Section 9D compliance is mandatory before relying on investigation statements in excise adjudication; cross-examination follows lawful witness examination.

Section 9D(1) of the Central Excise Act requires the adjudicating authority to follow the prescribed procedure before relying on statements recorded during investigation. Where clause (a) does not apply, the maker must first be examined as a witness before the authority, and the authority must record a reasoned view that admission of the statement serves the interests of justice. The provision is mandatory in adjudication proceedings and is part of natural justice. Statements recorded behind the assessee's back cannot be used to prove their contents unless this procedure is followed, and cross-examination becomes available only after such examination-in-chief.

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Issues: Whether the adjudicating authority, while deciding the show cause notice under the Central Excise Act, 1944, is bound to follow Section 9D(1) before relying on statements recorded during investigation and to afford the assessee an opportunity of cross-examination.

Analysis: Section 9D(1) makes statements recorded before a gazetted Central Excise Officer relevant only in the circumstances specified in clauses (a) and (b). If clause (a) does not apply, the statement cannot be treated as relevant for proving the truth of its contents unless the maker is first examined as a witness before the adjudicating authority and the authority records a reasoned opinion that the statement should be admitted in evidence in the interests of justice. The procedure is mandatory and applies to adjudication proceedings as well. Statements recorded behind the back of the assessee cannot be relied upon unless this statutory procedure is followed, and cross-examination becomes available only after such examination-in-chief.

Conclusion: The adjudicating authority must follow Section 9D(1) and the principles of natural justice before relying on such statements, and the assessee is entitled to seek cross-examination in accordance with law.

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