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TMI Blog2024 (9) TMI 403X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. Third party's evidence is not sufficient to establish the clandestine removal of appellant s goods particularly when the said third party's statement was not examined under Section 9D of Central Excise Act, 1944 - By reading the Section 9D, it is clear that it is not the optional but mandatory to conduct the cross examination of the witnesses. Since in the present case no cross examination was allowed, the statements can not be relied upon which is the root of the evidence and in the absence of root tree cannot stand. It is a settled law that in absence of cross examination the statements cannot be relied upon as evidence as the same lose its evidentiary value - reliance can be placed in ANDAMAN TIMBER INDUSTRIES VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA-II [ 2015 (10) TMI 442 - SUPREME COURT ] where it was held that ' we are of the opinion that if the testimony of these two witnesses is discredited, there was no material with the Department on the basis of which it could justify its action, as the statement of the aforesaid two witnesses was the only basis of issuing the show cause notice.' Thus, the revenue could not establish it s case of clandestine rem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 2011. The department further alleged that out of such 691.33 M.Tons of Billets allegedly received by the Appellant clandestinely, the Appellant manufactured 691.33 M. Tons of Structural Items/ rolled Products and cleared the same clandestinely without payment of duty. The department also relied upon two Blank Invoices recovered from Ramesh Pandey who was working as a cook in canteen of TFCWRL, which are alleged to have been kept for using as cover for clandestine removal. The department also recorded Statement dated 12-6-2013 of the Second appellant, Sanjay Gaur in support of the said allegations. 1.3 Based on the aforesaid allegations, Show cause notice dated 1-8-2013 was issued to the Appellant demanding Central Excise duty of Rs.25,40,675/- on the said 691.33 M.Tons of Structural items/ rolled products alleged to have been clandestinely manufactured and cleared out of 691.33 M.Tons of Billets alleged to have been clandestinely received by the Appellant from TFCWRL. The Appellant replied to and contested the said Show Cause Notice by their Advocate s letter, by which it was inter alia submitted that no case for clandestine removal on the part of the Appellant can be said to ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o evidence of transportation of the said alleged 691.33 M.Tons of Structural items/ rolled products to any Buyer. There is no evidence whatever of any payment received by the Appellant from any buyer for supply of the said alleged 691.33 M.Tons of Structural items/ rolled products to any Buyer. In the absence of any such evidence, no case of clandestine removal can be said to have been established merely on the basis of entries in Private records maintained by a Third party and on the basis of Statements of persons who have not been examined and cross-examined in the adjudication proceedings as required by Section 9D of the Central Excise Act 1944. 2.5 In support of the submission that charge of clandestine removal cannot be upheld based on third party documents and mere statements in absence of any evidence of production of goods, their transportation, buyers of the goods, receipt of payment from the buyers, reliance is placed on the following decisions: a) Bajrangbali Ingots Steel P. Ltd v CCE 2019 (1) TMI 966-CESTAT-NEW DELHI, b) Raipur Forging P. Ltd v CCE 2016 (335) ELT 297 c) CCE v Garg Industries P. Ltd 2023 (385) ELT 541 d) Arya Fibers P. Ltd v CCE 2014 (311) ELT 529 e) Con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tured received by any buyer. There is not a single evidence of receipt of sale proceed against alleged clandestine manufacture and clearance of final product. No evidence of transport of any single consignment of alleged clandestinely removed goods was adduced. Third party's evidence is not sufficient to establish the clandestine removal of appellant s goods particularly when the said third party's statement was not examined under Section 9D of Central Excise Act, 1944 which 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 an amount of delay or expense which, under the circumstances of the case, the Court considers unreasonable; or (b) when the person w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o for what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them. 7 . As mentioned above, the appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of cross-examination. That apart, the Adjudicating Authority simply relied upon the price list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price list itself could be the subject matter of cross-examination. Therefore, it was not for the Adjudicating Authority to presuppose as to what could be the subject matter of the cross-examination and make the remarks as mentioned above. We may also point out that on an earlier occasion when the matter came before this Court in Civil Appeal No. 2216 of 2000, order dated 17-3-2005 [2005 (187) E.L.T. A33 (S.C.)] was passed remitting the case back to the Tribunal with the directions to decide the appeal on merits giving its reasons for accepting or rejecting the submissions. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i High Court, in J.K. Cigarettes Ltd. v. CCE, 2009 (242) E.L.T. 189 (Del.). Para 12 of the said decision clearly holds that by virtue of sub-section (2) of Section 9D, the provisions of sub-section (1) thereof would extend to adjudication proceedings as well. There can, therefore, be 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 in adjudication proceedings as in criminal proceedings relating to prosecution. 