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TMI Blog2016 (8) TMI 836X X X X Extracts X X X X X X X X Extracts X X X X ..... was issued to the appellant and other noticees, proposing differential duty demand along with interest and penalty, and calling upon the appellant to show cause there against. Any detailed reference to the allegations in the Show Cause Notice would not be merited in the present case, however, it may be mentioned that the Show Cause Notice relied on the statements of the following persons, recorded under Section 14 of the Central Excise Act, 1944 [hereinafter referred to as "the Act"]: (i) Shri Shripal Sanghvi, Proprietor of M/s Shanthi Guru Marketing, Trichy. (ii) Shri H Mahaveer Kumar, the owner of M/s Goutham Fancy Store, 95, East Car Street, Tirunelveli - 627006 (iii) Shri Damodar Kolariya, M/s Sri Ram Traders, D. No. 14-5-404, Baidarwalli, Begam Bazar, Hyderabad - 12 (iv) Shri B.K. Shukla, M/s Venkatesh Traders at 51/104, Lal Phatak, Sakarpatti, Nayaganj, Kanpur (v) Shri Santosh Jaiswal, employee of M/s Prem Agency, Kanpur (vi) Shri Rajat Gupta, Proprietor of M/s Babu Brothers, 51/104, Lal Phatak, Sakarpati, Nayaganj, Kanpur (vii) Shri Anil Khurana, Proprietor of M/s Khurana Brothers, 52/44, Nayagani, Kanpur (viii) Shri Pawan Gupta, Proprietor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Hyderabad (xxxi) Statememt of Shri Rajender Parsad Kothari an employee of M/s Lucky Bagga Transport Co., Hyderabad (xxxii) Statement of Shri CSM Althaf, Railway agent, Railway Station, Coimbatore 3. On receipt of the abovementioned Show Cause Notice, the appellant filed its reply, thereto, vide letter dated 24.05.2016. The attention of the Commissioner was invited, in the said letter, to the provisions of Section 9D of the Act, with the specific averment that any statement, recorded before a gazetted Central Excise officer, under the Act, would be relevant in adjudication proceedings only if the maker of the said statement was examined in chief and his cross examination is allowed. As such, it was requested, vide the said communication, that the records of examination in chief of the persons whose statements were relied upon in the Show Cause Notice dated 16.02.2012 (supra), be provided to the appellants, so that they could request for cross examination of the said persons if need be. 4. The impugned communication dated 03.06.2016 purports to be a response to the said letter dated 24.05.2016. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of the Central Excise Act, 1944 [hereafter referred to as "the Act"] dealing with the appeals to the Appellate Tribunal. It was argued that the provision for appeal is very much clear inasmuch it clearly states that a decision or order taken by the adjudicating authority can be appealed before the Appellate Tribunal. 'Adjudicating authority' has been defined under the Act to mean any authority competent to pass any order or decision under this Act, but does not include the Central Board of Excise and Customs constituted under the Central Boards of Revenue Act, 1963 (54 of 1963), Commissioner of Central Excise (Appeals) or Appellate Tribunal. My attention was also invited to the following decisions in support of the contention that an appeal would lie against the decision rejecting cross-examination: (i) J & K Cigarattes Ltd v CCE, 2009 (242) ELT 189 (Del) (ii) Swiber Offshore Construction Pvt Ltd v CC, 2014 (301) ELT 119 7. Countering the arguments of the appellant, the learned DR relied upon following judgements of the Hon'ble Tribunal in support of the contention that no appeal lies agains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thority', this Tribunal has the power to entertain an appeal against the decision rejecting cross-examination. Therefore, the preliminary objection stands overruled. 8.3 On merits, the appellants, in the present case, limit their challenge to the rejection, by the Commissioner, of the request contained in their letter dated 24.05.16 (supra), vide the impugned communication dated 03.06.2016. In the appellants submission, a statement recorded, before a gazetted Central Excise officer under Section 14 of the Act, cannot be relied upon, for proving the truth of the contents thereof, straightaway by the adjudicating authority, unless and until the said statement falls within one of the categories referred to in clause (a) of Section 9D (1) of the Act in all other cases, the maker of the said statement has to be examined in chief before the adjudicating authority, who, thereafter, has to arrive at a reasoned conclusion that the statement deserves to be admitted in evidence, where after he has to offer the maker of the said statement to the assessee, for cross-examination if sought. The appellant emphasises that, in fact, the impugned communication is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ief of the witnesses whose statements are referred to in the Show Cause Notice dated 16.02.2012 (supra) issued to the appellant, so that the appellant could, if necessary, seeks cross-examination of the said witnesses. 9.2 In fact, the issues raised by the appellant, in its letter dated 24.05.2016, and argued before this Tribunal, are no longer res-integra. They stand decided by a number of authorities, most recently, by the judgement dated 17.06.2016 of the Hon'ble Punjab & Haryana High Court in Ambika International v UOI. Section 9D of the Act reads as under: "SECTION 9D.Relevancy of statements under certain circumstances. - (1) A statement made and signed by a person before any Central Excise Officer of a gazetted rank during the course of any inquiry or proceeding under this Act shall be relevant, for the purpose of proving, in any prosecution for an offence under this Act, the truth of the facts which it contains, - (a) when the person who made the statement is dead or cannot be found, or is incapable of giving evidence, or is kept out of the way by the adverse party, or whose presence cannot be obtained without a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y or expense which, under the circumstances of the case, the Court considers unreasonable. 