2016 (6) TMI 1234 - HC - Central Excise

Section 9D(1) of the Central Excise Act, 1944 - Relevancy of statements under certain circumstances - mandate to follow the section while adjudicating the SCN - Held that - 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. 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). Clearly, if this procedure, which is statutorily prescribed by plenary Parliamentary legislation, is not followed, it has to be regarded, that the Revenue has given up the said witnesses, so that the reliance by the CCE, on the said statements, has to be regarded as misguided, and the said statements have to be eschewed from consideration, as they would not be relevant for proving the truth of the contents thereof. Respondent no. 2 is directed to adjudicate the SCN issued to the writ petitioner by following the procedure contemplated by Section 9D of the Act - matter on remand.

Issues Involved:
1. Compliance with Section 9D of the Central Excise Act, 1944.
2. Admissibility and relevance of statements made before a Gazetted Central Excise Officer.
3. Procedural requirements for admitting statements as evidence in adjudication proceedings.
4. Principles of natural justice in adjudication proceedings.

Issue-wise Detailed Analysis:

1. Compliance with Section 9D of the Central Excise Act, 1944:
The petitioner filed a Writ Petition seeking a Writ of Mandamus directing the respondent to follow Section 9D(1) of the Central Excise Act, 1944, while adjudicating a pending Show Cause Notice. The petitioner argued that the respondent had adjudicated similar Show Cause Notices in violation of Section 9D by relying on statements without following the prescribed procedure.

2. Admissibility and relevance of statements made before a Gazetted Central Excise Officer:
Section 9D(1) outlines the circumstances under which a statement made and signed before a Gazetted Central Excise Officer is relevant for proving the truth of its contents. These circumstances include the death or unavailability of the person who made the statement, or when the person is examined as a witness in the case. The court emphasized that statements cannot be treated as relevant evidence unless they fall within the parameters of Section 9D(1).

3. Procedural requirements for admitting statements as evidence in adjudication proceedings:
The court highlighted that Section 9D(1) mandates a specific procedure for admitting statements as evidence. If the circumstances in clause (a) of Section 9D(1) are not met, clause (b) requires the person who made the statement to be examined as a witness before the adjudicating authority. The adjudicating authority must then form an opinion that the statement should be admitted in the interests of justice. The use of the word "shall" in Section 9D(1) indicates that these provisions are mandatory.

4. Principles of natural justice in adjudication proceedings:
The court underscored that the principles of natural justice must be followed in adjudication proceedings. This includes allowing the assessee to cross-examine the makers of statements relied upon by the Revenue. The court referred to various judicial authorities, including the Supreme Court, which have affirmed that statements recorded behind the back of an assessee cannot be relied upon without providing an opportunity for cross-examination.

Conclusion and Directions:
The court directed the respondent to adjudicate the Show Cause Notice by following the procedure outlined in Section 9D of the Act. Specifically:
- The Revenue must summon and examine in chief the makers of any statements it intends to rely on.
- A copy of the examination-in-chief must be provided to the assessee.
- Statements not examined in chief before the adjudicating authority must be excluded from evidence.
- The assessee must be allowed to cross-examine the makers of the statements if requested.

With these directions, the Writ Petition was disposed of.

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