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2016 (8) TMI 838
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....erence 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, 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, Proprietor of M/s Khurana Brothers, 52/44, Nayagani, Kanpur (viii) Shri Pawan Gupta, Proprietor of M/s Pawan Gupta, 51/104, Lal Phatak Sakarpati, Nayaganj, Kanpur (ix) Shri Kotha Venkateshwarlu, the Proprietor of M/s Sri Gopala Krishna General S....
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.... (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 & 06.06.16. In the letter dated 06.06.2016 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 (supra), be provided to the appellants, so that they could request for cross examination of the said persons if need be. 4. The impugned communication dated 03.06.2016 purports to be a response to the said letter dated 24.05.2016. The letter dated 06.0....
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....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 Ltd v CCE, 2009 (242) ELT 189 (Del) (ii) Swiber Offshore Construction Pvt Ltd v CC, 2014 (301) ELT 119 7. Countering the arguments of the appellant, the learned DR relied upon following judgements of the Hon'ble Tribunal in support of the contention that no appeal lies against the decision rejecting cross examination: (i) Delta Overseas v Commissioner of C.Ex & S.T v Delta Overseas, 2016 (333) ELT 126 (T) ....
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.... 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 appellant's 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 has to be examined in chief before the adjudicating authority, who, thereafter, has to arrive at a reasoned conclusion that the statement deserves to be admitted in evidence, where after he has to offer the maker of the said statement to the assessee, for cross-examination if sought. The appellant emphasises that, in fact, the impugned communication is not only clearly contrary to Section 9D of the Act it, in fact, completely misunderstood the request of the appellant, as it merely communicates rejection of the appellant's request for cross examination of Shri CSM Altaf Alam and Shri Kotha Venkateshwarlu. The appellan....
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....e the Court and the Court is of opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interests of justice. (2) The provisions of sub-section (l) shall, so far as may be, apply in relation to any proceeding under this Act, other than a proceeding before a Court, as they apply in relation to a proceeding before a Court. 9.3 Even without referring to the various judicial authorities on the subject, there appears to be no ambiguity whatsoever in the wording of Section 9D. The Section deals expressly with the circumstances in which a statement recorded before a gazetted officer of Central Excise (under Section 14 of the Act) can be treated as relevant for the purposes of proving the truth of the contents thereof and is pari materia with Section 138B of the Customs Act, 1962. Sub-Section (l) of Section 9D states that a statement, recorded before a gazetted officer of Central Excise, can be treated as relevant for the purposes of proving the truth of the contents thereof, if the case falls either under clause (a) or clause (b) thereof. Sub-Section (2) of the said Section makes the provision of sub-Section (l) a....
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....ure, itself, that there does not appear, at this point of time, to be any uncertainty regarding the requirement of allowing cross examination by an assessee, of the statements upon which the adjudicating authority proposes to rely against it. The law, in this regard, stands settled by the judgement of the Hon'ble Supreme Court in Arya Abhushan Bhandar v UOI, 2002 (143) ELT 25 (SC) and Swadeshi Polytex Ltd v CCE, 2000 (122) ELT 641 (SC), judgment of the Hon'ble High Court in Basudev Garg v CC, 2013 (294) ELT 353. as well as the recent decision of the Hon'ble Punjab & Haryana High Court in Ambika International (supra). 9.7 Reference may, however, be made to various judicial authorities relied upon by the appellant, which delineated the contours of Section 9D of the Act, as under: (i) In Sukhwant Singh V State of Punjab (1995) 3 SCC 367, referring to Section 138 of the Evidence Act, 1872, clearly held as under: "Section 138. Evidence Act 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 the prosecution. There is no meaning in tendering a....
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.... that it can be completed within the time as directed by the Hon'ble High Court." 9.9 Similarly, para 16 of the judgement of the Hon'ble Allahabad High Court in CCE v Parmath Iron Pvt Ltd, 2010 (250) ELT 514 (All.) holds in a similar vein thus: "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. 9.10 That the principles of evidence are applicable to adjudicatory proceedings under the Act, has also been settled by the judgement of the Hon'ble Supreme Court in CC v Bussa Overseas Properties Ltd, 2007 (216) ELT 659 (SC) by upholding the order of this Tribunal in Bussa Overseas Pro....
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....nt made and signed by those persons before any Central Excise Officer of a gazetted rank during the course of inquiry or proceedings under this Act can be treated as relevant and taken into consideration if under the given circumstances such a person cannot be produced for cross-examination. Thus, this provision makes such statements relevant for the purposes of proving the truth of the facts which it contains, in any prosecution for an offence under the Act in certain situations. Sub-section (2) extends the provision of sub-section (l) to any proceedings under the Act other than a proceeding before the Court. In this manner, Section 9D can be utilized in adjudication proceedings before the Collector as well. In the present case, provisions of Section 9-D of the Act were invoked by the Collector holding that it was not possible to procure the attendance of some of the witnesses without undue delay or expense. Whether such a finding was otherwise justified or not can be taken up in the appeal. 9. 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 Ex....
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....ef-examination, there is no cross examination. It is only witness who is examined in chief who can be cross-examined. Therefore, a prayer for cross-examination of the plaintiff even when the plaintiff has not been examined in chief is ridiculous and not provided for under Section 138 of the Evidence Act. The Trial Court has rightly rejected the application. No scope for interference with an order of this nature. 11. We further find that in the case of Swiber Offshore Construction PvtLtd. (supra), this Tribunal has further observed as under: 6. We therefore have no hesitation in holding that the impugned Order passed by the Commissioner as an adjudicating authority is appealable order in terms of Section 129A of the Act, even as per the ratio laid down in the above binding precedent. Request for cross-examination has been denied and the witnesses have not been examined despite specific reliance by the appellant on Section 138B without there being any objective formation of opinion based on any material on record to come to the conclusion that any specified circumstance mentioned in Section 138B(1)(a) exists. These circumstances mentioned in Section 138B(1)(a)....
