Failure of the department to produce Panch-witness for cross examination provides benefit of doubt to assessee.

PJ/Case Laws/2012-13/1481

Case:- COMMISSIONER OF CUSTOMS (PREV.), PATNA Versus SHRAWAN SAH

Citation:- 2013 (288) E.L.T. 443 (Tri. – Kolkata)

Brief Facts:-The Customs Officers intercepted an at 19.15 hours near border check post with 15 silver bars weighing and valued while attempting to illegally export the same to Nepal. His statement was recorded under Sections 107 and 108 of the Customs Act, 1962, wherein he had confessed that the goods belonged to one Shri Laxmi Prasad of Motihari. Consequently, the impugned goods were seized under Section 110 of the Customs Act, 1962 and show cause notice was issued to the respondents. On adjudication, the impugned goods were confiscated under Section 113 of the Customs Act, 1962 and penalty was imposed on Shri Laxmi Prasad and on Shrawan Sah under Section 114 of the Customs Act, 1962. Aggrieved by the said Order, both the respondents filed appeals before the Commissioner (Appeals), Patna, who had upheld the Order of the lower adjudicating authority. Aggrieved, the respondents filed appeals before this Tribunal, and after hearing both sides, this Tribunal had remanded the matter to the Adjudicating Authority, vide its Order Nos. A-487-488/KOL/2009, dated 13-8-2009 [2009 (248) E.L.T. 489 (Tri. - Kol.)]. Consequently, the Additional Commissioner of Customs, Patna has adjudicated the case by confiscating the goods and imposing respective penalties on the Respondents. Aggrieved by the said Order of the Additional Commissioner dated 20-8-2008, the Respondents filed appeals before the Commissioner (Appeals). Learned Commissioner (Appeals) allowed their appeals by setting aside the impugned Order-in-Original dated 20-8-2008. Hence, Revenue is in appeal.

Appellant Contentions:-The Revenue has submitted that this is the second round of litigation. In the first round of litigation, the Tribunal after considering the facts and circumstances of the case had remanded it to the adjudicating authority for deciding the issue afresh, after allowing the respondents cross- examination of the panch-witnesses and an opportunity of personal hearing to them. He has submitted that in spite of best efforts by the Department, the investigating officers could not locate the panch-witnesses and accordingly, the panch-witnesses could not be produced before the adjudicating authority in the de novo adjudication proceedings for cross-examination. However, the adjudicating authority on the basis of other evidences, confirmed the charges against the respondents. He has submitted that the learned Commissioner (Appeals) erred in not taking into consideration the other circumstantial evidences into consideration, while following the appeals filed by the Respondents before him. The contention of the learned AR is that merely due to non-production of panch‑witnesses’, it cannot vitiate the entire proceeding. However, he has fairly conceded that in the first round of litigation, it was the specific direction of this Tribunal to allow cross-examination of the panch-witnesses and the said order of the Tribunal had not been challenged before the higher authorities nor any time, the Department approached this Tribunal expressing its inability to produce the panch-witnesses for cross-examination.

Respondent Contentions:-The respondents submitted that since there was a dispute of the place of seizure, this Tribunal in its first round of litigation, had specifically directed the Department to produce panch-witnesses for cross-examination to ascertain the fact of actual place of seizure of the impugned goods. He has submitted that the Revenue has accepted the order of the Tribunal, but later failed to produce the panch-witnesses for cross-examination. He has submitted that consequently, the learned Commissioner (Appeals) has rightly observed that non-production of such witnesses resulted injustice to the appellants, and consequently, allowed their appeals.

Reasoning of Judgment:- We have considered the submission on both sided. It was found that in the initial round of litigation before this Tribunal, after hearing both sides and distinguishing the judgment of Hon'ble Supreme Court in the case of Surjeet Singh Chhabra v. Union of India - 1997 (89) E.L.T. 646 (S.C.), held that the facts of the case before the Hon'ble Supreme Court in the case of Surjeet Singh Chhabra (cited supra) are different as in that case, the gold jewellery was recovered at the Airport and the only issue raised was whether the same was recovered at the conveyor belt or at the green channel. In the circumstances, the Hon'ble Supreme Court says that the cross examination was not necessary as the recovery is made at the Airport which is a Customs area and the confessional statement was relied upon. In the present case, the appellants are disputing the place of recovery of the silver in question. As per the Revenue, the same is seized at Customs Land Station whereas the appellants' contention is that the same is seized at the Raxaul Bus Station. In the circumstances, the cross examination of the panch witnesses is necessary. Therefore, the impugned order is set aside and the matter is remanded to the adjudicating authority to decide afresh after affording an opportunity of cross examination of the panch witnesses and an opportunity of personal hearing to the appellants. Both sides are at liberty to raise their submissions at the time of hearing. Both the appeals are allowed by way of remand.
Under the above circumstances, the matter was remanded to the adjudicating authority for adjudication afresh. However, it seems that the Department could not produce the panch-witnesses and the adjudicating authority has confirmed the charges against the respondents on the basis of other circumstantial evidences available on record. On appeal, the learned Commissioner did not endorse the said action of the Department and set aside the impugned Order of the adjudicating authority passed in de novo adjudication and allowed the appeal of the respondents. The learned Commissioner while setting aside the Order, has observed as follows :-
"Therefore, in view of the above fads and circumstances of the case, it is amply clear that the seizing authority has failed to substantiate the legality of the seizure inasmuch as that they failed to produce the Panch Witness as per direction of Hon'ble CESTAT. Without the panch witness the veracity of the seizure and the place of seizure cannot be fully established. Since the department is not able to substantiate the legality of its action the order of confiscation and imposition of fine and penalty are not sustainable in the eyes of law. Therefore, the failure of the department to produce the panch witness invariably strengthens the case of the appellant and the benefit of doubt is in their favour. Hence the order of the lower adjudicating authority needs to be set aside in favour of the appellant."
Tribunal agrees with the above observation of the learned Commissioner (Appeals). The Tribunal has specifically directed the Department to produce the panch-witnesses for cross-examination in order to ascertain the fact of actual place of seizure of the goods. The said Order has been accepted by both sides, but later not implemented by the Department. Therefore, Tribunal do not find any merit in the appeals filed by the Revenue. Accordingly, the same are dismissed.

Decision:- Appeal dismissed.

Comment:- The analogy drawn from this case is that when the place of seizure itself cannot be established and department is also not able to provide cross examination of panch-witness, the case tilts in favour of the assessee and the benefit of doubt is to be extended to him.

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PJ/Case Laws/2012-13/1481

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