2018 (8) TMI 1336 - AT - Central Excise

Liability of Excise duty - manufacture of branded jeans - whether the statements of the buyers can be used against the Appellants despite the facts that those statements are hit by the provisions of Section 9D of the Central Excise Act, 1944? Held that - From the facts of the present case it is clear that the witnesses, of whom the statements have been relied upon by the department, have not been examined by the department before the Adjudicating Authority - The evidentiary value of the statements, insofar as proving the truth of the contents thereof is concerned, is completely lost, unless and until the case falls within the four corners of Section 9D(1). 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. In the present case, the Adjudicating Authority has not invoked clause (a) of Sub-Section (1) of Section 9D of the Act, and also has not recorded anywhere that the attendance of the makers of the said statements, which have been used against the Appellants, could not be obtained for any of the reasons contemplated by Section 9D of the Act. That being so, it was not open to the Adjudicating Authority to rely upon the said statements without following the mandatory procedure contemplated by Section 9D of the Act - the Adjudicating Order has been passed in violation of the mandatory procedure prescribed by Section 9D of the Act. Matter remanded back to the adjudicating authority for de-novo adjudication after following the procedure as contemplated under section 9D of the Central Excise Act, 1944 - appeal allowed by way of remand.

Summary

Issues:
1. Liability to pay excise duty on manufacturing branded jeans.
2. Admissibility of buyers' statements under Section 9D of the Central Excise Act, 1944.

Analysis:
1. The Appellate Tribunal considered whether the appellants were liable to pay excise duty on branded jeans and if buyers' statements could be used against them despite Section 9D provisions. The counsel argued lack of evidence against the appellants based on inadmissible statements. However, raising Section 9D as a legal point at this stage was permissible.

2. Section 9D of the Act specifies the relevance of statements made before a Central Excise Officer under certain circumstances. The Tribunal emphasized that without meeting the conditions of Section 9D(1), statements recorded during inquiry/investigation are not admissible as evidence to prove the truth of their contents. The tribunal cited judgments from the Hon'ble High Court of Punjab & Haryana to support the mandatory nature of Section 9D provisions.

3. Referring to case laws, the Tribunal highlighted that the absence of circumstances specified in Section 9D(1) renders reliance on such statements as irrelevant material, leading to a vitiated decision. The adjudicating authority must follow the prescribed procedure under Section 9D before admitting statements as evidence. Failure to adhere to this procedure results in a violation of the Act's mandatory requirements.

4. Consequently, the Tribunal set aside the impugned order and remanded the matter back to the adjudicating authority for de-novo adjudication in compliance with Section 9D of the Central Excise Act, 1944. Both parties were granted the opportunity to present evidence in their favor, ensuring a fair hearing. The appeals were allowed by way of remand to rectify the procedural errors and uphold the legal standards.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved, the legal principles applied, and the Tribunal's decision based on the interpretation of Section 9D of the Central Excise Act, 1944.