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TMI Blog2025 (1) TMI 424X X X X Extracts X X X X X X X X Extracts X X X X ..... ributors and various other traders? 2. Whether the appellant herein is still obligated to prove the clandestine manufacture and clearance of excisable goods when the Managing Partner of the respondent firm and its sole distributors and various other traders admitted the facts and more so admitted facts need not be proved?" FACTUAL BACKGROUND AND REVENUE'S STAND: 2. Sri A. Rama Krishna Reddy, learned counsel for the appellant submits that a search took place in the premises of respondent firm on 29.08.1996. The firm was found to be indulging in clandestine transfer of finished goods without paying excise duty through its sister concerns namely M/s. Geetha Synthetics and M/s. Shakthi Traders. The search was conducted in the presence of two witnesses and recovered certain goods and lastly, 'punchanama' dated 29.08.1996 was prepared. The man made material (MMF) and raw material i.e., grey fabric were found in excess for the stock reflected in statutory records and excess stock was seized. The 'punchanama' was drafted and named as GS/55/70. 3. The case of the revenue was that during the course of search the sister concerns received goods without raising central excise invoices. Sri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... based on correct appreciation of evidence should not have been disturbed by CESTAT by the impugned order dated 20.12.2005. 7. The stand of the revenue is that Section 9D (2) of the Excise Act is not applicable. The learned Tribunal has not given cogent reasons why the findings of the Commissioner cannot sustain judicial scrutiny despite the fact that it is founded upon the statement of 12 witnesses. If they were not produced during the adjudication proceedings and were not permitted to be cross examined by the respondent, it will not cause any dent on the case of the revenue. Heavy emphasis is laid on the word 'prosecution' employed in Section 9D of the Excise Act. It is submitted that said provision is applicable in cases of 'prosecution' and necessity to cross-examine can be pressed into service only when the case reached to the stage of 'prosecution' and not for adjudicating proceedings. 8. Sri Rama Krishna Reddy by placing reliance on the judgment of Supreme Court in the case of Commissioner of Central Excise, Mumbai v. Kalvert Foods India Private Limited (2011) 12 SCC 243 submits that a plain reading of this judgment will show that the facts of that case are almost similar t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsideration i.e., whether in the teeth of Section 138B of the Customs Act, 1962 (for short 'Customs Act'), which is pari materia provision, in departmental adjudication the witness is required to be produced. It is submitted that the Division Bench clearly held that without producing such witnesses in the adjudication proceedings and without subjecting them to cross-examination, those statements cannot be used against the assessee. It is further highlighted that there is no unconditional, unequivocal, admission or confession on the part of the Managing Partner. The reliance is placed on paragraph S 5.1 of the order of adjudicating authority wherein he opined that the Sri Narendra Kumar Goel, Managing Partner of VSM has not admitted or 'confessed' anything. 12. Learned Senior Counsel for the respondent placed reliance on another judgment of Bombay High Court in the case of Prakash Raghunath Autade v. Union of India 2021 SCC OnLine Bom 13137, wherein Section 9D of the Excise Act was considered and it was held that during adjudication proceedings, the relevant witnesses needs to be summoned and in absence thereof, such statements shall not be relied upon against the assessee unless ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has no application in the instant case. Sub-section (1) (a) can be pressed into service (a) when person who had given the statement is dead, (b) when he cannot be found, (c) when he is incapable of giving evidence, (d) when he is kept out of the way by the adverse party and (e) when his presence cannot be secured without an amount of delay or expense, which officer considers unreasonable. In the considered opinion of this Court, this provision is based on doctrine of necessity. Admittedly, in the instant case, sub-section 1 (a) of Section 9D of the Excise Act has no application. 