ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 17.12.2025
Gujarat High Court Sets Aside Adjudicating Authority’s Order for Non-Compliance with Section 138-B of Customs Act, 1962 β
This Article has been written by Shri Ravi Shekhar Jha, Advocate based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.ββ
In a significant judgment, the Gujarat High Court, comprising Honourable Justice, has set aside the impugned order dated 18.03.2025, passed by the adjudicating authority (Respondent No.2), in the case of M/S Mitesh Impex & Ors. β vs Union of India & Anr. β The court has directed a fresh adjudication of the matter, emphasizing the importance of adhering to the principles of natural justice and the provisions of Section 138-B of the Customs Act, 1962. β
Background of the Case
The petitioners, M/S Mitesh Impex & Ors., challenged the impugned order on the grounds that it was passed in defiance of the directions issued by the Central Excise and Service Tax Appellate Tribunal, West Zonal Bench at Ahmedabad. β The Tribunal, in its order dated 13.03.2023, had remanded the matter to the adjudicating authority, directing it to grant the petitioners an opportunity to cross-examine six witnesses whose statements were relied upon in the original adjudication. β
The petitioners argued that the adjudicating authority ignored the statements of three witnesses who had deposed in their favor after cross-examination, while relying on the statements of three other witnesses who were not cross-examined in the first round of adjudication. β The petitioners contended that this approach violated the principles of natural justice and the directions of the Tribunal. β
Key Legal Issues
The case revolved around the interpretation and application of Section 138-B of the Customs Act, 1962, which deals with the relevancy of statements made during the course of inquiry or proceedings under the Act. β The provision outlines two scenarios under which such statements can be considered relevant:
- Clause (a): Statements made by witnesses who are unavailable due to death, incapacity, or other reasonable circumstances can be treated as relevant, provided the adjudicating authority records findings on the non-availability of the witness and offers the assessee an opportunity to respond to the statement. β
- Clause (b): Statements made by witnesses who are available for cross-examination can be admitted in evidence in the interest of justice, provided the assessee is given an opportunity to cross-examine the witness. β
The petitioners argued that the adjudicating authority failed to comply with these provisions, as it relied on the statements of witnesses who were not cross-examined, while ignoring the evidence of witnesses who had deposed in their favor. β
Observations of the Court β
The Gujarat High Court carefully examined the impugned order and the provisions of Section 138-B of the Customs Act, 1962. The court noted the following:
- The adjudicating authority had relied on the statements of three witnesses who did not appear for cross-examination, despite being given four opportunities to do so. β These statements were recorded during the first round of adjudication, where the petitioners were not granted the opportunity to cross-examine the witnesses. β
- The adjudicating authority ignored the evidence of three witnesses who had appeared and deposed in favor of the petitioners after cross-examination. β
- The adjudicating authority failed to record findings on the non-availability of the three witnesses who did not appear for cross-examination, as required under clause (a) of Section 138-B. β
The court emphasized that the principles of natural justice require that the statements of witnesses cannot be used against an assessee unless they are given an opportunity to cross-examine the witnesses and respond to their statements. β The court also highlighted that the adjudicating authority must record reasons and findings based on the evidence and corroborative material before arriving at a decision. β
Court’s Decision β
The Gujarat High Court held that the adjudicating authority had not fully complied with the directions issued by the Tribunal. β While the Tribunal had remanded the matter to provide an opportunity for cross-examination, the adjudicating authority failed to properly consider the evidence of all six witnesses in accordance with Section 138-B of the Customs Act, 1962. β
The court quashed the impugned order and remanded the matter back to the adjudicating authority for fresh adjudication. β The court directed the authority to pass an appropriate order within 12 weeks, taking into account the evidence of all witnesses and adhering to the principles of natural justice. The court also clarified that it was not expressing any opinion on the merits of the case, leaving all rights and contentions of the parties open. β
Conclusion
This judgment underscores the importance of adhering to procedural fairness and the principles of natural justice in adjudication processes under the Customs Act, 1962. The Gujarat High Court’s decision serves as a reminder to adjudicating authorities to ensure that the rights of the assessee are protected, particularly with regard to the opportunity for cross-examination of witnesses. β By remanding the matter for fresh adjudication, the court has reinforced the need for a fair and transparent process in cases involving penalties under the Customs Act.
Listen to this on our #YouTube Channel
Source: Gujarat High Court
Handy Download:
Write to us at office@aadrikaalaw.com
Tel: +91-11-4999 2707 I +91-9999005379
Leave a Reply