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2025 (1) TMI 424 - HC - Central ExciseClandestine manufacture and removal - circumstantial evidence are clearly brought out or not - evasion of duty is clearly established beyond doubt or not - whether the Tribunal can ignore binding admissions made by the managing partner of the respondent firm and its sole distributors and various other traders? - HELD THAT - So far Section 9D (1) (a) of the Excise Act is concerned, it has no application in the instant case. Sub-section (1) (a) can be pressed into service (a) when person who had given the statement is dead, (b) when he cannot be found, (c) when he is incapable of giving evidence, (d) when he is kept out of the way by the adverse party and (e) when his presence cannot be secured without an amount of delay or expense, which officer considers unreasonable. In the considered opinion of this Court, this provision is based on doctrine of necessity. Admittedly, in the instant case, sub-section 1 (a) of Section 9D of the Excise Act has no application. The judgment of Jharkhand High Court in Bihar Foundry Casting Ltd s 2022 (3) TMI 694 - JHARKHAND HIGH COURT makes it clear that the statement recorded by the Gazetted Central Excise Officer during enquiry or investigation is in a quasi criminal proceeding. In this view of the matter, the word prosecution needs to be understood. The proceeding may lead into imposition of penalty. In some cases, it may also result into prosecution . The view taken by Division Bench of Jharkhand High Court in Bihar Foundry Casting Ltd. Thus, it is unable to persuade ourselves with the line of argument of revenue that because of use of the word prosecution in Section 9D of the Excise Act, the requirement of producing evidence in adjudication proceeding can be done away with. It is clear like noon day that the incriminating material/statements recorded behind the back of the petitioner cannot be used against him, unless, such witnesses are produced in adjudication proceedings and they were permitted to be cross-examined by the petitioner. Conclusion - In the teeth of Section 9D (1) (b) of the Excise Act, unless, the incriminating material and witnesses are produced in the adjudication proceedings and are permitted to be cross-examined by the assessee, the said incriminating material cannot be used against the assessee. Appeal dismissed.
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1. ISSUES PRESENTED and CONSIDERED The legal judgment revolves around two core issues: 1. Whether the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) was justified in setting aside the demands of duty confirmed and the penalties imposed by the adjudicating authority, especially when admissions were made by the managing partner of the respondent firm and its associates. 2. Whether the appellant is still required to prove the clandestine manufacture and clearance of excisable goods when admissions were made by the managing partner of the respondent firm and its associates, and whether admitted facts need to be proved. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Justification of CESTAT's Decision Relevant Legal Framework and Precedents: The case hinges on the interpretation of Section 9D of the Central Excise Act, 1944, which dictates the relevancy of statements made before a Central Excise Officer. The provision outlines conditions under which such statements can be used in proceedings. Court's Interpretation and Reasoning: The court examined whether the statements made by the managing partner and others could be used against the respondent without cross-examination. It emphasized that Section 9D requires witnesses to be produced for cross-examination in adjudication proceedings. Key Evidence and Findings: The statements of various individuals, including the managing partner, were central to the case. However, the court noted that these statements were not subjected to cross-examination, which is a requirement under Section 9D. Application of Law to Facts: The court applied Section 9D and concluded that without cross-examination, the statements could not be used as evidence against the respondent. Treatment of Competing Arguments: The appellant argued that the admissions were sufficient to establish the case. However, the court found that procedural requirements under Section 9D were not met. Conclusions: The court concluded that CESTAT was justified in setting aside the demands and penalties due to the procedural lapses in using the statements as evidence. Issue 2: Requirement to Prove Clandestine Manufacture and Clearance Relevant Legal Framework and Precedents: The court considered the necessity of proving clandestine activities when admissions are made, referencing precedents that emphasize the need for cross-examination to validate such admissions. Court's Interpretation and Reasoning: The court reiterated that admissions alone, without the opportunity for cross-examination, do not suffice to prove clandestine manufacture and clearance under the Excise Act. Key Evidence and Findings: The court found that the evidence presented, primarily statements, lacked the procedural backing of cross-examination. Application of Law to Facts: The court applied the principles of evidence and natural justice, emphasizing the need for cross-examination to substantiate the admissions. Treatment of Competing Arguments: The appellant's reliance on admissions was countered by the court's insistence on procedural adherence for such admissions to be valid evidence. Conclusions: The court concluded that the appellant failed to meet the burden of proof required under the law due to the lack of cross-examination of the statements. 3. SIGNIFICANT HOLDINGS Preserve Verbatim Quotes of Crucial Legal Reasoning: "In the teeth of Section 9D (1) (b) of the Excise Act, unless, the incriminating material and witnesses are produced in the adjudication proceedings and are permitted to be cross-examined by the assessee, the said incriminating material cannot be used against the assessee." Core Principles Established: The judgment reinforces the necessity of cross-examination in using statements as evidence in adjudication proceedings under the Excise Act, highlighting the procedural safeguards required by Section 9D. Final Determinations on Each Issue: The court determined that CESTAT's decision to set aside the demands and penalties was justified due to the procedural failings in the use of statements as evidence. The appellant's obligation to prove clandestine manufacture and clearance was not met due to the lack of cross-examination of admissions. This summary provides a comprehensive analysis of the legal judgment, focusing on the issues presented, their detailed analysis, and the significant holdings of the court. The use of HTML paragraph tags helps structure the content clearly.
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