Section 9D compliance and cross-examination are required before relying on recorded statements in excise adjudication.

Where an excise demand rests on recorded statements, Section 9D of the Central Excise Act requires the statutory conditions for treating those statements as evidence to be satisfied before reliance can be placed on them. If the exceptional circumstances in Section 9D are not shown, the deponents must be examined and cross-examination afforded. The text also notes that a cryptic order which does not properly deal with the documentary evidence and denies cross-examination can cause prejudice and justify de novo reconsideration after hearing the parties in accordance with law.

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Issues: Whether the adjudication order was vitiated for denial of cross-examination and non-compliance with Section 9D of the Central Excise Act, 1944, warranting remand for fresh adjudication.

Analysis: The decision turned on whether statements relied upon by the Revenue could be used without first following the statutory procedure under Section 9D. The majority held that where the department bases its case on recorded statements, the adjudicating authority must examine the deponents and afford cross-examination unless the exceptional circumstances specified in Section 9D are shown. It was also found that the impugned order did not adequately consider the documentary material relied upon by the appellants and was cryptic and non-speaking. In these circumstances, the denial of cross-examination caused prejudice and the matter required reconsideration by the adjudicating authority in de novo proceedings.

Conclusion: The adjudication order was set aside and the matter was remanded for fresh consideration after granting opportunity of hearing and cross-examination in accordance with law.

Ratio Decidendi: When an excise demand is founded on recorded statements, Section 9D requires the statutory conditions for treating such statements as evidence to be satisfied and, in the absence of those conditions, the statements cannot be relied upon without affording cross-examination.

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