2017 (6) TMI 270 - AT - Central Excise

Natural justice - procedure as envisaged u/s 9D of CEA, 1944 - cross-examination - Held that - provisions of Section 9D are to be followed. It has been repeatedly held that when the statement is relied upon the test of Section 9D has to be applied. There is no substantial difference between the proceedings before the Adjudicating Authority or before a court as specifically mentioned under Section 9D (2) of the Act - at the time of adjudication, the Adjudicating Authority has to follow the procedures with reference to admission of such statements and consequent requirements of law upon such admission - Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Procedure to be followed when statements of witnesses are relied upon in a show cause notice.
2. Whether the Adjudicating Authority should allow cross-examination of witnesses before adjudication.
3. Compliance with Section 9D of the Central Excise Act, 1944 in adjudication proceedings.
4. Admissibility of statements as evidence and the role of the Adjudicating Authority in following legal procedures.

Analysis:
1. The appeal raised concerns regarding the procedure to be followed when statements of witnesses are relied upon in a show cause notice. The appellant requested cross-examination of witnesses as per Section 9D of the Central Excise Act, 1944 before filing a final defense. Citing legal precedents, the appellant argued that failure to follow this procedure would prejudice their legal rights and lead to improper adjudication. The Tribunal referenced a previous case and emphasized the need for strict compliance with Section 9D and legal principles before proceeding with adjudication.

2. The respondent contended that the appeals were premature and cross-examination was not mandatory in all cases where statements were relied upon. The respondent argued that corroborative evidence could negate the need for cross-examination, citing various decisions. However, the Tribunal disagreed with the respondent, stating that the reliance on 18 statements in the show cause notice necessitated following the provisions of Section 9D. The Tribunal clarified that the discretion of the Adjudicating Authority did not override the requirement to adhere to Section 9D.

3. The Tribunal highlighted the importance of following the legal procedures outlined in Section 9D of the Act when relying on witness statements. It noted that the issuance of a show cause notice based on certain statements did not automatically constitute admission of those statements as evidence. The Tribunal stressed the distinction between the initial issuance of the notice and the subsequent adjudication process, emphasizing the need for proper adherence to legal requirements.

4. In conclusion, the Tribunal set aside the communication from the Adjudicating Authority and directed compliance with Section 9D and the principles established by the Hon'ble Punjab & Haryana High Court. The Tribunal's decision focused on ensuring that the Adjudicating Authority followed the necessary legal provisions in adjudication proceedings, irrespective of the discretion available. The appeals were allowed based on the need for adherence to legal procedures and principles laid down by higher courts.