TaxTMI 
TaxTMI 
2016 (8) TMI 836
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....nbsp; Show Cause Notice, dated 16.02.2012, was issued to the appellant and other noticees, proposing differential duty demand along with interest and penalty, and calling upon the appellant to show cause there against. Any detailed reference to the allegations in the Show Cause Notice would not be merited in the present case, however, it may be mentioned that the Show Cause Notice relied on the statements of the following persons, recorded under Section 14 of the Central Excise Act, 1944 [hereinafter referred to as "the Act"]: (i) Shri Shripal Sanghvi, Proprietor of M/s Shanthi Guru Marketing, Trichy. (ii) Shri H Mahaveer Kumar, the owner of M/s Goutham Fancy Store, 95, East Car Street, Tirunelveli - 627006 (iii) Shri Damodar Kolariya, M/s Sri Ram Traders, D. No. 14-5-404, Baidarwalli, Begam Bazar, Hyderabad - 12 (iv) Shri B.K. Shukla, M/s Venkatesh Traders at 51/104, Lal Phatak, Sakarpatti, Nayaganj, Kanpur (v) Shri Santosh Jaiswal, employee of M/s Prem Agency, Kanpur (vi) Shri Rajat Gupta, Proprietor of M/s Babu Brothers, 51/104, Lal Phatak, Sakarpati, Nayaganj, Kanpur (vii) Shri Anil Khurana, Propri....
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....sport Co., Hyderabad (xxix) Statememt of Shri Balbeer Singh Thakur, Office clerk of M/s Lucky Bagga Transport Co., Hyderabad (xxx) Statement of Shri Andela Krishna Yadav, Proprietor of M/s Kaleshwari Mail Lorry Service, New Osman Ganj, Hyderabad (xxxi) Statememt of Shri Rajender Parsad Kothari an employee of M/s Lucky Bagga Transport Co., Hyderabad (xxxii) Statement of Shri CSM Althaf, Railway agent, Railway Station, Coimbatore 3. On receipt of the abovementioned Show Cause Notice, the appellant filed its reply, thereto, vide letter dated 24.05.2016. The attention of the Commissioner was invited, in the said letter, to the provisions of Section 9D of the Act, with the specific averment that any statement, recorded before a gazetted Central Excise officer, under the Act, would be relevant in adjudication proceedings only if the maker of the said statement was examined in chief and his cross examination is allowed. As such, it was requested, vide the said communication, that the records of examination in chief of the persons whose statements were relied upon in the Show Cause Notice dated 16.02.2012 (sup....
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....p; Before proceeding with the hearing the appeal on merits, a preliminary query was raised by the Bench as to whether an appeal would lie against the decision rejecting the request for cross examination. On this issue, the learned Senior Counsel for the appellant had drawn my attention to the provisions of the Central Excise Act, 1944 [hereafter referred to as "the Act"] dealing with the appeals to the Appellate Tribunal. It was argued that the provision for appeal is very much clear inasmuch it clearly states that a decision or order taken by the adjudicating authority can be appealed before the Appellate Tribunal. 'Adjudicating authority' has been defined under the Act to mean any authority competent to pass any order or decision under this Act, but does not include the Central Board of Excise and Customs constituted under the Central Boards of Revenue Act, 1963 (54 of 1963), Commissioner of Central Excise (Appeals) or Appellate Tribunal. My attention was also invited to the following decisions in support of the contention that an appeal would lie against the decision rejecting cross-examination: (i) J & K Cigarattes ....
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....nbsp; Therefore, following the judgement of the Hon'ble High Court in J & K Cigarettes (supra) and this Tribunal's decision in Swiber Offshore (supra), I am of the view that an appeal is maintainable against the decision rejecting cross examination. Even as per the provisions of Section 35B of the Act read with the definition of 'adjudicating authority', this Tribunal has the power to entertain an appeal against the decision rejecting cross-examination. Therefore, the preliminary objection stands overruled. 8.3 On merits, the appellants, in the present case, limit their challenge to the rejection, by the Commissioner, of the request contained in their letter dated 24.05.16 (supra), vide the impugned communication dated 03.06.2016. In the appellants submission, a statement recorded, before a gazetted Central Excise officer under Section 14 of the Act, cannot be relied upon, for proving the truth of the contents thereof, straightaway by the adjudicating authority, unless and until the said statement falls within one of the categories referred to in clause (a) of Section 9D (1) of the Act in all other cases, the maker of the said statement....
