2022 (1) TMI 202 - AT - Central Excise

Clandestine removal - CTD/TMT bars - provisions of Section 9D of the Central Excise Act have not been followed - allegations against the appellant are based on the statement of third party which were not subjected to examination-in-chief or cross-examination - Principles of natural justice - HELD THAT - A plain reading of Section 9D(i) ibid makes it clear that clauses (a) and (b) therein 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. The use of the word shall in the said section makes it clear that the provisions contemplated in the said sub-section are mandatory. It means that the procedure prescribed in Section 9D(i) ibid has to be followed mandatorily in the adjudication proceedings and if without following the procedure stated therein, the adjudicating authority relies upon the statements recorded during investigation then it vitiates the adjudication process. Either the adjudicating authority follow the procedure prescribed in Section 9D or if it is not possible to follow then to discard those statements. Although in the instant case, opportunities were granted by the adjudicating authority to the appellant but they chose not to participate in the proceeding - When the legislature has laid down a procedure to be followed then it has to be done in that way only and no shortcut can be adopted. Therefore on this ground alone, without going into the merits of the matter, it is deemed proper to set aside the impugned order and remand the matter back to the adjudicating authority for de novo adjudication after giving an opportunity of hearing to the appellant - appeal allowed by way of remand.

Summary

Issues:
1. Alleged clandestine removal of CTD/TMT bars without payment of Central Excise duty.
2. Adjudication process following Section 9D of the Central Excise Act.
3. Imposition of penalty on the Appellant and M/s. Sai Deva Steel.
4. Non-appearance of the Appellant before the adjudicating authority.

Analysis:

Issue 1: Alleged clandestine removal of CTD/TMT bars
The case involved the alleged clandestine removal of CTD/TMT bars from the Appellant's premises without payment of Central Excise duty, unearthed during a search in February 2013. The department relied on statements of individuals involved in the transactions. The Adjudicating Authority confirmed the duty demand against the manufacturer and imposed penalties on the Appellant and the broker. The Commissioner upheld the penalties, leading to the appeal.

Issue 2: Adjudication process following Section 9D of the Central Excise Act
The learned counsel raised a preliminary issue regarding the non-compliance of Section 9D, which mandates the procedure for relying on statements recorded during investigations. The appellant argued that the statements of third parties were crucial for the case but were not subjected to examination-in-chief or cross-examination as per Section 9D. The failure to follow this procedure could vitiate the adjudication process. The Tribunal emphasized the mandatory nature of Section 9D and ruled that adherence to its provisions is essential for a fair adjudication process.

Issue 3: Imposition of penalty
The appellant questioned the imposition of a higher penalty on them compared to the broker who facilitated the transactions. The Authorized Representative defended the penalties imposed, highlighting the appellant's non-appearance before the adjudicating authority. Despite opportunities granted, the appellant did not participate, leading to a procedural issue. The Tribunal stressed the importance of following prescribed procedures and remanded the case for de novo adjudication to ensure fairness and adherence to legal requirements.

Issue 4: Non-appearance of the Appellant
The non-appearance of the Appellant before the adjudicating authority was a crucial factor in the case. While the appellant raised procedural concerns, the Tribunal noted that participation in the proceedings is essential for a just outcome. The Tribunal emphasized the principle of justice being seen to be done and directed the appellant to attend the hearing before the adjudicating authority for a fair adjudication process.

In conclusion, the Tribunal set aside the impugned order and remanded the matter back to the adjudicating authority for de novo adjudication, emphasizing the importance of following legal procedures and ensuring a fair hearing for all parties involved.