9.4 In case none of the above circumstances contemplated in clause (a) of Section 9D(1) applies, then clause (b) categorically mandates that the statement shall be treated as relevant for the purposes of proving the truth of the facts which contains only "when the person who made the statement is examined as a witness in the case before the Court (or adjudicating authority) and the Court (or adjudicating authority) is of the opinion that having regard to the circumstance of the case the statement should be admitted in evidence in the interest of justice. 9.5 It does not appear that there is any ambiguity in the drafting of clause (b) of Section 9D(1) of the Act. What the said clause categorically requires is that the person, whose statement was earlier recorded before a gazetted officer of Central Excise, has to be examined as witness before the adjudicating authority who, thereafter, has to arrive at an opinion that having regarded to the circumstances of the case, the statement should be admitted in evidence in the interests of justice. It is only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s who is examined in chief who can be cross-examined." Sukhwant Singh (supra) was followed by this Hon'ble Tribunal in Swiber Offshore Construction Pvt Ltd v State of Punjab (supra), which reproduces paras 8, 9 and 18 of the judgement in Sukhwant Singh (supra), where after paras 10 to 12 of the judgement set out the operative portion thereof in the following words: "10.We therefore find force in the submission of the ld. counsel for the appellant. We find no reason to justify rejection of request made by the appellant to the adjudicating authority in light of Section 138B of the Act, to summon witnesses for examination and to offer them for cross-examination if their statements were to be considered as relevant and admitted in evidence in the interest of justice. 11. We also find that the denial of request to permit cross-examination of the Chief Chemist (DGH), whose opinion is relied in the show cause notice, is also wholly unjustified. 12. The appeals are therefore allowed with direction to the Respondent adjudicating authority to follow Section 138B and to forthwith summon the witnesses for examination under intimation to the appellant, and to offer them for cross-examina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were not put to examination-in-chief before providing an opportunity of cross examination. A plain reading of sub-section (1) of section 9D makes it clear that clauses (a) and (b) of the said sub-section set out the circumstances in which a statement, made and signed by a person before the Central Excise Officer of a gazette 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. Therefore, there is no doubt about the legal position that the procedure prescribed in sub-section (1) of section 9D is required to be scrupulously followed, as much as in adjudication proceedings as in criminal proceedings relating to prosecution. Therefore, sub-section (1) of section 9D set out the circumstances in which a statement, made and signed by a person before the Central Excise Officer shall be relevant, for the purpose of proving the truth of the facts contained therein. If the circumstances are absent, therefore, the statement, which has been made during the course of inquiry/investigation, before a gazette Central Excise Officer, cannot be treated as relevant for the purpose of proving the facts co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uirement in the Act or Rules, nor do the principles of natural justice and fair play require that the witnesses whose statements were recorded and relied upon to issue the show cause notice, are liable to be examined at that stage. If the Revenue choose not to examine any witnesses in adjudication, their statements cannot be considered as evidence. However, if the Revenue choose to rely on the statements, then in that event, the persons whose statements are relied upon have to be made available for cross-examination for the evidence or statement to be considered. 10. We further find that in the case of Smt.Sharadamma (supra), hon'ble Karnataka High Court has observed as under:- 9. It is not the duty of the Court to direct the parties or compel the parties as to in what manner they should conduct their case before the Court or also what quality of evidence they should place before the Court. But the duty of the court is only to appreciate the case in the proper perspective and on the basis of what is placed before the Court. Even with regard to the prayer for permitting the applicant to cross-examine the plaintiff, the prayer is misconceived as the question of cross examinat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the appellant to examine the witnesses and to offer them for cross-examination. 8. The appellant has also relied on the judgment of Hon'ble Apex Court inSukhwant Singh v. State of Punjab, (1995) 3 SCC 367 to give emphasis on his submission that examination of witness is mandatory unless specified exceptional circumstances mentioned in clause (a) of Section 138B(1) exist. The Hon'ble Apex Court was pleased to hold that - "8. It will be pertinent at this stage to refer to Section 138 of the Evidence Act which provides: "138. Order of examinations. - Witnesses shall be first examined-in-chief then (if the adverse party so desires) cross-examined, then (if the party calling him so desires) re-examined. The examination and cross-examination must relate to relevant facts but the cross-examination need not be confined to the facts to which the witness testified on his examination-in-chief. Direction for re-examination. - The re-examination shall be directed to the explanation of matters referred to in cross-examination; and if new matter is, by permission of the Court, introduced in re-examination, the adverse party may further cross-examine upon that matter." 10. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he enactment of the code of Criminal Procedure, 1898. 