TaxTMI 
TaxTMI 
2025 (12) TMI 512
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....A with interest under section 11AA and penalty under section 11AC of the of the Central Excise Act, 1944 [the Central Excise Act]. 2. Excise Appeal No. 51461 of 2022 has been filed by Raj Kumar Agarwal, Director of the appellant, to assail that part of the order dated 03.02.2022 passed by the Commissioner (Appeals), that rejects the appeal filed by him against the order dated 23.12.2020 passed by the Additional Commissioner imposing penalty upon the appellant under rule 26(1) of the Central Excise Rules, 2002 read with section 174 of the CGST Act, 2017. 3. The appellant is engaged in the manufacture of Scented Supari. The issue in these appeals relates to clandestine clearances of goods for the period from July, 2014 to June, 2017. The quantum of clandestine clearances has been ascertained on the basis of maximum running speed of packing machines used for packing of the final product manufactured by the appellant i.e. scented supari. By adopting this methodology, the production and clearances has been increased by five times of what was reflected in returns and duty discharged. 4. A show cause notice dated 07.10.2019 was issued to the appellant alleging that the appellant ....
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....ided in the appeal is whether the demand is sustainable or not. 7.1 I observe that the appellant has put forth various arguments to challenge the method of computation of demand and to prove that the whole demand and allegation of clandestine removal of excisable goods is based on assumption. I find that the factors considered by the Revenue for computing quantum of evasion of duty are based on the statements of the director of the appellant company Shri Rajkuamar Agarwal, wherein he categorically admitted the anomaly. I observe that the appellant has argued that the director had retracted his statement dated 27.12.2017, but I find that the appellant has not produced any evidence of duress or coercion at the time of recording of the statement. Further, retraction is also not immediate. I am of the considered view that in absence of proof of duress, statement recorded under Section 14 of the Central Excise Act, 1944 is reliable as evidence. ***** ***** 7.3 I further find that in his statement dated 04.01.2018, recorded before the Joint Director, DGGI under Section 14 of the Act. Shri Rajkumar Agarwal, Director again agreed with the contents of the Panchnam....
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....nce or to produce a document or any other thing in any inquiry, which such officer is making under the Central Excise Act. 7. Section 9D of the Central Excise Act deals with relevancy of statements under certain circumstances and it is reproduced below: "9D. Relevancy of statements under certain circumstances. (1) A statement made and signed by a person before any Central Excise Officer of gazette rank during the course of any inquiry or proceeding under this Act shall be relevant, for the purpose of proving, in any prosecution for an offence under this Act, the truth of the facts which it contains, - (a) when the person who made the statement is dead or cannot be found, or is incapable of giving evidence, or is kept out of the way by the adverse party, or whose presence cannot be obtained without an amount of delay or expense which, under the circumstances of the case, the court considers unreasonable; or (b) when the person who made the statement is examined as a witness in the case before 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 ....
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....ow be appropriate to examine decisions interpreting section 9D of the Central Excise Act and section 138B of the Customs Act, 1962 [the Customs Act]. 11. In Ambika International vs. Union of India decided [2018 (361) E.L.T. 90 (P&H)] on 17.06.2016, the Punjab and Haryana High Court examined the provisions of section 9D of the Central Excise Act. The show cause notices that had been issued primarily relied upon statements made under section 14 of the Central Excise Act. It was sought to be contended by the Writ Petitioners that the demand had been confirmed in flagrant violation of the mandatory provisions of section 9D of the Central Excise Act. The High Court held that if none of the circumstances contemplated by clause (a) of section 9D(1) exist, then clause (b) of section 9D(1) comes into operation and this provides for two steps to be followed. The first is that the person who made the statement has to be examined as a witness before the adjudicating authority. In the second stage, the adjudicating authority has to form an opinion, having regard to the circumstances of the case, whether the statement should be admitted in evidence in the interests of justice. The judgment fu....
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....ility 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 adjudication 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 stage of relevance, in adjudication proceedings, of the statement, recorded before a gazetted Central Excise Officer during inquiry or investigation, would arise only after the statement is admitted in evidence in accordance with the procedure prescribed in clause (b) of Section 9D(1). The rigour of this procedure is ....
