TaxTMI 
TaxTMI 
2016 (6) TMI 919
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....roducts. Cenvat Credit, under the Cenvat Credit Rules, 2004, is availed, by such downstream manufacturers-chiefly M/s Sharp Menthol India Ltd (SMIL) under Rule 12 of the said Rules. As the availment of the said Cenvat Credit is not subject matter of dispute in the present case, no further reference is required to be made thereto. 2. By virtue of the geographical location, i.e. in notified areas in the state of Jammu and Kashmir, the petitioners claim the benefit of areabased exemption from payment of duty, under the Central Excise Act, 1944 (hereinafter referred to as "the Act"), in terms of Notification 56/2002-CE, dated 14.11.2002. Under the said Notification, manufacturers located in the areas notified in the said Notification, in the State of Jammu and Kashmir, are entitled to exemption, from duty, on the products manufactured by them, for which purpose they are, in the 1st instance, required to pay the duty, whereafter they are entitled to be refunded that amount of the said duty as has been paid otherwise than by way of utilisation of Cenvat Credit, i.e. through their Personal Ledger Account (PLA). 3. Concededly, all the 4 petitioners, claimed, and were granted, the ben....
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....ded under Section 14 of the Act, from the following persons, during the course of investigation : a) Shri D.K. Jain, authorised signatory of M/s Bareilly Agro Products. b) Shri Pooran Lal, Pradhan of village Gopalpur. c) Smt. Kamla Devi, Pradhan of village Jatoya Jafarpur, d) Shri Mulayam Singh, Pradhan of village Naugawa, e) the executive officer of the Nagar Panchayat, Kemri, and f) Shri S.S. Sambyal, General Manager of the petitioner. 6. Additionally, the Show Cause Notices relied upon letters, dated 20/09/2011, by the Additional Commissioner of Central Excise, Merrut-II, and letter, 01.04.2011, of the Assistant Commissioner (Preventive), Central Excise Commissioner, Lucknow. 7. For the sake of completion of the record, it may be mentioned here, that, in addition to the above, Show Cause Notice, dated 07/12/2011, alleging undervaluation, in respect of the clearances effected by it during the period December 2006 to February 2010, was also issued, to Ambika, by the Directorate General of Central Excise Intelligence. 8. Replies, to the above-mentioned Show Cause Notices, were filed by all the 4 petitioners. 9. The above-mentioned Show Cause Notices we....
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....ent No. 2, are appealable, under Section 35B of the act, to the Customs, Excise and Service Tax Appellate Tribunal (hereinafter referred to as "the Tribunal"), the petitioners, i.e. Ambika and Jay Ambey seek to justify invocation of the writ jurisdiction of this Court essentially on the ground that any appeal, to the Tribunal would, by virtue of the amended provisions of Section 35F of the act, had to be accompanied by pre-deposit of 7 ½% of the duty demand confirmed against them by the Orders-in-Original passed by Respondent No. 2, which, they contend, would, in view of the fact that the said Ordersin- Original had been passed in flagrant violation of the mandatory provisions of Section 9D of the Act, be entirely unjustified. In this regard, they also draw attention to the fact that the Allahabad High Court, while upholding the vires of Section 35F of the Act, to the extent the said provision requires mandatory pre-deposit of 7 ½% of the duty demand confirmed against an assessee to appeal thereagainst to the Tribunal, in its judgment in Ganesh Yadav vs. U.O.I., 2015 (320) ELT 711 (All), was cautious enough to keep open the avenue of the writ jurisdiction of the High ....
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....89 (Del). Para 12 of the said decision clearly holds that by virtue of sub-section (2) of Section 9D, the provisions of sub-section (1) thereof would extend to adjudication proceedings as well. There can, therefore, be no doubt about the legal position that the procedure prescribed in sub-section (1) of Section 9D is required to be scrupulously followed, as much in adjudication proceedings as in criminal proceedings relating to prosecution. 17. As already noticed herein above, sub-section (1) of Section 9D sets out the circumstances in which a statement, made and signed before a gazetted Central Excise Officer, shall be relevant for the purpose of proving the truth of the facts contained therein. If these circumstances are absent, the statement, which has been made during inquiry/investigation, before a gazetted Central Excise Officer, cannot be treated as relevant for the purpose of proving the facts contained therein. In other words, in the absence of the circumstances specified in Section 9D(1), the truth of the facts contained in any statement, recorded before a gazetted Central Excise Officer, has to be proved by evidence other than the statement itself. The evidentiary ....
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..... If none of the circumstances contemplated by clause (a) of Section 9D (1) exists, clause (b) of Section 9D (1) comes into operation. The said clause prescribes a specific procedure to be followed before the statement can be admitted in evidence. Under this procedure, two steps are required to be followed by the adjudicating authority, under clause (b) of Section 9D (1), viz. i) the person who made the statement has to first be examined as a witness in the case before the adjudicating authority, and ii) the adjudicating authority has, thereafter, to form the opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interests of justice. 23. There is no justification for jettisoning this procedure, statutorily prescribed by plenary parliamentary legislation for admitting, into evidence, a statement recorded before the gazetted Central Excise officer, which does not suffer from the handicaps contemplated by clause (a) of Section 9D(1) of the Act. The use of the word "shall" in Section 9D (1), makes it clear that, the provisions contemplated in the sub-Section are mandatory. Indeed, as they pertain to conferment of admi....
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....een recorded before a gazetted Central Excise officer is examined as a witness before the adjudicating authority, and (ii) the adjudicating authority arrives at a conclusion, for reasons to be recorded in writing, that the statement deserves to be admitted in evidence, that the question of offering the witness to the assessee, for crossexamination, can arise. 28. Clearly, if this procedure, which is statutorily prescribed by plenary Parliamentary legislation, is not followed, it has to be regarded, that the Revenue has given up the said witnesses, so that the reliance by the CCE, on the said statements, has to be regarded as misguided, and the said statements have to be eschewed from consideration, as they would not be relevant for proving the truth of the contents thereof. 29. Reliance may also usefully be placed on para 16 of the judgment of the Allahabad High Court in C.C.E. V Parmarth Iron Pvt Ltd, 2010 (250) ELT 514 (All), which, too, unequivocally expound the law thus: "If the Revenue choose (sic chose?) not to examine any witnesses in adjudication, their statements cannot be considered as evidence." 30. That adjudicating authorities are bound by the general pr....
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....e makers of any of the statements on which the Revenue chooses to rely, would have to be made available to the assessee, i.e. to Ambika and Jay Ambey in this case. (iii) Statements recorded during investigation, under Section 14 of the Act, whose makers are not examined in chief before the adjudicating authority, i.e. before Respondent No 2, would have to be eschewed from evidence, and it would not be permissible for Respondent No 2 to rely on the said evidence while adjudicating the matter. Neither, needless to say, would be open to the Revenue to rely on the said statements to support the case sought to be made out in the Show Cause Notice. (iv) Once examination-in-chief, of the makers of the statements, on whom the Revenue seeks to rely in adjudication proceedings, takes place, and a copy thereof is made available to the assessee, it would be open to the assessee to seek permission to cross-examine the persons who have made the said statements, should it choose to do so. In case any such request is made by the assessee, it would be incumbent on the adjudicating authority, i.e. on Respondent No2 to allow the said request, as it is trite and well- settled position in law tha....