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....Ajmera. No such request is contained in the letter dated 24.05.2016 addressed by the appellant to the Commissioner. The letter dated 24.05.2016, quite categorically, sets out the contention of the appellant regarding Section 9D of the Act and the manner in which it is to operate and, therefore, seeks to be provided the records of the examination-in-chief of the witnesses whose statements are referred to in the Show Cause Notice dated 16.02.2012 (supra) issued to the appellant, so that the appellant could, if necessary, seeks cross-examination of the said witnesses. 9.2 In fact, the issues raised by the appellant, in its letter dated 24.05.2016, and argued before this Tribunal, are no longer res-integra. They stand decided by a number of authorities, most recently, by the judgement dated 17.06.2016 of the Hon'ble Punjab & Haryana High Court in Ambika International v UOI. Section 9D of the Act reads as under: "SECTION 9D.Relevancy of statements under certain circumstances. - (1) A statement made and signed by a person before any Central Excise Officer of a gazetted rank during the course of any inquiry or p....
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....the person who made the statement is dead (ii) the person who made the statement cannot be found, (iii) the person who made the statement is incapable of giving evidence, (iv) the person who made the statement is kept out of the way by the adverse party, and (v) the presence of the person who made the statement cannot be obtained without an amount of delay or expense which, under the circumstances of the case, the Court considers unreasonable. 9.4 In case none of the above circumstances contemplated in clause (a) of Section 9D(1) applies, then clause (b) categorically mandates that the statement shall be treated as relevant for the purposes of proving the truth of the facts which contains only "when the person who made the statement is examined as a witness in the case before the Court (or adjudicating authority) and the Court (or adjudicating authority) is of the opinion that having regard to the circumstance of the case the statement should be admitted in evidence in the interest of justice. 9.5 It does not appear that there is any ambigu....
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....221) which holds as under: "Even with regard to the prayer for permitting the applicant to cross-examine the plaintiff, the prayer is misconceived as the question of cross-examination arises only when a witness has tendered evidence in chief examination. Under Section 138 of the Indian Evidence Act, cross-examination follows chief examination, but not without chief-examination. If there is no chief-examination, there is no cross-examination. It is only witness who is examined in chief who can be cross-examined." Sukhwant Singh (supra) was followed by this Hon'ble Tribunal in Swiber Offshore Construction Pvt Ltd v State of Punjab (supra), which reproduces paras 8, 9 and 18 of the judgement in Sukhwant Singh (supra), where after paras 10 to 12 of the judgement set out the operative portion thereof in the following words: "10.We therefore find force in the submission of the ld. counsel for the appellant. We find no reason to justify rejection of request made by the appellant to the adjudicating authority in light of Section 138B of the Act, to summon witnesses for examination and to offer them for cross-examination if their statements were to be ....
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....in a catena of authorities, including most recently, the judgment of the Hon'ble Supreme Court in Mohinuddin Jamal Alvi v UOI JT 2016 (5) SC 214. 9.12 The above interpretation of Section 9D was also accepted by this Hon'ble Tribunal in its recent orders in CCE v Kuber Tobacco Ltd v CCE [Final Order No:5038-50942/2016-CHD dated 4.03.15], paras 8 to 14 of which merit reproduction as under: "8. The main contention of the appellant is that the deponents whose statements have been relied upon by the adjudicating authority were not put to examination-in-chief before providing an opportunity of cross examination. A plain reading of sub-section (1) of section 9D makes it clear that clauses (a) and (b) of the said sub-section set out the circumstances in which a statement, made and signed by a person before the Central Excise Officer of a gazette rank, during the course of inquiry or proceeding under the Act, shall be relevant, for the purpose of proving the truth of the facts contained therein. Therefore, there is 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 as in adjudication p....
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....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 interest of justice. The same view has been taken by hon'ble Allahabad High Court in the case of Parmarth Iron Pvt.Ltd. (supra) wherein the High Court has observed as under:- 16. We, therefore, have no hesitation in holding, that there is no requirement in the Act or Rules, nor do the principles of natural justice and fair play require that the witnesses whose statements were recorded and relied upon to issue the show cause notice, are liable to be examined at that stage. If the Revenue choose not to examine any witnesses in adjudication, their statements cannot be considered as evidence. However, if the Revenue choose to rely on the statements, then in that event, the persons whose statements are relied upon have to be made available for cross-examination for the evidence or statement to be considered. 10. We further find that in the case of Smt.Sharadamma (supra), h....
