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2025 (4) TMI 815 - AT - Central ExciseViolation of principles of natural justice - denial of the opportunity for cross-examination of witnesses whose statements were relied upon by the Revenue to substantiate allegations against the appellants - Section 9D of the Central Excise Act 1944 - HELD THAT - The entire case has been build on the basis of statements of witnesses as well as the documents supplied by the source manufacturers. Further the appellants from the very beginning has requested the adjudicating authority as well as the Commissioner (Appeals) to allow cross-examinations of all those persons whose statements have been relied upon against them but the cross-examinations have been denied by the Revenue without any justified reasons. This Tribunal in the case of M/s Lauls Ltd and ors vs. CCE Delhi-IV 2023 (7) TMI 1113 - CESTAT CHANDIGARH after following the judgment of the jurisdictional High Court of Punjab Haryana in the case of Jindal Drugs Pvt Ltd vs. UOI 2016 (6) TMI 956 - PUNJAB HARYANA HIGH COURT wherein the Hon ble High Court has categorically held that it is mandatory to allow cross-examination of material witnesses whose statements are relied upon against the assessee. Matter remanded back to the adjudicating authority for a fresh decision after affording the opportunity of cross-examination of the material witnesses and by following the procedure as prescribed in Section 9D of the Central Excise Act 1944 - appeals are allowed accordingly by way of remand.
ISSUES PRESENTED and CONSIDERED
The primary issue considered in this judgment revolves around the denial of the opportunity for cross-examination of witnesses whose statements were relied upon by the Revenue to substantiate allegations against the appellants. The core legal question is whether the denial of cross-examination violates the principles of natural justice and the statutory requirements under Section 9D of the Central Excise Act, 1944. ISSUE-WISE DETAILED ANALYSIS Relevant Legal Framework and Precedents The legal framework primarily involves Section 9D of the Central Excise Act, 1944, which stipulates the conditions under which statements made before a Central Excise Officer can be admitted as evidence. The section mandates that if the person who made the statement is available, they must be examined as a witness, and the adjudicating authority must then decide if the statement should be admitted in the interests of justice. The Tribunal referenced several precedents, including judgments from the Punjab & Haryana High Court and the Supreme Court, which underscore the necessity of allowing cross-examination to uphold the principles of natural justice. Court's Interpretation and Reasoning The Tribunal interpreted Section 9D to mean that denying cross-examination of witnesses whose statements are relied upon in adjudication proceedings constitutes a significant procedural flaw. The Court emphasized that cross-examination is a fundamental right under the principles of natural justice, especially when statements are used as primary evidence against a party. The Tribunal relied on precedents where similar issues were adjudicated, reinforcing the requirement for cross-examination to ensure fair proceedings. Key Evidence and Findings The evidence in question consisted of statements from individuals associated with Skoda Industries and the documentary evidence obtained from source manufacturers. The Tribunal found that the denial of cross-examination of these witnesses by the adjudicating authority and the Commissioner (Appeals) was unjustified and not supported by any legal rationale. Application of Law to Facts The Tribunal applied Section 9D and relevant case law to the facts, concluding that the adjudicating authority and the Commissioner (Appeals) failed to adhere to the statutory requirements. The Tribunal noted that the appellants had consistently requested cross-examination, which was crucial for challenging the credibility and truthfulness of the statements used against them. Treatment of Competing Arguments The Tribunal considered the department's argument that the statements and documentary evidence were sufficient to establish the case against the appellants. However, it found this argument untenable in light of the statutory requirement for cross-examination and the principles of natural justice. The Tribunal emphasized that the absence of cross-examination vitiated the proceedings. Conclusions The Tribunal concluded that the denial of cross-examination constituted a violation of the principles of natural justice and statutory requirements, warranting a remand of the case to the adjudicating authority for fresh consideration. SIGNIFICANT HOLDINGS Preserve Verbatim Quotes of Crucial Legal Reasoning The Tribunal quoted the Supreme Court's observation in the Andaman Timber Industries case: "Not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected." Core Principles Established The judgment reaffirmed the principle that cross-examination is an essential component of fair adjudication, particularly when statements are used as evidence against a party. The Tribunal underscored the mandatory nature of the procedural requirements under Section 9D of the Central Excise Act, 1944. Final Determinations on Each Issue The Tribunal set aside the impugned order and remanded the matter back to the adjudicating authority for a fresh decision. It directed that cross-examination of the material witnesses be allowed, and the procedure prescribed in Section 9D be followed. The appellants were also instructed to cooperate with the adjudicating authority for a speedy resolution of the case.
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