Relied-upon statements and cross-examination are required before clubbing clearances and denying SSI exemption.

Where a demand is based directly on witness statements alleging that multiple units functioned as one and supporting denial of SSI exemption and clubbing of clearances, fair adjudication requires supply of those relied-upon statements and an opportunity for cross-examination. The record did not establish that the statements were unavailable, and their possible existence in other investigation files could not be excluded. Accordingly, the appellants were entitled to receive the statements and test their veracity before adjudication; if the statements were genuinely unavailable or the witnesses could not be produced, the authority could proceed only on legally available material.

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Issues: Whether the appellants were entitled to supply of the relied upon statements and cross-examination of the witnesses before adjudication.

Analysis: The demand was founded on statements of persons said to have admitted that the four units were functioning as one and the same, and those statements were directly relied upon to deny SSI exemption and club the clearances. In such circumstances, fair opportunity required supply of the statements and an opportunity to test their veracity through cross-examination. The record did not contain a categorical finding that the statements were unavailable, and the possibility of their availability in other investigation files could not be ruled out. If the statements were unavailable or the witnesses could not be produced, the adjudicating authority could proceed in accordance with law on the basis of the material legally available.

Conclusion: The appellants were entitled to the statements and cross-examination, and the matter was required to be reconsidered after granting such opportunity.

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