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....ion of the Court, introduced in re-examination, the adverse party may further cross-examine upon that matter." 10. We therefore find force in the submission of the Id. 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 considered as relevant and admitted in evidence in the interest of justice. 12. We further find in the case of Bussa Overseas Properties Ltd., this Tribunal again observed as under:- 24. The fact that in cases relating to smuggling or indeed any case civil or criminal cannot or need not been proved for degree of mathematical precision or that the department governed by strict rules of evidence is again no answer, The department is certainly bound by the contents of the Customs Act, 1962 and the general principles of evidence. which has been affirmed by the Apex Court. 13. We further find that Hon'ble Punjab & Haryana High Court in the case of Sukhwant Singh it has been observed as under:- 8.&....
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....ed 29.04.2016, passed by this Tribunal in Alliance Alloys Pvt Ltd v CCE [Final Order No. : 343-347/2016-CHD dated 29.04.16] 9.14 Most authoritatively, perhaps, this position of law is now crystallized by the judgment dated 17.06.2016 of the Hon'ble Punjab & Haryana High Court in Ambika International (supra). Paras 15 to 34 thereof are reproduced as under: "15. A plain reading of sub-section (1) of Section 9D of the Act 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 gazetted 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. 16. Section 9D of the Act came in from detailed consideration and examination, by the Delhi High Court, in J.K. Cigarettes Ltd. vs. CCE, 2009 (242) ELT 189 (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 positio....
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.... on the adjudicating authority, it is self-evident inference that the decision flowing from the exercise of such discretion, i.e. the order which would be passed, by the adjudicating authority under Section 9D, if he chooses to invoke clause (a) of sub-section (1) thereof, would be pregnable to challenge. While the judgment of the Delhi High Court in J&K Cigarettes Ltd. (supra) holds that the said challenge could be ventilated in appeal, the petitioners have also invited attention to an unreported short order of the Supreme Court in UOI and another vs. GTC India and others in SLP ( C) No. 2183/1994 dated 03/01/1995 wherein it was held that the order passed by the adjudicating authority under Section 9D of the Act could be challenged in writ proceedings as well. Therefore, it is clear that the adjudicating authority cannot invoke Section 9D(1)(a) of the Act without passing a reasoned and speaking order in that regard, which is amenable to challenge by the assessee, if aggrieved thereby. 22. 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....
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....n the Act, it is not open to any adjudicating authority to straightaway rely on the statement recorded during investigation/inquiry before the gazetted Central Excise officer, unless and until he can legitimately invoke clause (a) of Section 9D(1). In all other cases, if he wants to rely on the said statement as relevant, for proving the truth of the contents thereof, he has to first admit the statement in evidence in accordance with clause (b) of Section 9D(1). For this, he has to summon the person who had made the statement, examine him as witness before him in the adjudicating proceeding, and arrive at an opinion that, having regard to the circumstances of the case, the statement should be admitted in the interests of justice. 26. In fact, Section 138 of the Indian Evidence Act, 1872, clearly sets out the sequence of evidence, in which evidence-in-chief has to precede cross-examination, and cross-examination has to precede re-examination. 27. It is only, therefore, (i) after the person whose statement has already been recorded before a gazetted Central Excise officer is examined as a witness before the adjudicating authority, and (ii) the adju....
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....Insofar as the writ petitions filed by M/s Ambika International CWP 12615 of 2016 and M/s Jay Ambey Aromatics CWP 12617 of 2016 are concerned, they are allowed by setting aside the Orders-in-Original, dated 19/05/2016 and 01/06/2016, passed by Respondent No 2 and impugned therein. Resultantly, the Show Cause Notices, issued to Ambika and Jay Ambey, are remanded, to Respondent No 2 for adjudication de novo, by following the procedure contemplated by Section 9D of the Act, and the law laid down by various judicial authorities in this regard, including the principles of natural justice, in the following manner: (i) In the event that the Revenue intends to rely on any of the statements, recorded under Section 14 of the Act and referred to in the Show Cause Notices issued to Ambika and Jay Ambey, it would be incumbent on the Revenue to apply to Respondent No 2 to summon the makers of the said statements, so that the Revenue would examine them in chief before the adjudicating authority, i.e. before Respondent No 2. (ii) A copy of the said record of examination-in-chief, by the Revenue, of the makers of any of the statements on which the Revenue chooses to rely, would ha....
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....is allowed by setting aside the decision as communicated to the appellant by the impugned letter dated 03.06.2016, and the matter is remanded to the Principal Commissioner with a direction to adjudicate the Show Cause Notice strictly by complying with the mandate of Section 9D of the Act, in accordance with the directions contained in para 33 of the judgment of the High Court of Punjab & Haryana in Ambika International (supra) which are, for ready reference, reiterated as under: (i) In the event that the Revenue intends to rely on any of the statements, recorded under Section 14 of the Act and referred to in the Show Cause Notices issued to Ambika and Jay Ambey, it would be incumbent on the Revenue to apply to Respondent No 2 to summon the makers of the said statements, so that the Revenue would examine them in chief before the adjudicating authority, i.e. before Respondent No 2. (ii) A copy of the said record of examination-in-chief, by the Revenue, of the 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) Statement....