Cross-examination of material witnesses is essential when their statements support the demand; denial led to remand.

Denial of cross-examination of material witnesses whose statements formed the basis of the demand vitiated the adjudication. The Tribunal held that, where the Revenue relies on such statements, the assessee's request for cross-examination cannot be refused without sufficient justification, and the statutory procedure under Section 9D of the Central Excise Act, 1944 must be followed. As the request had been declined before both lower authorities, the impugned orders were set aside and the matter was remanded for fresh adjudication after granting cross-examination and complying with the prescribed procedure.

---

---

Issues: Whether the denial of cross-examination of material witnesses whose statements were relied upon by the Department vitiated the adjudication and warranted remand for fresh decision in compliance with Section 9D of the Central Excise Act, 1944.

Analysis: The Tribunal held that the adjudication rested on statements of witnesses relied upon by the Revenue, and the appellants had specifically sought cross-examination before both lower authorities. In the facts of the case, the request was declined without sufficient justification. Relying on the binding principle that statements recorded during investigation cannot be used against an assessee without following the statutory procedure, the Tribunal applied the requirement under Section 9D of the Central Excise Act, 1944 and the settled rule that cross-examination of material witnesses is an essential facet of natural justice where their statements form the basis of the demand.

Conclusion: The impugned orders were set aside and the matters were remanded to the adjudicating authority for fresh adjudication after granting cross-examination of the material witnesses and following the procedure prescribed by law.

---