Bombay High Court
Shri. Bipin Badani vs Union Of India , Through The Secretary ... on 5 December, 2023
Author: G. S. Kulkarni
Bench: G. S. Kulkarni
2023:BHC-AS:36557-DB
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO. 12217 OF 2017
Shri. Bipin Badani. ..Petitioner
Vs.
1. Union of India, through the Secretary,
Ministry of Finance,
2. The Commissioner of Customs. ..Respondents
__________
Ms. Kiran Doiphode i/b. V. M. Doiphode & Co., for the Petitioner.
Mr. Karan Adik with Ms.Maya Majumdar, for the Respondents.
__________
CORAM : G. S. KULKARNI &
JITENDRA JAIN, JJ.
RESERVED ON : AUGUST 28, 2023
PRONOUNCED ON : DECEMBER 5, 2023
JUDGMENT (Per G. S. Kulkarni, J.):
1. This petition under Article 226 of the Constitution of India is filed
praying for the only relief that the order-in-original dated 6 June 2017
passed by the Commissioner of Customs, Pune, be quashed and set aside.
2. At the outset, it may be observed that an objection was raised on
behalf of the respondent that the petitioner has a remedy of filing an
appeal against the order-in-original as provided for under Section 129A of
the Customs Act (for short 'the Customs Act') before the Customs, Excise
and Service Tax Appellate Tribunal (for short 'CESTAT'). However, the
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petitioner would submit that the petitioner ought not to be relegated to
such statutory remedy as the impugned order involves breach of the
principles of natural justice, as the petitioner was not provided an
opportunity to cross examine the persons whose statements came to be
recorded in the course of the investigation. In supporting such contention,
learned Counsel for the petitioner has referred to the provisions of Section
138B of the Act which provides for relevancy of statements under certain
circumstances.
3. Before, we proceed to consider the rival contentions, we may refer
to the relevant facts.
FACTS
4. On 29 March 2000 a show cause notice was issued to the petitioner
demanding differential customs duty of Rs.2,45,83,219/- under Section
28 of the Customs Act. The petitioner had invoked the jurisdiction of the
Settlement Commission. On 20 February, 2001, the Settlement
Commission admitted the petitioner's application for settlement of the
case. By an order dated 17 October 2003, the Settlement Commission
rejected the petitioner's application on the ground that it did not have
jurisdiction to entertain the application. The petitioner challenged such
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order of the Settlement Commission before this Court in Writ Petition
No.2 of 2004. A Division Bench of this Court by an order dated 21 July
2005 disposed of the said writ petition remitting the case to the
Settlement Commission inter alia observing that the Settlement
Commission has jurisdiction to entertain the application filed by the
petitioner. The Revenue, however, being aggrieved by the said orders
passed by this Court, had approached the Supreme Court against the order
dated 21 July 2005. The Supreme Court by its order dated 19 August
2015 dismissed the revenue's appeal inter alia observing that the High
Court had merely remitted the case to the Settlement Commission and
therefore, no interference is called for. It was, however, observed that if the
petitioner did not approach the Settlement Commission within three
months from the said order, his right to approach the Commission will
stand forfeited and that the orders of the Settlement Commission rejecting
the petitioner's application, shall stand revived.
5. It appears from the averments as made in the petition that the
petitioner could not approach the Settlement Commission and
consequently by virtue of the orders passed by the Supreme Court, the
issue before the Settlement Commission as raised by the petitioner, has
attained finality.
