AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2026 (4) TMI 61
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....ctured and cleared from its factory. The Appellant maintains proper statutory records relating to manufacture, clearance and payment of duty, as prescribed under the provisions of the Central Excise Act, 1944 and the Rules made thereunder. The Appellant also files the prescribed periodical returns before the Department from time to time. The finished goods manufactured by the Appellant are cleared under cover of proper Central Excise invoices on payment of appropriate Central Excise duty, and such duty-paid clearances of the Appellant have never been in dispute. 2.2. That the present proceedings arise out of investigations conducted by the officers of the Directorate General of Central Excise Intelligence (DGCEI), New Delhi. On the basis of certain intelligence, the officers of DGCEI conducted simultaneous search operations at various premises of M/s. Shree Parasnath Re-Rolling Mills Limited (hereinafter referred to as "the Third Party). During the course of the said search, certain records were recovered from the premises of the Third Party and statements of the Chief Financial Officer (CFO) and Director of the said Third Party were recorded on different dates under the provisi....
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....ered from the premises of the Appellant and the charge of clandestine removal is a serious charge which is to be investigated to find out excess details, whether the excess raw materials have been purchased, the dispatch particulars from the regular transporters, the realization of sale proceeds, the excess power of consumptions, the mode and flow back of funds which has not been dealt during investigation. Therefore, impugned order is to be set aside. 4. It is also submitted that the demand has been raised on the basis of assumption and presumption basis without any clinching, cogent and corroborative evidence on record. To support this contention he relied on the following decisions: i. Continental Cement Company v Union of India reported in 2014 (309) E.L.T. 411 (HC-All.) ii. Commissioner of C Ex Kolkata-III Vrs Sai Sulphonate Pvt. Ltd. reported 2022 (380) E.L.T 441 (Cal-HC) iii. Pooja Spong Pvt. Ltd. Vrs Commr. Of Central Excise, Customs & Service Tax, Bhubaneswar-I reported in (2026) 38 CENTAX 278 (Tri-Cal). 5. Further he submitted that the statement which has been relied upon were reported in the absence of the appellant and the same has not b....
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....hard drives from SPRML. They recorded statements of their several employees. The statement of one Debashis Shasmal of SPRML was taken wherein he has stated that SPRML were buying Sponge Iron on cash basis without any Excise invoice from various parties. On the ground that from the records seized from SPRML, it was found that the appellant has supplied 1733.02 MT of Sponge Iron without payment of duty, Excise Duty of Rs. 50.79.671/- was demand. It was alleged that this quantity of Sponge Iron was cleared by the appellant clandestinely without payment of Excise Duty. The appellants submitted their detailed reply and argued that based on the 3rd party records and the statement of the officials of the 3rd party, the demand cannot be made on presumptions and assumptions. They also sought Cross Examination of Debashis Shasmal and others whose Statements were relied upon by the Show Cause Notice issuing authority. They submitted that no Corroborative evidence has been gathered towards vehicle movement, cash transactions, etc. Neither any stock taking was conducted at the end of the appellant nor any shortage was found. In view of the above submissions, they submitted that the proceedings ....
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....the procedure prescribed in this regard by Section 9D(1)(b) of the Act. 4. In view of the fact that the case of the petitioner is essentially premised on Section 9D of the Central Excise Act, 1944, it would be appropriate to reproduce the said provision, in extenso, thus: "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 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 evidenc....
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....rity 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, 10. Once the ambit of Section 9D(1) is thus recognized and understood, one has to turn to the circumstances referred to in the said sub-section, which are contained in clauses (a) and (b) thereof. 11. Clause (a) of Section 9D(1) refers to the following circumstances: (i) when the person who made the statement is dead, (ii) when the person who made the statement cannot be found, (iii) when the person who made the statement is incapable of giving evidence, (iv) when the person who made the statement is kept out of the way by the adverse party, and (v) when the presence of the person who made the statement cannot be obtained. without unreasonable delay or expense. 12. Once discretion, to be judicially exercised is, thus conferred, by Section 90, on the adjudicating authority, it is self-evident inference that the decisi....
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....atement recorded during enquiry/investigation by the Gazetted Central Excise officer, has every chance of having been recorded under coercion or compulsion. It is a matter obvious. The statement, recorded during inquiry/investigation, by the Gazetted Central Excise 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. 16. 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 90(1). The rigour of this procedure is exempted only in a case in which one or more of the handicaps referred to in clause (a) of Section 9D (1) o....
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....the judgment of the Supreme Court in C.C. v. Bussa Overseas Properties Ltd., 2007 (216) E.L.T. 659 (S.C.), which upheld the decision of the Tribunal in Bussa Overseas Properties Ltd. v. C.C., 2001 (137) E.L.T. 637 (Tri. Bom). 22. It is clear, from a reading of the Order-in-Original dated 4-4-2016 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 procedure contemplated by clause (b) of the said sub-section. The Orders-in-Original, dated 4-4-2016, having been passed in blatant violation of the mandatory procedure prescribed by Section 9D of the Act, it has to be held that said Orders-in-Original stand vitiated thereby. 23. The said Order-in-Original, dated 4-4-2016, passed by Respondent No. 2 is, therefore, clearly liable....
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....-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 Abhushan Bhandar v. U.O.I., 2002 (143) E.L.T. 25 (S.C.)and Swadeshi Polytex v. Collector, 2000 (122) E.L.T 641 (S.C.) 25. The writ petition is allowed in the aforesaid terms. 10. In the case of Geetham Steels Pvt Ltd v. Commissioner of GST & Central Excise Salem [2025 (3) TMI 1098CESTAT Chennai (2025) 36 Centax 41 (Tri. Chenna))], wherein it has been observed as follows:- "57. If we notice the provisions of Section 9D, what flows from it is that 9D(1) stipulates when a statement given under section 14 would be relevant for the purpose of proving, "in any prosecution for an offence", the truth of the facts which it contains and provides for various scenarios in the subsections thereto at (a) and (b). It is only when the Department first adduces evidence in the proceedings before the adjudicating authority, of the existence of the aforementioned scenarios in section 9D(1)(a) that the deponent's statement is taken as a substantive piece of evidence, without the deponent deposin....
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.... of the case. In other words, it is only after such examination in chief, that the adjudicating authority can arrive at a considered decision, whether to declare the witness appearing before it as a hostile witness and then to decide in the facts and circumstances whether to rely on the earlier statement; or if upon finding major inconsistencies between his earlier deposition and in the contradictions brought about in cross-examination, to not rely on the earlier statement, or if it is only minor discrepancies as that which does not majorly disturb the essential truth of his deposition, to rely upon it, if in the circumstances of the case, the adjudicating deems it fit in the interest of justice. 60. Therefore, we are of the view that Section 9D(2) not only legislatively mandates the adjudicating authority to apply the provisions of S. 9D(1), depending on the facts and circumstances of the case, to the extent possible, but also when read along with Section 9D(1) (b), leads to the inexorable conclusion that the adjudicating authority necessarily has to conduct an examination in chief of the deponent of the statement so as to determine not only the voluntary nature as well a....