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TMI Blog2018 (1) TMI 157X X X X Extracts X X X X X X X X Extracts X X X X ..... t be placed on the statements which were recorded during the investigation of a case. Matter remanded back to the adjudicating authority to reconsider the issue afresh - appeal allowed by way of remand. - E/2231/2012, E/2232/2012 - A/31864-31865/2017 - Dated:- 1-12-2017 - Mr. M.V. Ravindran, Member(Judicial) Shri R. Muralidhar, Advocate for the Appellant. Shri P.S. Reddy, Asst. Commissioner/AR for the Respondent. ORDER [Order per: Mr. M.V. Ravindran] 1. These two appeals are directed against Order-in-Original No.(Denovo) No.12/2012-Adjn. (Commr) CE, dated 29.03.2012. 2. The relevant facts that arise for consideration after filtering out unnecessary details are that the Officers of Anti Evasion Wing conducted simultaneous search operations on 15.05.1997 at the factory premises of M/s Gulab Chand Silk Mills Pvt. Ltd. (hereinafter referred to as GSM); residential premises of the Managing Director, Registered Office, godowns and the dealers of GSM and residential premises of the Proprietors and partners. During the search carried out, certain records and documents were recovered from all these premises and quantum of grey cloth and processed fabric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ations, the adjudicating authority in the impugned order confirmed the demands raised alongwith interest and imposed penalties on GSM and others. M/s GSM and Mr. Gopal Gupta are in appeal in these appeals. 5. Ld. Counsel submits that the entire Order-in-Original is based upon only the statements and the panchnama recorded by the investigating Officers during the course of investigation and visit. It is his submission that the adjudicating authority has not followed the provisions of Section 9(d) of Central Excise Act, 1944. It is his further submission that Hon'ble High Court of Punjab Haryana in the case of Ambika International vs. Union of India, in a writ petition decided on 17.06.2016 has laid down the law which states that if the adjudicating authority is relied upon the statements recorded during the investigation, then the rigour of section 9(D) of Central Excise Act, 1944 needs to be followed. He submits that adjudicating authority be directed to follow the rigour of section 9(d) of Central Excise Act, 1944 before reaching any conclusion, in the matter. 6. Ld. DR, on the other hand, submits that the shortage of stocks were found in the presence of officers and o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same: 8. In view of the fact that the case of the petitioners is essentially premised on Section 9D of The Central Excise Act, 1944, it would be appropriate to reproduce the said provision, in extenso, thus : 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 an amount of delay or expense which, under the circumstances of the case, the Court considers unreasonable; or (b) when the person who made the statement is examined as a witness in the case before the Court and the Court is of opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interests of justice. (2) The provision of sub-section (1) shall, so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e facts contained in the said statement, it has to be held that the adjudicating authority has relied on irrelevant material. Such reliance would, therefore, be vitiated in law and on facts. 13. Once the ambit of Section 9D (1) is thus recognized and understood, one has to turn to the circumstances referred to in the said sub- section, which are contained in clauses (a) and (b) thereof. 14. 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. 15. 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a matter of common knowledge that, on many occasions, the DRI/DGCEI resorts to compulsion in order to extract confessional statements. It is obviously in order to neutralize this 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. 19. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above, respondent no. 2 is directed to adjudicate the Show Cause Notice issued to the writ petitioners by following the procedure contemplated by Section 9D of the Act and the law laid down by various judicial authorities in this regard, including the principles of natural justice, in the following manner: (i) In the event that the Revenue intends to rely on any of the statements, recorded under Section 14 of the Act and referred to in the Show Cause Notices issued to Ambika and Jay Ambey, it would be incumbent on the Revenue to apply to Respondent No 2 to summon the makers of the said statements, so that the Revenue would examine them in chief before the adjudicating authority, i.e. before Respondent No.2. (ii) A copy of the said record of examination-in-chief, by the Revenue, of the makers of any of the statements on which the Revenue chooses to rely, would have to be made available to the assessee, i.e. to Ambika and Jay Ambey in this case. (iii) Statements recorded during investigation, under Section 14 of the Act, whose makers are not examined in chief before the adjudicating authority, i.e. before Respondent No 2, would have to be eschewed from evidence, and it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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