11 . As already noticed hereinabove, sub-section (1) of Section 9D sets out the circumstances in which a statement, made and signed before a gazetted Central Excise Officer, shall be relevant for the purpose of proving the truth of the facts contained therein. If these circumstances are absent, the statement, which has been made during inquiry/investigation, before a Gazetted Central Excise 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee, if aggrieved thereby. 16 . If none of the circumstances contemplated by clause (a) of Section 9D(1) exists, clause (b) of Section 9D(1) comes into operation. The said clause prescribes a specific procedure to be followed before the statement can be admitted in evidence. Under this procedure, two steps are required to be followed by the adjudicating authority, under clause (b) of Section 9D(1), viz. (i) the person who made the statement has to first be examined as a witness in the case before the adjudicating authority, and (ii) the adjudicating authority has, thereafter, to form the opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interests of justice. 17 . There is no justification for jettisoning this procedure, statutorily prescribed by plenary Parliamentary 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 perta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has already been recorded before a Gazetted Central Excise Officer is examined as a witness before the adjudicating authority, and (ii) the adjudicating authority arrives at a conclusion, for reasons to be recorded in writing, that the statement deserves to be admitted in evidence, that the question of offering the witness to the assessee, for cross-examination, can arise. 22 . Clearly, if this procedure, which is statutorily prescribed by plenary Parliamentary legislation, is not followed, it has to be regarded, that the Revenue has given up the said witnesses, so that the reliance by the CCE, on the said statements, has to be regarded as misguided, and the said statements have to be eschewed from consideration, as they would not be relevant for proving the truth of the contents thereof. 23 . Reliance may also usefully be placed on Para 16 of the judgment of the Allahabad High Court in C.C.E. v. Parmarth Iron Pvt Ltd., 2010 (260) E.L.T. 514 (All.), which, too, unequivocally expound the law thus : If the Revenue choose (sic chose?) not to examine any witnesses in adjudication, their statements cannot be considered as evidence. 24 . That adjudicating authorities are bound by the g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hout allowing the assessee an opportunity to test the said evidence by cross-examining the makers of the said statements. If at all authority is required for this proposition, reference may be made to the decisions of the Hon ble Supreme Court in Arya Abhushan Bhandar v. U.O.I., 2002 (143) E.L.T. 25 (S.C.) and Swadeshi Polytex v. Collector, 2000 (122) E.L.T. 641 (S.C.). 26 . With the above directions, the writ petition stands disposed of. c) In the case of HI Tech Abrasives Ltd Vs. Commissioner of C. EX. Cus., Raipur- 2018 (362) ELT 961 (Chhattisgarh) Hon ble Chhattisgarh High Court has passed the following judgment:- 9. Findings on Substantial Questions of Law (i) (ii) : We shall decide the first two substantial questions of law as they are overlapping. The submission of counsel for the appellant has been that firstly, the Director s statement was not admissible and secondly it cannot be treated as admission because in reply to Show Cause Notice, the said statement was stated to have been obtained under duress. We shall first examine the legal position with regard to the admissibility of the statement of Director which admittedly was taken during search operations by the investiga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tingencies enumerated therein, clause (b) provides that statement made and signed would be relevant for the purposes of proving the truth of the facts contained in that statement only when the person whom made the statement is examined as witness before the Court. (her, the adjudicating authority). 9.2 At this juncture, we need to notice the provision contained in Section 9D which provides that sub-section (1) shall, as far as may be, applied in relation to the proceedings under the Act, other than the proceeding before the court, as they apply in relation to proceeding before the Court. This provision when read in juxtaposition, the small clauses (a) and (b) under sub-section (1), requirement of law of recording of examination as witness would be in relation to the proceedings before the adjudicating authority. 9.3 A conjoint reading of the provisions therefore reveals that a statement made and signed by a person before the Investigation Officer during the course of any inquiry or proceedings under the Act shall be relevant for the purposes of proving the truth of the facts which it contains in case other than those covered in clause (a), only when the person who made the statemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... take into consideration the statement recorded earlier during investigation by the Investigation officers. Indeed, without examination of the person as required under Section 9D and opinion formed as mandated under the law, the statement recorded by the Investigation Officer would not constitute the relevant and admissible evidence/material at all and has to be ignored. We have no hesitation to hold that the adjudicating officer as well as Customs, Excise and Service Tax Appellate Tribunal committed illegality in placing reliance upon the statement of Director Narayan Prasad Tekriwal which was recorded during investigation when his examination before the adjudicating authority in the proceedings instituted upon show cause notice was not recorded nor formation of an opinion that it requires to be admitted in the interest of justice. In taking this view, we find support from the decision in the case of Ambica International v. UOI rendered by the High Court of Punjab and Haryana. Reliance has been placed by the Counsel for the Revenue on the decision in the matter of Commissioner of Central Excise v. Kalvert Foods India Private Limited (Laws (SC) 2011 838) = 2011 (270) E.L.T. 643 (S.C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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