Section 9D evidentiary safeguards govern reliance on excise statements; non-compliance led to remand for fresh adjudication.

Statements recorded during excise investigation cannot be treated as substantive evidence unless Section 9D of the Central Excise Act is first complied with. The adjudicating authority must examine the maker of the statement as a witness and record a reasoned view on admissibility where clause (a) does not apply; only then can the statement be relied on, with cross-examination available where lawfully admitted. Reliance on such statements without following this procedure amounts to use of irrelevant material and breaches natural justice. The order-in-original was set aside and the matter remanded for de novo adjudication after compliance with Section 9D.

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Issues: Whether the order-in-original was vitiated for reliance on statements recorded during investigation without following the mandatory procedure under Section 9D of the Central Excise Act, 1944, and whether the matter required fresh adjudication after compliance with the prescribed evidentiary safeguards.

Analysis: Section 9D governs the relevancy of statements recorded before a gazetted Central Excise Officer and makes admissibility subject to the conditions in sub-section (1). Where clause (a) is not attracted, the adjudicating authority must first examine the maker of the statement as a witness and then record a reasoned opinion that the statement should be admitted in evidence in the interests of justice under clause (b). Until that procedure is followed, the statement cannot be treated as substantive evidence of the truth of its contents. The order-in-original relied extensively on such statements without first satisfying the statutory prerequisites, and therefore proceeded on irrelevant material. The ruling also applies the ordinary evidentiary principle that statements recorded behind the back of the assessee cannot be relied upon without an opportunity for cross-examination after lawful admission in evidence.

Conclusion: The impugned order-in-original was set aside and the show-cause notice was remanded for de novo adjudication in accordance with Section 9D and the principles of natural justice.

Ratio Decidendi: A statement recorded during excise investigation cannot be relied upon as evidence of its contents in adjudication unless the statutory procedure for admissibility under Section 9D is first complied with, including examination of the maker and, where sought, opportunity of cross-examination.

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