Delhi HC Partly Allows Cross-Examination in Customs Duty Evasion Case

The petitioner, Sanjeev Maggu, challenged the Show Cause Notice issued by the Directorate of Revenue Intelligence and the adjudication order passed by the Additional Commissioner of Customs. The SCN alleged large-scale evasion of customs duty through diversion of foreign liquor stored in public bonded warehouses into the domestic market without payment of duty, supported by forged and fabricated export and re-warehousing documents.

It was alleged that four fictitious firms were created with separate Import Export Codes and the misuse of customs brokers for document fabrication. Searches were conducted at the residential premises of the petitioner and associated warehouses. The petitioner sought cross-examination of fifteen individuals, including private persons, customs brokers, warehouse staff, and multiple customs officials, whose statements were relied upon in the SCN. The adjudicating authority rejected the request, leading to the present writ petition.

Main Issue: Whether the petitioner was entitled, as a matter of right, to cross-examine all persons whose statements were relied upon in the customs show cause notice, including customs officials, brokers, and warehouse staff.

HC Decided: The High Court held that the right to cross-examination is not absolute and cannot be claimed as a matter of course. The Court reiterated that show cause notice proceedings cannot be converted into mini-trials and that cross-examination is to be permitted only where prejudice is demonstrated.

The Court refused cross-examination of customs officials, holding that they were acting in their official capacity and that no specific prejudice was shown. The Court permitted cross-examination of two independent customs brokers and two private warehouse staff members holding that they were private individuals whose evidence could materially affect the adjudication.

The impugned order was thus modified. Dates were fixed for cross-examination, after which the petitioner was permitted to file an additional reply to the SCN. The adjudicating authority was directed to grant a personal hearing and thereafter adjudicate the SCN in accordance with law.

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