14. In view of the above anaylsis, it is clear that during adjudication, the adjudicating authority is required to first examine the witness in chief and also to form an opinion that having regard to the facts and circumstances of the case, the statements of the witness are admissible in evidence. Thereafter, the witness is offered to be cross examined. In the absence of examination in chief, allowing the cross examination, is a futile exercise. We further find that the appellant have challenged the impugned order on the ground that the evidence in the form of statements gathered have no link of the appellant to the activities took at Sandeep Poultry Farm which is required to be examined on the basis of records available during the course of adjudication and the same has not been considered judicially." 9.13 The judgment in Kuber Tobacco stands reiterated in the subsequent Final Order dated 29.04.2016, passed by this Tribunal in Alliance Alloys Pvt Ltd v CCE [Final Order No:343-347/2016-CHD dated 29.04.16] 9.14 Most authoritatively, perhaps, this position of law is now crystallized by the judgment dated 17.06.2016 of the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s relied on irrelevant material. Such reliance would, therefore, be vitiated in law and on facts. 19. Once the ambit of Section 9D (1) is thus recognized and understood, one has to turn to the circumstances referred to in the said subsection, which are contained in clauses (a) and (b) thereof. 20. Clause (a) of Section 9D (1) refers to the following circumstances : i) when the person who made the statement is dead, ii) when the person who made the statement cannot be found, iii) when the person who made the statement is incapable of giving evidence, iv) when the person who made the statement is kept out of the way by the adverse party, and v) when the presence of the person who made the statement cannot be obtained without unreasonable delay or expense. 21. Once discretion, to be judicially exercised is, thus conferred, by Section 9D, on the adjudicating authority, it is self-evident inference that the decision flowing from the exercise of such discretion, i.e. the order which would be passed, by the adjudicating authority under Section 9D, if he chooses to invoke clause (a) of sub-section (1) thereof, would be pregnable to challenge. While the judgment of the Delhi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... possibility that, before admitting such a statement in evidence, clause (b) of Section 9D(1) mandates that the evidence of the witness has to be recorded before the adjudicating authority, as, in such an atmosphere, there would be no occasion for any trepidation on the part of the witness concerned. 25. Clearly, therefore, the stage of relevance, in adjudication proceedings, of the statement, recorded before a gazetted Central Excise officer during inquiry or investigation, would arise only after the statement is admitted in evidence in accordance with the procedure prescribed in clause (b) of Section 9D(1). The rigour of this procedure is exempted only in a case in which one or more of the handicaps referred to in clause (a) of Section 9D(1) of the Act would apply. In view of this express stipulation in the Act, it is not open to any adjudicating authority to straightaway rely on the statement recorded during investigation/inquiry before the gazetted Central Excise officer, unless and until he can legitimately invoke clause (a) of Section 9D(1). In all other cases, if he wants to rely on the said statement as relevant, for proving the truth of the contents thereof, he has to fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) of Section 9D of the Act, by holding that attendance of the makers of the said statements could not be obtained for any of the reasons contemplated by the said clause. That being so, it was not open to Respondent No.2 to rely on the said statements, without following the mandatory procedure contemplated by clause (b) of the said sub-section. The Orders-in-Original, dated 19/05/2016 and 01/06/2016, having been passed in blatant violation of the mandatory procedure prescribed by Section 9D of the Act, it has to be held that said Orders-in-Original stand vitiated thereby. 32. The said orders-in-Original, dated 19/05/2016 and 01/06/2016, passed by Respondent No.2 are, therefore, clearly liable to be set aside. 33. Insofar as the writ petitions filed by M/s Ambika International CWP 12615 of 2016 and M/s Jay Ambey Aromatics CWP 12617 of 2016 are concerned, they are allowed by setting aside the Orders-in-Original, dated 19/05/2016 and 01/06/2016, passed by Respondent No 2 and impugned therein. Resultantly, the Show Cause Notices, issued to Ambika and Jay Ambey, are remanded, to Respondent No 2 for adjudication de novo, by following the procedure contemplated by Section 9D of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntical to those which had been issued to Ambika and Shiva Mint and which stand adjudicated by Respondent No.2 vide Orders-in-Original dated 19.05.2016 and 01.06.2016 supra, have been issued, and are presently pending adjudication before Respondent No.2. No further orders would be required to be passed, in the said writ petitions, apart from directing that Respondent No.2 would adjudicate the said Show Cause Notices by following the procedure prescribed in para 33 supra. Therefore, CWP 12616 of 2016 and 12618 of 2016 stand disposed of accordingly. 9.15 In view of the above unequivocal expression of law as contained in a plethora of judicial authorities, the present appeal is allowed by setting aside the decision as communicated to the appellant by the impugned letter dated 03.06.2016, and the matter is remanded to the Principal Commissioner with a direction to adjudicate the Show Cause Notice strictly by complying with the mandate of Section 9D of the Act, in accordance with the directions contained in para 33 of the judgment of the High Court of Punjab & Haryana in Ambika International (supra) which are, for ready reference, reiterated as under: (i) In the event that the Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X
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