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....e found; (c) when he is incapable of giving evidence; (d) when he is kept out of the way by the adverse party; and (e) when his presence cannot be obtained without an amount of delay or expense, which the Officer considers unreasonable." These circumstances show that if witness cannot be examined for any of these five reasons, the statement previously recorded would be relevant. The adjudicating authority was therefore bound to follow the binding precedent and in absence of any specified circumstance to consider the statement relevant without examining the witnesses, erred in rejecting the request of the appellant to examine the witnesses and to offer them for cross-examination. 8. The appellant has also relied on the judgment of Hon'ble Apex Court inSukhwant Singh v. State of Punjab, (1995) 3 SCC 367 to give emphasis on his submission that examination of witness is mandatory unless specified exceptional circumstances mentioned in clause (a) of Section 138B(1) exist. The Hon'ble Apex Court was pleased to hold that - "8. It will be pertinent at this stage to refer to Section 138 of the Evidence Act which provides: ....
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....tter is, by permission of the Court, introduced in re-examination, the adverse party may further cross-examine upon that matter." 9. It would, thus be seen that Section 138 (supra) envisages that a witness would first be examined-in-chief and then subjected to cross-examination and for seeking any clarification, the witness may be re-examined by prosecution. There is, in our opinion, no meaning in tendering a witness for cross-examination only. Tendering of a witness for cross-examination, as a matter of fact, amounts to giving up of the witness by prosecution as it does not choose to examine him in chief. However, the practice of tendering witness for cross-examination in session trials had been frequently resorted to since the enactment of the code of Criminal Procedure, 1898. 14. In view of the above anaylsis, it is clear that during adjudication, the adjudicating authority is required to first examine the witness in chief and also to form an opinion that having regard to the facts and circumstances of the case, the statements of the witness are admissible in evidence. Thereafter, the witness is offered to be cross examined. In the absence of examination in chi....
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....er 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 value of the statement, insofar as proving the truth of the contents thereof is concerned, is, therefore, completely lost, unless and until the case falls within the parameters of Section 9D(1). 18. The consequence would be that, in the absence of the circumstances specified in Section 9D(1), if the adjudicating authority relies on the statement, recorded during investigation in Central Excise, as evidence of the truth of the facts contained in the said statement, it has to be held that the adjudicating authority has relied on irrelevant material. Such reliance would, therefore, be vitiated in law and on facts. 19. Once the ambit of Section 9D (1) is thus recognized and understood, one has to turn to the circumstances referred to in the said subsection, which are contained in clauses (a) and (b) thereof. 20. Clause (a) of Section 9D (1) refers to the following circumstances : i) when the person wh....
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....fore 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 admissibility to oral evidence they would, even otherwise, have to be recorded as mandatory. 24. The rationale behind the above precaution contained in clause (b) of Section 9D(1) is obvious. The statement, recorded during inquiry/investigation, by the gazetted Central Excise officer, has every chance of having been recorded under coercion or compulsion. It is a matter of common knowledge that, on many occasions, the DRI/DGCEI resorts to compulsion in order to extract confessional statements. It is obviously in order to neutralize this possibility that, before admitting such a statement in evidence, clause (b) of Section 9D(1) mandates that the evidence of the witness has to be recorded before the adjudicating authority, as, in such an atmosphere, there would be no occasion for any trepidation on the part of the witness concerned. 25. Clearly, therefore, the s....
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....dgment 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 principles of evidence, stands affirmed in the judgement of the Supreme Court in C.C. V Bussa Overseas Properties Ltd, 2007(216) ELT 659 (SC), which upheld the decision of the Tribunal in Bussa Overseas Properties Ltd v C.C., 2001 (137) ELT 637 (T). 31. It is clear, from a reading of the Orders-in-original dated 19.05.2016 and 01.06.2016 supra, that Respondents No.2 has, in the said Orders-in-Original, placed extensive reliance on the statements, recorded during investigation under Section 14 of the Act. He has not invoked clause (a) of sub-section (1) of Section 9D of the Act, by holding that attendance of the makers of the said statements could not be obtained for any of the reasons contemplated by the said clause. That being so, it was not open to Respondent No.2 to rely on the said statements, without following the mandatory proc....
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....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 that statements recorded behind the back of an assessee cannot be relied upon, in adjudication proceedings, without allowing the assessee an opportunity to test the said evidence by cross-examining the makers of the said statements. If at all authority is required for this proposition, reference may be made to the decisions of the Hon'ble Supreme Court in Arya AbhushanBhandar v U.O.I., 2002(143)ELT 25 (SC), Swadeshi Polytex v Vollector, 2000 (122) ELT 641 (SC). 34. In the case of M/s Fine Aromatics CWP 12616 of 2016 and M/s Shiva Mint Industries CWP 12618 of 2016, identical to those which had been issued to Ambika and Shiva Mint and which stand adjudicated by Respondent No.2 vide Orders-in-Original dated 19.05.2016 and 01.06.2016 supra, have been issued, and are presently pending adjudication before Respondent No.2. No further orde....