Cross-examination and Section 9D requirements govern use of witness statements in central excise adjudication.

Where Revenue relies on third-party statements in adjudication, the maker of the statement must ordinarily be examined and the assessee must be allowed cross-examination unless the statutory exceptions apply. The article notes that Section 9D of the Central Excise Act, 1944 governs the admissibility and use of such statements, and denial of cross-examination in these circumstances violates natural justice. On that basis, the adjudication was held to be vitiated, the impugned order was set aside, and the matter was remanded for fresh decision after complying with Section 9D and granting cross-examination of the material witnesses.

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Issues: Whether denial of cross-examination of the material witnesses whose statements were relied upon by the Revenue vitiated the adjudication and warranted remand for fresh decision after following Section 9D procedure.

Analysis: The impugned demand and penalty were founded on third-party statements recorded during investigation. The Tribunal relied on the settled position that, where such statements are proposed to be used against the assessee, the person making the statement must ordinarily be examined in adjudication and the assessee must be afforded cross-examination, unless the statutory exceptions are attracted. It was noted that the mandatory procedure under Section 9D of the Central Excise Act, 1944 governs the admissibility and use of such statements in adjudication proceedings, and that denial of cross-examination in these circumstances offends natural justice. The Tribunal followed the binding line of authority that such a defect goes to the root of the proceedings.

Conclusion: The denial of cross-examination vitiated the adjudication, the order was set aside, and the matter was remanded to the adjudicating authority for fresh decision after granting opportunity to cross-examine the material witnesses and following Section 9D of the Central Excise Act, 1944.

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