2017 (11) TMI 1280 - AT - Central Excise

Clandestine removal - cross examination of witnesses - principles of natural justice - Held that - The fact that cross-examination of witnesses sought by the appellant has been denied is a serious breach of the Principles of Natural Justice. The Section 9D of the Central Excise Act, 1944 lays down the conditions for a statement made by a person before any Central Excise Officer during the course of inquiry to be admitted as evidence. It is required for the departmental adjudicating authorities to first admit the statements in evidence in accordance in the procedure prescribed in Section 9D before the same can be used against asseesse even in departmental proceedings. The matter is remanded to the adjudicating authority - appeal allowed by way of remand.

Summary

Issues:
Appeal against Order-in-Original confirming clandestine clearance, denial of cross-examination, authenticity of seized goods, admissibility of documents from residential premises, breach of Principles of Natural Justice, Section 9D of the Central Excise Act, 1944.

Analysis:

1. Clandestine Clearance:
The appellant, engaged in manufacturing evaporative air coolers, challenged the charge of clandestine clearance. The department seized goods during searches and issued show cause notices proposing duty demand. The appellant disputed the seized goods' nature, claiming they were incomplete coolers. The adjudicating authority confirmed charges but accepted arguments on duplication of demand. The appellant contended that demand based on seized goods was unjustified.

2. Denial of Cross-Examination:
The appellant raised concerns about denial of cross-examination of witnesses and defense witnesses, alleging a breach of Principles of Natural Justice. The adjudicating authority's refusal to permit cross-examination was highlighted as a serious procedural flaw affecting the case.

3. Authenticity of Seized Goods:
The authenticity of seized goods was questioned as re-verification revealed discrepancies. Initially presumed to be complete coolers, subsequent findings showed many boxes contained only enclosures. The appellant abandoned the seized goods, arguing against liability for duty payment on those goods.

4. Admissibility of Documents:
Documents seized from the residential premises of the proprietor formed a significant part of the evidence. The appellant contested the admissibility of these documents, arguing they were from third-party premises and lacked proper identification of authors. The appellant also raised concerns about duplicate entries in the documents leading to inflated demands.

5. Section 9D of the Central Excise Act:
The judgment emphasized the importance of following Section 9D procedures for admitting statements as evidence. Citing legal precedents, the court highlighted the necessity of summoning statement makers for examination before admitting statements as evidence. The failure to adhere to Section 9D requirements was deemed a critical flaw in the adjudication process.

Conclusion:
The impugned order was set aside, and the matter remanded to the adjudicating authority for compliance with Section 9D procedures and reevaluation of the evidentiary basis for the demand. The judgment underscored the need for procedural fairness and adherence to legal standards in adjudicating proceedings, emphasizing the principles of natural justice and statutory provisions governing evidence admission.