Section 9D compliance is mandatory before relying on recorded statements as evidence in clandestine removal cases.

Statements recorded by Central Excise officers cannot be relied upon as proof of clandestine manufacture or removal unless the requirements of Section 9D of the Central Excise Act, 1944 are satisfied. Where the declarant does not fall within the statutory exceptions, the authority must examine the declarant as a witness, pass a reasoned order on admissibility, and only then consider cross-examination. As that procedure had not been followed, the adjudication could not stand and the matter was remanded for fresh decision after compliance with Section 9D and natural justice.

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Issues: Whether the impugned order could be sustained when the statements relied upon by the Department had not been examined in accordance with the procedure prescribed for admitting such statements in evidence.

Analysis: The order was founded substantially on statements recorded by Central Excise officers to establish clandestine manufacture and removal. The statutory scheme requires that such statements, if relied upon for the truth of their contents, must satisfy the conditions in Section 9D of the Central Excise Act, 1944. Unless the declarant falls within the specified exceptional circumstances, the statement cannot be straightaway used as evidence; the declarant must be examined as a witness and the authority must then decide, by a reasoned order, whether the statement should be admitted in evidence. Only thereafter can the question of cross-examination arise. Since both sides accepted that this procedure had not been followed, the matter required reconsideration by the adjudicating authority after complying with Section 9D and the principles of natural justice.

Conclusion: The impugned order could not be sustained and the matter was remanded to the original authority for fresh adjudication after following the mandatory procedure under Section 9D and granting due opportunity for cross-examination where applicable.

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