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6. In this view of the matter, the Department had taken up the show
cause notice dated 29 March 2000 for adjudication. The petitioner has
averred that a reply to the show cause notice was submitted by his
Advocate's letter dated 15 February 2017. On perusal of the petitioner's
Advocate's letter, it clearly appears that the petitioner has not at all
addressed the principal allegations as made in the show cause notice,
namely, that there was concealment of ball bearings in the declared
consignment of Damar Batu by the petitioner when the investigation
revealed that the cargo declared by the petitioner as Damar Batu, imported
vide Bill of Entry No.000479 dated 5 October 1999 on being examined
at Container Freight Station Pimpri, Pune, in the presence of Mr.Deepak
Bhargawa, CHA, proprietor of M/s. Avignon Shipping Agency and in the
presence of two panchas, the investigation revealed that foreign origin ball
bearings having estimated market value of Rs. 58,91,006/- were concealed
in the consignment declared to be of 'Damar Batu' which was valued
merely at Rs.57,074/-. The consignment was accordingly placed under
seizure under the provisions of the Customs Act. The investigation
further revealed that the address declared on the import documents by the
petitioner as the proprietor of M/s. Sai Impex were found to be not
correct. On such backdrop, summons were issued to the Clearing House
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Agent Mr.Deepak Bhargawa as also to the petitioner under Section 108 of
the Customs Act. A statement was also recorded. The petitioner in his
statement in connection with the seizure, is stated to have admitted
conscious knowledge of willful mis-declaration and concealment of
bearings under the guise of the consignment to be Damar Batu, imported
on MS drums with an intention to smuggle the bearings of foreign origin
and thereby to evade the Customs duty. There was further a statement of
the petitioner recorded on 13 October 1999 under Section 108 of the
Customs Act, in which he has stated that only the last two consignments
he has imported vide Bill of Entries No.000479 dated 5 October 1999
and 000393 dated 16 September 1999 where the ball bearings were
concealed in the cargo of Damar Batu and the goods were to be delivered
to Mr. Nitin Mehta for a consideration of Rs.10 lakhs. The petitioner has
also stated that he was involved in such activities amounting to smuggling
of bearings, in consultation with Mr.Nitin Mehta who was an associate of
Mr. Farooq of M/s. P & F Trading Co. of Singapore, the supplier of the
said consignments. Further statements of the petitioner were recorded on
15 October 1999, 20 October 1999, 3 November 1999, and also on 22
November 1999 and 24 November 1999 under Section 108 of the
Customs Act. It also appears that a statement of Mr. Shyamkant Laxman
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Kolpe, godown keeper was recorded, which revealed that the consignment
of the foreign ball bearings belonging to the petitioner, were kept in the
godown at Alandi on 29 September 1999 and thereafter, shifted to Geeta
Bhawan at Alandi, during the night of 30 September 1999. Also there was
involvement of Mr. Praveen V. Ladkat who was involved in packing of the
bearings sizewise in cartons, whose statement was recorded under the
Customs Act who stated that he was aware that the bearings were illegally
imported.
7. It is on such statements of the petitioner, the Customs Preventive
Unit, Pune had undertaken search at the godown at Gita Bhawan at
Alandi which resulted into recovery of huge consignment of foreign
original ball bearings packed in plastic woven bags, and the consignment
in question was seized.
8. On such premise, after having substantial material to issue a show
cause notice, a show cause notice dated 29 March 2000 was issued to the
petitioner. As noted above, a reply dated 15 February 2017 was filed by
the petitioner to the show cause notice and thereafter, an additional reply
dated 9 March 2017 was filed by the petitioner, however, the petitioner
did not deal with the merits of the show cause notice. Despite such clear
factual position, what is insisted is that the petitioner be provided an
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opportunity to cross examine Mr. Shyamkant Laxman Kolpe, Godown
keeper, Mr. Praveen V. Ladkat, who had taken the godown on lease and
was involved in packaging of the ball bearings, as also supplying the ball
bearings to Mr. Nitin Mehta, who was a dealer in ball bearings and the
proprietor of M/s.Collective Trade Links, Mumbai, who was interested to
purchase the consignment at discounted price.
9. On the above backdrop, the show cause notice was taken up for
adjudication. The petitioner was given full opportunity in the adjudication
of the show cause notice. The petitioner was represented by his counsel
who had made detailed submissions in the adjudication of the show cause
notice. After hearing of the parties, the Commissioner of Customs had
passed a detailed Order-In-Original (O-I-O) dated 28 June 2017 which
runs into 118 pages. We may observe that the adjudication order
extensively considers the minutest of the facts and all material which had
come on record in the investigation, including the attempts as made by the
petitioner in his several submissions. The adjudicating officer has also
referred to the proceedings before the Settlement Commission in the two
writ petitions before this Court being Writ Petition No.3071 of 2003 and
Writ Petition no.2 of 2004 respectively, as also the orders passed thereon,
as also the orders passed by the Supreme Court dated 19 August 2015.
