Witness statements cannot be relied on without statutory procedure and cross-examination; non-compliance vitiates adjudication.

Reliance on witness statements recorded during investigation was held unsustainable where the statutory procedure for admitting such statements was not followed and cross-examination was denied. The adjudicating authority had also not given fresh consideration to the earlier cross-examination findings and had proceeded without complying with the safeguards required before treating the statements as evidence. That non-compliance violated natural justice and deprived the assessee of a fair opportunity to meet the material relied upon. The impugned order was set aside and the matter remanded for fresh adjudication in accordance with the statutory procedure and principles of natural justice.

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Issues: Whether the adjudication order was vitiated for failure to comply with Section 9D of the Central Excise Act, 1944 and for denial of cross-examination before relying on witness statements.

Analysis: The challenge centred on the use of statements recorded during investigation, non-supply of one statement at the earlier stages, and refusal of cross-examination. The record showed that the adjudicating authority had adopted earlier findings on cross-examination without fresh consideration and had relied upon statements without following the procedure prescribed by Section 9D. Since the statutory procedure for making such statements admissible was not followed, the reliance placed on them could not be sustained. The resultant denial of a fair opportunity to meet the evidence also violated the principles of natural justice.

Conclusion: The impugned order was held unsustainable and was set aside. The matter was remanded for fresh adjudication after complying with Section 9D and the principles of natural justice.

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