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....llow the procedure contained in clause (b) of section 138B(1) of the Customs Act, before treating a statement recorded under section 108 of the Customs Act as relevant. 13. In Hi Tech Abrasives Ltd. vs. Commissioner of C. Ex. & Cus., Raipur [2018 (362) E.L.T. 961 (Chhattisgarh)] decided on 04.07.2018, the Chhattisgarh High Court also examined the provisions of section 9D of the Central Excise Act. The allegation against the appellant was regarding clandestine removal of goods without payment of duty and for this purpose reliance was placed on the statement of the Director of the Company who is said to have admitted clandestine removal of goods. The contention of the appellant before the High Court was that the statement of the Director could be admitted in evidence only in accordance with the provisions of section 9D of the Central Excise Act. After examining the provisions of sub-sections (1) and (2) of section 9D of the Central Excise Act, and after placing reliance on the judgment of the Punjab and Haryana High Court in Ambika International, the Chhattisgarh High Court held: "9.3 A conjoint reading of the provisions therefore reveals that a statement made and signed ....
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....rigor of this provision, therefore, could not be done away with by the adjudicating authority, if at all, it was inclined to take into consideration the statement recorded earlier during investigation by the Investigation officers. Indeed, without examination of the person as required under Section 9D and opinion formed as mandated under the law, the statement recorded by the Investigation Officer would not constitute the relevant and admissible evidence/material at all and has to be ignored. We have no hesitation to hold that the adjudicating officer as well as Customs, Excise and Service Tax Appellate Tribunal committed illegality in placing reliance upon the statement of Director Narayan Prasad Tekriwal which was recorded during investigation when his examination before the adjudicating authority in the proceedings instituted upon show cause notice was not recorded nor formation of an opinion that it requires to be admitted in the interest of justice. In taking this view, we find support from the decision in the case of Ambica International v. UOI rendered by the High Court of Punjab and Haryana." (emphasis supplied) 14. In Additional Director General (Adjudication) ....
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....2019." (emphasis supplied) 15. In M/s. Drolia Electrosteel P. Ltd. vs. Commissioner, Customs, Central Excise & Service Tax, Raipur [Excise Appeal No. 52612 of 2018 decided on 30.10.2023] decided on 30.10.2023, a Division Bench of the Tribunal examined the provisions of section 9D of the Central Excise Act and after placing reliance upon the decision of the Punjab and Haryana High Court in Jindal Drugs, observed that if the mandatory provisions of section 9D(1)(b) of the Central Excise Act are not followed, the statements cannot be used as evidence in proceedings under Central Excise Act. The relevant portions of the decision of the Tribunal are reproduced below: "14. Evidently, the statements will be relevant under certain circumstances and these are given in clauses (a) and (b) of subsection (1). There is no assertion by either side that the circumstances indicated in (a) existed in the case. It leaves us with (b) which requires the court or the adjudicating authority to first examine the person who made the statement and form an opinion that having regard to the circumstances of the case, the statement should be admitted in evidence. Of course, the party adve....
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.... 17. A Division Bench of the Tribunal in M/s Surya Wires Pvt. Ltd. vs. Principal Commissoner, CGST, Raipur [Excise Appeal No. 51148 of 2020 decided on 01.04.2025] followed the aforesaid decisions of the High Courts and held: "21. It would be seen section 14 of the Central Excise Act and section 108 of the Customs Act enable the concerned Officers to summon any person whose attendance they consider necessary to give evidence in any inquiry which such Officers are making. The statements of the persons so summoned are then recorded under these provisions. It is these statements which are referred to either in section 9D of the Central Excise Act or in section 138B of the Customs Act. A bare perusal of sub-section (1) of these two sections makes it evident that the statement recorded before the concerned Officer during the course of any inquiry or proceeding shall be relevant for the purpose of proving the truth of the facts which it contains only when the person who made the statement is examined as a witness before the Court and such Court is of the opinion that having regard to the circumstances of the case, the statement should be admitted in evidence, in the interests o....