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10. Considering the voluminous material which was on the record of
the adjudicating officer, namely, the Commissioner of Customs, the
adjudicating officer had come to a conclusion that the show cause notice
was required to be confirmed against the petitioner, by ordering
confiscation of the ball bearings as seized, as also to recover customs duties
of Rs.2,45,83,219/- of the Customs Act alongwith interest as applicable
under the provisions of Section 28AB of the Customs Act, as also ordered
to recover personal penalty of the like amount from the petitioner under
Section 112(a) and 112(b) of the Customs Act. The proceedings to the
extent of demand of Customs duty amounting to Rs.23,54,600/- under
Section 28(1) of the Customs Act, was also dropped. A penalty of
Rs.4,97,737/- was imposed against the petitioner under Section 114A of
the Customs Act.
11. It is on the above backdrop, the present petition has been filed
raising the only contention that the impugned order-in-original needs to
be set aside on the ground of breach of principles of natural justice, as an
opportunity to cross examine three witnesses as noted above, was not
granted to the petitioner.
Reply of the Respondents
12. The petition has been opposed on behalf of the respondents by filing
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reply affidavit of Mr. V. S. Chaudary, Commissioner of Customs, Pune. At
the outset, it is contended that the petitioner has a statutory remedy of
filing an appeal before the Customs, Excise and Service Tax Appellate
Tribunal (for short 'CESTAT') under Section 129A of the Customs Act,
against the impugned order-in-original. It is also contended that the
petitioner in order to avoid the pre-deposit of the 7.5% amount has taken
a chance to file this writ petition, despite an efficacious alternate remedy
available to the petitioner. It is contended that as set out in detail in the
show cause notice, the person hearing these notices addressed to Mr.
Shyamkant Kolpe and Mr. Pravin Ladkat, were not served and returned by
the postal department. Also in the facts and circumstances, considering
the provisions of Section 9D and 138B of the Customs Act, the request for
cross examination of the witnesses was disallowed by recording detailed
reasons. It was submitted that there was sufficient material as also the
statements of different persons recorded, were found substantial
corroboration in the adjudication of the show cause notice.
13. The reply affidavit states that in the facts and circumstances of the
case, the charges were not only confirmed merely on the sole basis of the
statements, but also the corroborative evidence which have been weighed
and elaborately discussed by the adjudicating authority including the
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panchanama which was proved and the other voluminous material of
illegal import and smuggling of the ball bearings, and there was no
violation of the principles of natural justice by denying the cross
examination in the facts and circumstances of the case. In supporting such
contention, the respondents have placed reliance on the decisions in
Surjeet Singh Chhabra Vs. Union of India & Ors. 1 to contend that the
cross examination of the witness would not make any material difference
in the facts and circumstances of the case. Further, reliance is placed on
the decision of the Supreme Court in Telestar Travels Pvt. Ltd. Vs. Special
Director of Enforcement2. In these circumstances, it is submitted that the
petition deserves to be dismissed.
Submissions of the Petitioner
14. Learned Counsel for the petitioner has limited submissions. The
only contention as urged on behalf of the petitioner is that the impugned
order is required to be held to be illegal as it is in breach of the principles
of natural justice, on the ground that the petitioner was not permitted to
cross examine the said three witnesses. It is her submission that the
Commissioner of Customs could not have proceeded to pass the
impugned order by not providing an opportunity to cross examine the said
1 (1997)89 ELT 646 (SC)
2 (2013(289) ELT 3 (SC))
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three witnesses as law would mandate namely the provisions of Section
138B of the Customs Act. In support of her contention, reliance is placed
on the decision of the Supreme Court in the case Andaman Timber
Industries Vs. CCE, Kolkata-II3, the decision of this Court in Nirmal
Seeds Pvt. Ltd. Vs. Union of India 4, the decision of this Court (Goa
Bench) in the case M/s. Novacare Drug Socialities Private Limited Vs.
