Clandestine manufacture proved by search evidence and corroborated statements, with denial of cross-examination not vitiating proceedings.

Corroborated search evidence, including machinery, packing material, raw material mix and packed gutka, together with consistent statements linking transfer of mix, installation of machines and direction of activity, established deliberate involvement in clandestine manufacture and clearance, so penalties under Rule 26 were sustained. On the cross-examination objection, the Tribunal found no procedural infirmity under Section 9D because the relied-upon witnesses were under the appellants' control and cross-examination was unlikely to add value. The appeals therefore failed on both merits and procedure, and the penalties were upheld.

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Issues: (i) Whether the evidence on record established the appellants' role in clandestine manufacture, packing and clearance of gutka so as to justify the penalties imposed under Rule 26. (ii) Whether denial of cross-examination of witnesses whose statements were relied upon vitiated the proceedings for non-compliance with Section 9D.

Issue (i): Whether the evidence on record established the appellants' role in clandestine manufacture, packing and clearance of gutka so as to justify the penalties imposed under Rule 26.

Analysis: The investigation found working packing machines at the Libaspur , along with packing material, raw material mix and packed gutka, while the factory premises of MRTPL showed preparation of gutka mix. Statements of persons working at both locations consistently showed that the mix was transferred from the factory to Libaspur and used for illegal manufacture and packing. The statement of Hazi Habibullah also implicated the appellants in procuring the machines, installing them at Libaspur and directing the illicit activity. The record therefore supported a finding of deliberate involvement in the evasion.

Conclusion: The appellants' participation in clandestine manufacture and evasion of excise duty was proved, and the penalties were rightly upheld against them.

Issue (ii): Whether denial of cross-examination of witnesses whose statements were relied upon vitiated the proceedings for non-compliance with Section 9D.

Analysis: The witnesses had given statements during investigation and their evidence was relied upon with supporting material from the search and seizure operations. The Tribunal held that, in the facts, the witnesses were under the control of the appellants and permitting cross-examination would serve no useful purpose because the witnesses could be influenced to retract their earlier statements. On that basis, the Tribunal found no procedural infirmity warranting interference.

Conclusion: The objection based on Section 9D failed and the proceedings were not vitiated by denial of cross-examination.

Final Conclusion: The appeals failed on both merits and procedure, and the impugned penalties were sustained.

Ratio Decidendi: Where corroborated statements and search evidence establish clandestine manufacture and the witnesses are shown to be under the control of the noticees, denial of cross-examination does not by itself vitiate the adjudication under Section 9D.

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