Cross-examination and corroboration are required before third-party statements can sustain central excise duty liability.

Third-party statements recorded under Section 14 of the Central Excise Act, 1944 are relevant evidence, but their evidentiary weight depends on corroboration and the surrounding circumstances. When such statements are used as substantive incriminating material against an assessee, denial of cross-examination of the makers breaches natural justice and cannot sustain an adverse duty demand or penalty. Section 9D makes these statements relevant in prosecution proceedings, but it does not render them conclusive proof of fiscal liability. The Allahabad HC therefore upheld the view that ex parte statements alone, without an opportunity to test them through cross-examination, cannot legally support the demand.

---

---

Issues: Whether statements recorded under Section 14 of the Central Excise Act, 1944 could by themselves sustain demand and penalty without cross-examination of the persons making them, and whether Section 9D of the Central Excise Act, 1944 made such statements conclusive for proving fiscal liability.

Analysis: Statements under Section 14 are relevant pieces of evidence, but their probative value depends on the surrounding circumstances and corroboration. Where the statements are relied upon against the assessee as substantive incriminating material, denial of cross-examination of the makers of those statements violates natural justice. Section 9D makes such statements relevant in prosecution proceedings, but it does not convert them into conclusive proof for determination of duty liability. The attempted reliance on ex parte statements of third parties, without affording an opportunity to test them through cross-examination, could not legally sustain the adverse demand.

Conclusion: The questions were answered against the Revenue and the Tribunal's view was affirmed. The appeal failed.

Ratio Decidendi: Third-party statements recorded under Section 14 of the Central Excise Act, 1944 cannot, without corroboration and without permitting cross-examination where sought, be treated as conclusive proof for imposing fiscal liability; Section 9D does not override the requirement of natural justice.

---