U.O.I. & Ors.5, the decision of Allahabad High Court in CCE,
Meerut-I Vs. Parmarth Iron Pvt. Ltd. 6, the decision of this Court in M/s.
Larsen & Toubro Ltd. Vs. Union of India7, the decision of this Court in
M/s.Khaitan Chemicals And Fertilizers Ltd. Vs. Union of India 8, the
decision of Rajasthan High Court in Shree Raj Pan Masala Private Limited
Vs. Union of India And Anr.9, decision of the Supreme Court in Shree Raj
Pan Masala Private Limited And Anr. Vs. Union of India And Anr. 10, the
decision of this Court in Sameer Shah (Real Name "Javed Shaikh") vs. The
Union of India & Anr.11, the decision of Delhi High Court in Basudev
Garg vs. Commissioner of Customs12.
3 2015 (324) ELT 641 (S. C.)
4 2017 (350) ELT 486 (Bom)
5 2017 (356) ELT 233 (Bom.)
6 2010 (260) ELT 514 (All.)
7 2016 (331) ELT 353 (Bom.)
8 2013 (292) ELT 44 (Bom.)
9 D.B. Civil WP NO.11566 of 2016, decision dt.10/05/2017
10 SLP (C) No (s). 23214 of 20172017, decision dt. 15.9.2017
11 Writ Petition (l) No. 3220 of 2020 (OS), decision dt. 9.6.2022.
12 2013(294) E.L.T. 353 (Del.)
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15. On the other hand Mr.Adik, learned Counsel for the revenue while
opposing the petition has reiterated the contentions as urged by the
Revenue in the reply affidavit. Mr.Adik would submit that the petition
ought not to be entertained on the ground that the petitioner has an equal
efficacious alternate remedy of an appeal before the CESTAT under
Section 129A of the Customs Act. He submits that it is only to avoid the
mandatory pre-deposit of the amount, the present petition has been filed.
It is his contention that the facts and circumstances of the case are such
that the contention of the petitioner that the petitioner is not provided for
an opportunity to cross-examine the said three witnesses, is totally
untenable inasmuch as the impugned order is a detailed order relying on
several materials and it is not passed solely on the basis of the statements
made by three witnesses. He submits that the contention that the
provisions under Section 138B of the Customs Act would itself recognize
an opportunity of cross examination, would be untenable in quasi judicial
proceedings namely of the adjudication of the show cause notice. It is his
submission that the strict principles of evidence are applicable to the
criminal trial and would not be applicable to the proceedings under the
show cause notice issued under Section 124 read with Section 28 of the
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Customs Act. In support of his contention, Mr. Adik has placed reliance
on the decision of the Supreme Court in the case Telestar Travels Pvt. Ltd.
(supra), Basudev Garg (supra), as also the decision of the Madras High
Court in "The Commissioner of Customs (Appeals-II) & Anr. Vs. Shri.
Vijayraj Surana"13, as also the decision of the Division Bench of this Court
in United Spirits Ltd. Vs. The Union of India & Anr. 14 The principles as
laid down in these decisions are well settled.
Analysis and Conclusion
16. At the outset, we would deal with the petitioner's contention
referring to the provisions of Section 138B of the Customs Act to consider
whether such provision would ipso facto provide for an opportunity to
cross examine the witnesses and more particularly considering the
provisions of sub-section (2) which are made applicable to other
proceedings under the Customs Act. To appreciate such contention as
urged by the petitioner, we would be required to note the provisions of
Section 138B of the Customs Act, which read thus:-
"138B. Relevancy of statements under certain circumstances.
