2025 (2) TMI 894 - AT - Central Excise

Revenue denied cross-examination of witnesses violating natural justice principles under Section 9D Central Excise Act

M/s Regal Alloys Pvt. Ltd. Versus Commissioner of CGST & Central Excise, Ludhiana And Shri Jiwan Kumar M/s Regarl Alloys Pvt. Ltd. Versus Commissioner of CGST & Central Excise, Ludhiana

CESTAT Chandigarh set aside the impugned order for violating principles of natural justice by denying cross-examination of witnesses whose statements were ... Violation of principles of natural justice - impugned order has been passed without properly appreciating the facts - denial of cross-examination of witnesses by the Adjudicating Authority - violation of Section 9D of the Central Excise Act, 1944 - HELD THAT:- The identical issue has been decided by the Hon’ble Punjab & Haryana High Court in the case of Jindal Drugs Pvt. Ltd. [2016 (6) TMI 956 - PUNJAB & HARYANA HIGH COURT] as well as by this Tribunal in the case of M/s Lauls Ltd. [2023 (7) TMI 1113 - CESTAT CHANDIGARH] and M/s Tibrewala Industries (P) Limited [2023 (7) TMI 1112 - CESTAT CHANDIGARH] wherein it was held that the cross-examination of witnesses whose statements were relied upon by the Revenue to make out a case against the assessee has to be allowed and by following the ratio of the said decisions, the impugned order is not sustainable and therefore, the same is set aside and the cases remanded back to the Adjudicating Authority for a fresh decision after affording opportunity of cross-examination of the material witnesses and by following the procedure as prescribed in Section 9D of the Central Excise Act. Conclusion - Both the appeals are allowed by way of remand to the Original Authority, who will comply with the requirement of Section 9D of the Central Excise Act by affording an opportunity of cross-examination and thereafter will pass a reasoned order in accordance with law. Appeal allowed by way of remand. 1. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered in this judgment are:Whether the denial of cross-examination of witnesses by the Adjudicating Authority was in violation of Section 9D of the Central Excise Act, 1944.Whether the impugned order, which relied on statements deemed inadmissible due to lack of cross-examination, is sustainable.Whether the principles of natural justice were violated due to the denial of cross-examination.2. ISSUE-WISE DETAILED ANALYSISDenial of Cross-Examination under Section 9D of the Central Excise Act:Relevant legal framework and precedents: Section 9D of the Central Excise Act, 1944, outlines the conditions under which statements made before a Central Excise Officer can be admitted as evidence. The section mandates that such statements can only be admitted if the witness is unavailable or if the adjudicating authority examines the witness in court and deems the statement necessary for justice. The case of Jindal Drugs Pvt. Ltd. Vs UOI and Andaman Timber Industries were cited to emphasize the mandatory nature of cross-examination for statements to be admissible.Court's interpretation and reasoning: The Tribunal interpreted Section 9D as imposing a mandatory requirement for cross-examination unless specific conditions are met. The Tribunal noted that the adjudicating authority failed to adhere to this statutory requirement, thus violating the principles of natural justice.Key evidence and findings: The Tribunal found that the statements of witnesses were heavily relied upon in the impugned order without offering the appellants the opportunity for cross-examination, which is a procedural safeguard under Section 9D.Application of law to facts: The Tribunal applied the legal framework of Section 9D and the precedents set by higher courts to determine that the denial of cross-examination was unjustified and procedurally flawed.Treatment of competing arguments: The Department argued that documentary evidence sufficed and cross-examination was unnecessary. However, the Tribunal rejected this, emphasizing that cross-examination is a fundamental right under the statutory framework when statements are relied upon.Conclusions: The Tribunal concluded that the denial of cross-examination rendered the proceedings and the impugned order unsustainable, necessitating a remand for fresh adjudication.3. SIGNIFICANT HOLDINGSPreserve verbatim quotes of crucial legal reasoning: The Tribunal highlighted, 'not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice.'Core principles established: The judgment reinforced the principle that cross-examination is a critical component of fair adjudication, especially when statements form the basis of a decision. It affirmed the mandatory nature of Section 9D procedures.Final determinations on each issue: The Tribunal set aside the impugned order and remanded the cases to the Adjudicating Authority to allow cross-examination of witnesses and to follow the procedure prescribed under Section 9D, thereby ensuring compliance with statutory requirements and principles of natural justice.