TaxTMI 
TaxTMI 
2025 (1) TMI 424
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....issions made by the managing partner of the respondent firm and its sole distributors and various other traders? 2. Whether the appellant herein is still obligated to prove the clandestine manufacture and clearance of excisable goods when the Managing Partner of the respondent firm and its sole distributors and various other traders admitted the facts and more so admitted facts need not be proved?" FACTUAL BACKGROUND AND REVENUE'S STAND: 2. Sri A. Rama Krishna Reddy, learned counsel for the appellant submits that a search took place in the premises of respondent firm on 29.08.1996. The firm was found to be indulging in clandestine transfer of finished goods without paying excise duty through its sister concerns namely M/s. Geetha Synthetics and M/s. Shakthi Traders. The search was conducted in the presence of two witnesses and recovered certain goods and lastly, 'punchanama' dated 29.08.1996 was prepared. The man made material (MMF) and raw material i.e., grey fabric were found in excess for the stock reflected in statutory records and excess stock was seized. The 'punchanama' was drafted and named as GS/55/70. 3. The case of the revenue was that during the course....
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....The said findings are based on the evidence of 12 witnesses and such findings of fact which are based on correct appreciation of evidence should not have been disturbed by CESTAT by the impugned order dated 20.12.2005. 7. The stand of the revenue is that Section 9D (2) of the Excise Act is not applicable. The learned Tribunal has not given cogent reasons why the findings of the Commissioner cannot sustain judicial scrutiny despite the fact that it is founded upon the statement of 12 witnesses. If they were not produced during the adjudication proceedings and were not permitted to be cross examined by the respondent, it will not cause any dent on the case of the revenue. Heavy emphasis is laid on the word 'prosecution' employed in Section 9D of the Excise Act. It is submitted that said provision is applicable in cases of 'prosecution' and necessity to cross-examine can be pressed into service only when the case reached to the stage of 'prosecution' and not for adjudicating proceedings. 8. Sri Rama Krishna Reddy by placing reliance on the judgment of Supreme Court in the case of Commissioner of Central Excise, Mumbai v. Kalvert Foods India Private Limited (2011) 12 SCC 243 subm....
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.... 2017 SCC OnLine Bom 8811 was referred to submit that almost a similar substantial question cropped up for consideration i.e., whether in the teeth of Section 138B of the Customs Act, 1962 (for short 'Customs Act'), which is pari materia provision, in departmental adjudication the witness is required to be produced. It is submitted that the Division Bench clearly held that without producing such witnesses in the adjudication proceedings and without subjecting them to cross-examination, those statements cannot be used against the assessee. It is further highlighted that there is no unconditional, unequivocal, admission or confession on the part of the Managing Partner. The reliance is placed on paragraph S 5.1 of the order of adjudicating authority wherein he opined that the Sri Narendra Kumar Goel, Managing Partner of VSM has not admitted or 'confessed' anything. 12. Learned Senior Counsel for the respondent placed reliance on another judgment of Bombay High Court in the case of Prakash Raghunath Autade v. Union of India 2021 SCC OnLine Bom 13137, wherein Section 9D of the Excise Act was considered and it was held that during adjudication proceedings, the relevant witnesses need....
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....t, as they apply in relation to a proceeding before a Court. (Emphasis Supplied) 17. So far Section 9D (1) (a) of the Excise Act is concerned, it has no application in the instant case. Sub-section (1) (a) can be pressed into service (a) when person who had given the statement is dead, (b) when he cannot be 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 secured without an amount of delay or expense, which officer considers unreasonable. In the considered opinion of this Court, this provision is based on doctrine of necessity. Admittedly, in the instant case, sub-section 1 (a) of Section 9D of the Excise Act has no application. 18. This case revolves around the interpretation and application of Section 9D (1) (b) of the Excise Act. It is pertinent to remember that learned counsel for the appellant has taken pains to highlight that the word 'prosecution' is employed in Section 9D and therefore, it cannot be stretched to be applied on 'adjudication proceedings'. The argument at the threshold appears to be attractive but lost much of its shine when examined minutely with the aid of....
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....D (1) (b). The rigors of this procedure is exempted only in case in which one or more of the handicaps referred to in clause (a) of Section 9D (1) would apply. The proceedings for recording of the statements during search and seizure operation under C.E.A. 1944 are quasi criminal in nature because it results in imposition of not only duty but also a penalty and in some cases, it may also lead to prosecution. Therefore the statement recorded before a Gazetted Central Excise officer during inquiry or investigation, would be relevant only after the statement is admitted in evidence in accordance with the procedure prescribed under Clause (b) of Section 9D(1). The rationale behind the precaution contained in Section 9D (1) (b) is obvious as the statement recorded during inquiry/investigation by the Gazetted Central Excise Officer has every chance of having been recorded under coercion or compulsion. Therefore, the provisions contained in Section 9D have to be construed strictly and held as mandatory and, non-compliance would result in rendering the statement as irrelevant piece of evidence that cannot be used by the Adjudicating Authority to arrive at its finding. (See: Flevel Internat....
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....oundry & Casting Ltd's (supra) makes it clear that the statement recorded by the Gazetted Central Excise Officer during enquiry or investigation is in a quasi criminal proceeding. In this view of the matter, the word 'prosecution' needs to be understood. The proceeding may lead into imposition of penalty. In some cases, it may also result into 'prosecution'. We are in respectful agreement with the view taken by Division Bench of Jharkhand High Court in Bihar Foundry & Casting Ltd. (supra). Thus, we are unable to persuade ourselves with the line of argument of revenue that because of use of the word 'prosecution' in Section 9D of the Excise Act, the requirement of producing evidence in adjudication proceeding can be done away with. 22. The Bombay High Court in Ciabro Alemao (supra) has framed question which reads thus: "(b) Could the Tribunal legitimately have relied on Section 138B of the Customs Act and applied to it departmental adjudication proceedings when the section specifically and clearly applies only to prosecution for offences under the Customs Act?" 23. It was rightly highlighted that Section 138 (B) of the Customs Act is almost analogous to Section 9 (D) ....
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....aking for the Division bench in case of Prakash Raghunath Autade (supra) while considering Section 9D of the Excise Act poignantly held: "13. In such view of the matter, we dispose of this writ petition with the following order: (a) to (c)... (d) if in the course of adjudication proceedings before the relevant authority any witness is summoned in terms of the power conferred by section 14 of the Act and his statement is recorded and found relevant, such statement shall not be relied upon against the petitioner unless he has been given suitable and reasonable opportunity to cross examine such witness; (e) the evidence of the witness, as above, shall be recorded in the presence of the petitioner; and (f) based on the evidence and other materials on record, the relevant authority shall proceed to pass a final order in accordance with law." (Emphasis Supplied) 27. Apart from this, in State of Mysore v. S.S. Makapur AIR 1963 SC 375, the Apex Court (Constitution Bench) ruled that the purpose of an examination in the presence of a party against whom an enquiry is made, is sufficiently achieved, when a witness who has given a prior s....