(1) A statement made and signed by a person before any
Gazetted Officer of customs during the course of any inquiry or
proceeding under this Act shall be relevant, for the purpose of
proving, in any prosecution for an offence under this Act, the
truth of the facts which it contains,-
(a) when the person who made the statement is dead or cannot
13 W.A.No.1763 of 2021 & C.M.P. No.11024 of 2021 dt. Of decision 17/8/2021
14 Writ Petition No.8516 of 2018, Decision dt. 14/6/2019
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be found, or is incapable of giving evidence, or is kept out of the
way by the adverse party, or whose presence cannot be obtained
without an amount of delay or expense which, under the
circumstances of the case, the court considers unreasonable; or
(b) when the person who made the statement is examined as a
witness in the case before the court and the court is of opinion
that, having regard to the circumstances of the case, the statement
should be admitted in evidence in the interests of justice.
(2) The provisions of sub-section (1) shall so far as may be, apply
in relation to any proceeding under this Act, other than a
proceeding before a court, as they apply in relation to a
proceeding before a Court.]"
(emphasis supplied)
17. A plain reading of Section 138 B would show that this provision
pertains to the relevancy of statements under certain circumstances which
stipulates that a statement made and signed by a person before any
Gazetted Custom Officers, may during the course of any inquiry or
proceedings under the Customs Act, shall be relevant, for the purpose of
proving, "in any prosecution for an offence" under the Customs Act, the
truth of the facts which it contains eventualities as provided for in clauses
(a) and (b) of sub-section (1). Sub-section (1)(a) stipulates the eventuality.
When the person who made the statement is dead or cannot be found, or
is incapable of giving evidence, or is kept out of the way by the adverse
party, or whose presence cannot be obtained without an amount of delay
or expense which, under the circumstances of the case, the Court considers
unreasonable; and in situation under sub-section (1)(b) when the person
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who made the statement is examined as a witness in the case before the
Court and the Court is of opinion that, having regard to the circumstances
of the case, the statement should be admitted in evidence in the interest of
justice. Sub-section (1) therefore clearly implies that it is only in the
proceedings before the Court and in the context of any prosecution for an
offence under the Customs Act, the statement of a person as recorded by
the Customs Officer would be held to be relevant.
18. Insofar as the second limb of Section 138B as provided for in sub-
section (2) of the said provision is concerned, it clearly implies that the
provisions of sub-section (1) shall apply in relation to any proceedings
under the Customs Act (other than a proceeding before a Court), in a
manner they apply in relation to a proceeding before a Court. In other
words, the relevancy of a statement which sub-section (1) of Section 138B
speaks about, would be held to be admissible and relevant even in relation
to any proceeding under the Customs Act, in a manner it is so applicable
before a Court as provided for under sub-section (1).
19. On such meaning which can be attributed to Section 138B, the
contention of the petitioner is required to be tested. At the outset, we may
observe that Section 138B per se does not provide for any cross
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examination, as the provision deals with relevancy of statements in the
facts and circumstances of the case. As to whether an opportunity of cross
examination ought to be given in regard to the statements as recorded by
the Customs Officer, would be required to be considered in the course of
adjudication of the show cause notice. Considering the implications, the
provisions of Section 138B would bring about, we do not find that in the
facts and circumstances of the case, it can be argued by the petitioner as an
absolute principle of law, that an opportunity of cross examination of three
witnesses ought to have been granted to the petitioner. This for more than
one reason, that sub-section (2) is required to be read in conjunction with
sub-section (1). Sub-section (1) clearly provides for relevancy of
statements as made and signed before the Gazetted Officer of the Customs
only in relation to any prosecution for an offence under the Customs Act
and not otherwise. Although sub-section (2) makes a provision that the
provisions of sub-section (1) are applicable in relation to any proceeding
under the Customs Act, other than a proceeding before a Court, as they
apply in relation to a proceeding before a Court, it cannot be
countenanced that sub-section makes a blanket provision for cross
examination of such persons whose statement have been recorded before
any Gazetted Officer of the Customs during the course of any inquiry or
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proceedings. In fact clause (b) of sub-section (1) makes a contrary
indication, when it refers to the statement of the persons who are dead or
cannot be found or is incapable of giving evidence or is kept out of the
way by the adverse party, or whose presence cannot be obtained without
an amount of delay or expense, which are eventualities wherein such
persons can never be available for cross examination. Sub-section (1) also
does not in any manner take away the discretion of the Customs Officer to
accord appropriate weightage to the material and / or evidence before him
in adjudicating the show cause notice. We are thus not inclined to accept
the contention as urged on behalf of the petitioner that Section 138B be
read as creating an absolute right of cross examination of such persons on
behalf of the noticee in the event the statements are made before any
Customs Officer, during the course of any inquiry which are subject
matter of consideration in adjudication of the show cause. In our opinion,
such contention as urged on behalf of the petitioner, if accepted, would
militate against the provisions of clause (a) of sub-section (1) of Section
138B which also includes complete discretion which is made available to
the adjudicating officer, to hold statements as recorded relevant even in
given situation. When the provision itself manifest such discretion to the
adjudicating officer, then any demand for cross examination would be
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required to be tested, in the facts and circumstances of the case, including
by applying the test of prejudice which may be required to be discharged.
