2022 (3) TMI 694 - JHARKHAND HIGH COURT

Clandestine removal - Jurisdiction - Power to summon persons to give evidence and produce documents in inquiries - reliability of statements - statement of Managing Director of the appellant-company recorded under Section 14 of the Central Excise Act, 1944 could be treated as a relevant piece of material without complying with the provisions of Section 9D of Central Excise Act, 1944 - suo-moto deposit of differential duty liability, whose details have been mentioned in SCN issued to the appellant as well as to its Managing Director can be said to be an admission on the part of the appellant regarding clandestine removal of goods - penalty imposed by the adjudicating authority upon the Managing Director of the Company, having attained finality, can itself be used against the appellant or not - impugned order was passed solely on the statement of the Managing Director of the Company recorded under Section 14 of the Central Excise Act, 1944 or otherwise - entries made in private diary of the Managing Director of the Company could have been a basis for passing the impugned order or not.

As per Aparesh Kumar Singh, J

HELD THAT:- The order of learned Tribunal cannot be sustained in the eye of law. It is accordingly set aside. The substantial questions of law framed for adjudication in this appeal are accordingly answered in favour of the Appellant Assessee. Let the Lower Court Records be sent to the concerned Tribunal and Authorities.

As per Anubha Rawat Choudhary J

HELD THAT:- It can be concluded as follows:-

i. the statement recorded under Section 14 is per-se admissible in evidence by the adjudicatory authority under Central Excise Act, 1944 subject to scrutiny by the adjudicating authority in the light of Section 24 of the Indian Evidence Act.

ii. Such scrutiny is required to be done by the adjudicating authority on the basis of materials available before him including the evidences collected and statements recorded under Section 14, before relying upon such statements and treating them as relied upon evidence while issuing show-cause notice.

iii. Upon scrutiny under Section 24 of the Evidence Act, such statement recorded under Section 14 of the Act of 1944 can be relied upon by the adjudicating authority while issuing show-cause notice without calling upon the person to depose as a witness in terms of Section 9D (1) (b) read with Section 9D (2) of the Act of 1944. The moment the adjudicating authority relies upon the statement recorded under section 14 of the Central Excise Act, it is indicative of the fact that necessary scrutiny in terms of Section 24 of the Evidence Act has been done and no separate order is required to be passed to this effect and this is also subject to any objection to be raised by the noticee/ person whose statement has been recorded. This is because the recording of evidence is permissible under Section 14 of the Act of 1944 by issuing summons by a Central Excise Officer duly empowered by the Central Government in this behalf and the person concerned is under statutory legal obligation to disclose the truth and there are penal consequences for giving false evidence and the recording of evidence under section 14 of the Act of 1944 is deemed to be a judicial proceeding under Section 193 and Section 228 of Indian Penal Code.

iv. This will not be the position with regards to the statements under other provision of the Act of 1944 which are not recorded pursuant to summons under Section 14, including those of arrested persons under Section 21 of the Act of 1944. They would require compliance of Section 9D (1) (b) read with Section 9D (2) of the Act of 1944, if they are to be relied upon by the adjudicating authority and the only exception are those circumstances as provided under Section 9D (1) (a) of the Act of 1944.

v. In case of any objection with regards to the statements recorded under Section 14 of the Act of 1944, the person can be called upon at the instance of the noticee for cross-examination and the adjudicating authority is bound to consider such request and pass an appropriate order, failing which such statement recorded under Section 14 of the Act of 1944 is to be eschewed. On account of situation covered under Section 9D(1)(a), the statement becomes relevant in terms of Section 9D(1)(a) read with Section 9D (2) of the Act of 1944 as the person need not be produced for cross- examination.

vi. It is the right of the noticee to have the statements excluded from relied upon evidence by the adjudicating authority in light of Section 24 of the Indian Evidence Act and equally the duty of the adjudicating authority to exclude it even suo-moto if the vitiating circumstances appear from the records, as Section 24 of the Evidence Act uses the word “appears to the court”. When the noticee alleges that the statement recorded under Section 14 of the Act of 1944 was a result of threat or undue pressure of the authority, he must prove his allegation to be true, though the burden of this proof on the noticee is not very heavy, but certainly such allegation should be based on some material.

vii. Admittedly in the instant case no request was made before the adjudicating authority to cross examine any witness whose statements were recorded under section 14 of the Act of 1944 including that of the Managing Director of the appellant company. Admittedly no objection whatsoever was made in connection with the relied upon statements before the adjudicating authority and there was no material before the adjudicating authority to discard the statements in the light of Section 24 of the Evidence Act. The retraction by the Managing Director for the first time at appellate stage after expiry of more than four years was clearly an afterthought.

The statement of the Managing Director recorded under Section 14 of the Act of 1944 could be relied upon and treated as a relevant piece of material while issuing the show-cause notice to the Managing Director as well as the appellant company and the same could be relied upon without calling upon the Managing Director to again depose as a witness before the adjudicating authority in terms of Section 9D (1) (b) read with Section 9D (2) of the Act of 1944.

Application disposed off.