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TMI Blog2022 (9) TMI 534X X X X Extracts X X X X X X X X Extracts X X X X ..... section 9D is followed. Since this procedure has not been followed, the statements are not relevant to prove anything in this case and consequently are also not admissible. Cross-examination, therefore, becomes unnecessary because the statements are not relevant or admissible in the first place. The Committee of Commissioners who passed the Review order in this case seems to be under a mistaken notion that the Revenue has the power to decide whether the Tribunal s order must be followed by the Commissioner (Appeals) or not. It is not disputed that Maruti Metals had issued the invoices and the respondents had availed the CENVAT credit on them. It is not in dispute that Maruti Metals is a dealer registered to issue such invoices. It has also been recorded in the impugned order that the appellants had purchased the goods after paying duty thereafter availed the CENVAT credit on such invoices. Even if Maruti Metals had committed some fraud in CENVAT credit which it had taken, that cannot be held against the respondent. The respondent assessee is responsible for receiving goods and accounting for them - There is nothing in the CCR which requires any assessee to conduct such an in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Central Excise, Udaipur issued to the respondent a show cause notice [ SCN ] dated 06.10.2017 alleging that the invoices issued by the Maruti Metals were based on the inputs which it had procured from M/s Sypher Impex Alloys Pvt Ltd., Bhiwadi [ SIPL ] and that SIPL had issued invoices to Maruti Metals without supplying the materials mentioned therein and, therefore, the invoices issued by the Maruti Metals to the respondent do not qualify for CENVAT credit. Accordingly, it was proposed to recover CENVAT credit of Rs. 60,00,595/- availed by the respondent. It was also proposed to impose an equal amount as penalty on the Respondent and on some other co-noticees. 4. The Joint Commissioner had, in his order, dated 13.07.2018 disallowed the CENVAT credit and ordered its recovery from the respondent and imposed penalties. On appeal, the Commissioner (Appeals) has, by the impugned order set aside the order of the Joint Commissioner. 5. Hence, this appeal by the Revenue on the following grounds; (i) As per CENVAT Credit Rules, 2004 [ CCR ] CENVAT Credit is available only on the goods used in the factory of manufacture of the final products. In other words the invoices should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e statements made by various persons before the Central Excise Officers, three are copies of the summons issued to the various persons, one is the panchnama drawn at the premises of Maruti Metals and two are orders passed by the adjudicating authorities and High Courts and the rest are a few letters and emails. 11. We find from the records of the case that the statements made before the officers of Central Excise which were relied upon in the SCN were not put through the process under section 9D of the Central Excise Act,1944 which reads as follows: Section 9D in the Central Excise Act, 1944 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se Officer, cannot be treated as relevant for the purpose of proving the facts contained therein. In other words, in the absence of the circumstances specified in Section 9D(1), the truth of the facts contained in any statement, recorded before a Gazetted Central Excise Officer, has to be proved by evidence other than the statement itself. The evidentiary value of the statement, insofar as proving the truth of the contents thereof is concerned, is, therefore, completely lost, unless and until the case falls within the parameters of Section 9D(1). 12 . The consequence would be that, in the absence of the circumstances specified in Section 9D(1), if the adjudicating authority relies on the statement, recorded during investigation in Central Excise, as evidence of the truth of the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentary legislation for admitting, into evidence, a statement recorded before the Gazetted Central Excise Officer, which does not suffer from the handicaps contemplated by clause (a) of Section 9D(1) of the Act. The use of the word shall in Section 9D(1), makes it clear that, the provisions contemplated in the sub-section are mandatory. Indeed, as they pertain to conferment of admissibility to oral evidence they would, even otherwise, have to be recorded as mandatory. 18 . The rationale behind the above precaution contained in clause (b) of Section 9D(1) is obvious. The statement, recorded during inquiry/investigation, by the Gazetted Central Excise Officer, has every chance of having been recorded under coercion or compulsion. It is 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 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13. During hearing, we specifically asked the learned authorised representative for the Revenue, if the statements before the Central Excise Officers had been put through the process prescribed under section 9D of the Central Excise Act, 1944 and he replied in negative. As per Section 9D, any statement made before any central excise officer is relevant only if it has gone through the process prescribed therein. In this appeal, revenue has asserted that the cross-examination of the persons who made the statements were not allowed by the authority due to some reasons. However, cross-examination will be necessary only if the statements made before the Central Excise Officers are, in the first place, relevant and they will be relevant only if the procedure prescribed under section 9D is followed. Since this procedure has not been followed, the statements are not relevant to prove anything in this case and consequently are also not admissible. Cross-examination, therefore, becomes unnecessary because the statements are not relevant or admissible in the first place. 14. We also asked learned authorised representative if all the statements are ignored being rendered not relevant by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not tenable and that, if it was accepted, the Revenue would suffer. But what Sri Reddy overlooks is that we are not concerned here with the correctness or otherwise of their conclusion or of any factual mala fides but with the fact that the officers, in reaching their conclusion, by-passed two appellate orders in regard to the same issue which were placed before them, one of the Collector (Appeals) and the other of the Tribunal. The High Court has, in our view, rightly criticised this conduct of the Assistant Collectors and the harassment to the assessee caused by the failure of these officers to give effect to the orders of authorities higher to them in the appellate hierarchy. It cannot be too vehemently emphasised that it is of utmost importance that, in disposing of the quasi-judicial issues before them, revenue officers are bound by the decisions of the appellate authorities. The order of the Appellate Collector is binding on the Assistant Collectors working within his jurisdiction and the order of the Tribunal is binding upon the Assistant Collectors and the Appellate Collectors who function under the jurisdiction of the Tribunal. The principles of judicial discipline re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso in the hands of the same officer. He has only to bring the matter to the notice of the Board or the Collector so as to enable appropriate proceedings being taken under S. 35E(1) or (2) to keep the interests of the department alive. If the officer s view is the correct one, it will no doubt be finally upheld and the Revenue will get the duty, though after some delay which such procedure would entail. 8 . We have dealt with this aspect at some length, because it has been suggested by the learned Additional Solicitor General that the observations made by the High Court, have been harsh on the officers. It is clear that the observations of the High Court, seemingly vehement, and apparently unpalatable to the Revenue, are only intended to curb a tendency in revenue matters which, if allowed to become widespread, could result in considerable harassment to the assessee-public without any benefit to the Revenue. We would like to say that the department should take these observations in the proper spirit. The observations of the High Court should be kept in mind in future and utmost regard should be paid by the adjudicating authorities and the appellate authorities to the requireme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hain. It is for the officers who registered various entities and who receive regular returns, who audit their records and who have power to summon, seek information, search, seize etc., to ensure that no fraud is committed at their end. 19. Further, in this case, the submissions of the respondent as well as that of the functionaries of Maruti Metals were recorded, extracts of which were reproduced in the order-in-original. None of these suggest, let alone prove, that Maruti Metals only supplied invoices to the Respondent without supplying goods. Therefore, even on merits, revenue has no case. 20. To sum up revenue s appeal is based: a) On a mistaken notion that the precedential value of the Tribunal s orders is subject to their acceptance by the revenue; b) On a mistaken notion that all statements recorded by a central excise officer are admissible as evidence even if the statutory requirement under section 9D of the Excise Act has not been followed and that cross-examination can be denied by the officers even when requested for by the assessee; c) On a mistaken notion that the assessee has the responsibility to investigate complete chain of supply of the goods which ..... 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