18. This case revolves around the interpretation and application of Section 9D (1) (b) of the Excise Act. It is pertinent to remember that learned counsel for the appellant has taken pains to highlight that the word 'prosecution' is employed in Section 9D and therefore, it cannot be stretched to be applied on 'adjudication proceedings'. The argument at the threshold appears to be attractive but lost much of its shine when examined minutely with the aid of various judgments. The Punjab and Haryana High Court in G-Tech Industries (supra) held as under: "19. Clearly, if this procedure, which is statutorily ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of the statements during search and seizure operation under C.E.A. 1944 are quasi criminal in nature because it results in imposition of not only duty but also a penalty and in some cases, it may also lead to prosecution. Therefore the statement recorded before a Gazetted Central Excise officer during inquiry or investigation, would be relevant only after the statement is admitted in evidence in accordance with the procedure prescribed under Clause (b) of Section 9D(1). The rationale behind the precaution contained in Section 9D (1) (b) is obvious as the statement recorded during inquiry/investigation by the Gazetted Central Excise Officer has every chance of having been recorded under coercion or compulsion. Therefore, the provisions contained in Section 9D have to be construed strictly and held as mandatory and, non-compliance would result in rendering the statement as irrelevant piece of evidence that cannot be used by the Adjudicating Authority to arrive at its finding. (See: Flevel International v. Commissioner of Central Excise, [(2016) 332 ELT 416 (Del.) Para 40-46); Jindal Drugs Pvt. Ltd. v. Union of India, [(2016) 340 ELT 67 (P & H), para 9 to 25]; High Tech Abrasives ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the word 'prosecution' needs to be understood. The proceeding may lead into imposition of penalty. In some cases, it may also result into 'prosecution'. We are in respectful agreement with the view taken by Division Bench of Jharkhand High Court in Bihar Foundry & Casting Ltd. (supra). Thus, we are unable to persuade ourselves with the line of argument of revenue that because of use of the word 'prosecution' in Section 9D of the Excise Act, the requirement of producing evidence in adjudication proceeding can be done away with. 22. The Bombay High Court in Ciabro Alemao (supra) has framed question which reads thus: "(b) Could the Tribunal legitimately have relied on Section 138B of the Customs Act and applied to it departmental adjudication proceedings when the section specifically and clearly applies only to prosecution for offences under the Customs Act?" 23. It was rightly highlighted that Section 138 (B) of the Customs Act is almost analogous to Section 9 (D) of the Excise Act. Section 138 (B) reads as under: 138B. Relevancy of statements under certain circumstances.- "(1) A statement made and signed by a person before any gazetted officer of customs during the course ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings before the relevant authority any witness is summoned in terms of the power conferred by section 14 of the Act and his statement is recorded and found relevant, such statement shall not be relied upon against the petitioner unless he has been given suitable and reasonable opportunity to cross examine such witness; (e) the evidence of the witness, as above, shall be recorded in the presence of the petitioner; and (f) based on the evidence and other materials on record, the relevant authority shall proceed to pass a final order in accordance with law." (Emphasis Supplied) 27. Apart from this, in State of Mysore v. S.S. Makapur AIR 1963 SC 375, the Apex Court (Constitution Bench) ruled that the purpose of an examination in the presence of a party against whom an enquiry is made, is sufficiently achieved, when a witness who has given a prior statement is recalled, the statement is put to him, and made known to the opposite party, and the witness is tendered for cross-examination by that party. 28. In the light of aforesaid judgments, it is clear like noon day that the incriminating material/statements recorded behind the back of the petitioner cannot be used against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the instant case, as the appellant did not examine either the attesting witnesses of the document, nor proved its contents, no fault can be found with the judgment [(2004) 1 MLJ 301] impugned before us." (Emphasis Supplied) 31. In this view of the matter, it can be safely concluded that even if the signature of Babu Lal was tallied pursuant to the report of Government examiner that will not establish that contents of the statement are also proved. The other judgment cited by learned Standing Counsel for the appellant in the case of D. Bhoormall (supra) cannot be pressed into service in a case of this nature. The said case is founded upon totally different facts and different statute. 32. In view of foregoing discussion, substantial questions must be answered in favour of the respondent. We answer it accordingly and hold that in the teeth of Section 9D (1) (b) of the Excise Act, unless, the incriminating material and witnesses are produced in the adjudication proceedings and are permitted to be cross-examined by the assessee, the said incriminating material cannot be used against the assessee. Thus, Appeal fails and is hereby dismissed. There shall be no order as to costs. ..... 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