For such reasons, we reject the contention of the petitioner that any
absolute right was created by virtue of Section 138B on the petitioner to
demand cross examination of the three witnesses in the facts of the present
case.
20. Even otherwise, it is also important to note that show cause notice
was issued in March 2000 and the request for cross-examination was made
for the first time on 15 February 2017 i.e. almost after a period of more
than 17 years. In the intervening period, the petitioner took recourse for
settlement of the show cause notice by approaching the Settlement
Commission and the lis in regard to the Settlement Commission
ultimately reached the Supreme Court and the Supreme Court granted 3
months time to the petitioner to approach the Settlement Commission.
However, the petitioner did not approach the Settlement Commission
within the said period resulting into revival of the show cause notice of
March 2000. In our view, on such premise the petitioner now urging a
plea of cross-examination not being granted after a period of 17 years,
from the date of show cause notice, itself would show the lack of bonafides
of the petitioner.
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21. The persons whose cross-examination is sought are the persons with
whom the petitioner had business transactions and who were part of the
transactions under the investigation. They are also the co-noticees in the
impugned proceedings. In these facts, it would not be appropriate for us
to accept the submissions of the petitioner that merely because the cross-
examination was not given, the order-in-original is required to be quashed
more so, when the respondents had issued notices to the persons whose
statements were relied upon, however, these persons either made written
submissions or choose not to appear.
22. We have perused the grounds raised in the present petition and the
only ground on which the order-in-original is sought to be quashed is non-
granting of opportunity to cross-examine three persons whose statements
are relied upon in the order-in-original and the show cause notice. There
is no submission on the merits of the case even prima facie which would
show that the petitioner is merely taking recourse to a technical plea, to
avoid the liability imposed by the order-in-original. In the facts of the
present case, in our extraordinary jurisdiction we cannot entertain such
plea.
23. On a perusal of the impugned order-in-original which runs into 118
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pages and on a holistic reading of the order, it cannot be said that the order
is passed only on the statements of three witnesses of which cross-
examination has not been granted, but there were various other direct
evidences against the petitioner, for the duty liability to be fastened on the
petitioner. Thus, the petitioner's plea as urged are after 17 years, cannot
be a ground for quashing the order-in-original. In our opinion, the
petitioner is resorting to be selective to dodge the proceedings, on raising
hyper technical issues, which even otherwise are without merit.
24. Insofar the decisions as relied on behalf of the petitioner are
concerned, we do not wish to burden this judgment in discussing such
decisions, suffice it to observe that the principles as laid down in the said
decisions are well settled, however, for the reasons as discussed by us
hereinabove, the decisions are certainly not applicable.
25. In the light of the above discussion, we find no merit in this
petition. It is accordingly dismissed. No costs.
[JITENDRA JAIN, J.] [G. S. KULKARNI, J.]
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Signed by: Vidya S. Amin
Designation: PS To Honourable Judge
Date: 07/12/2023 21:40:06
