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2023 (10) TMI 874 - AT - Central ExciseClandestine removal - 3635.715 MT of MS bars of various sizes - demand based on the documents recovered allegedly from the said pen drive and statements recorded during investigation - corroborative evidences or not - cross-examination not permitted - violation of principles of natural justice - HELD THAT:- Although the cross-examination of the author of the diaries i.e. Mr.Suresh Mohata, entries in which to a large extent have been the basis of the issuance of show cause notice and confirmation of demand, was allowed by the adjudicating authority but the department failed to produce him for cross-examination - The appellants have asked for the cross-examination of those alleged six actual buyers but were not permitted. The demand was confirmed by the Adjudicating Authority on the basis of the documents allegedly retrieved from the said pen drive coupled with some statements recorded during investigation as well as u/s. 14 ibid. Admittedly the cross-examination was not granted to the appellants as according to the adjudicating authority that was not relevant despite the fact that the charges in the show cause notice are based on the evidence emanating from the seized documents and statements recorded during the course of investigation. Not allowing cross-examination is violative of the principle of natural justice. In catena of decisions it has been held that such statements cannot be relied upon. Denial of cross-examination by the adjudicating authority is a clear violation of the mandate of Section 9D ibid. - In the matter of Hi- Tech Abrasives Ltd. [2018 (11) TMI 1514 - CHHATTISGARH HIGH COURT] Hon’ble Chhattisgarh High Court has held that statements recorded u/s. 14 of the Act cannot be relied upon as evidence without following the rigour of Section 9D of the Act since the provisions of Section 9D are mandatory in nature. Mere recovery of private records, that too from the third party, is not sufficient to prove clandestine removal and a concrete and clinching evidence is required to prove such allegations and it is for the department to discharge the burden and prove the charges of clandestine removal against the appellants. It is settled position that the statements of witnesses cannot be relied upon unless they are corroborated with cogent evidence and when there is no corroborative evidence to support statements of witnesses those statements cannot be relied upon without offering a chance of cross-examination to the person charged. Denial of cross-examination vitiates entire proceedings as it amounts to violation of principle of natural justice - It is no doubt true that there is no right of cross- examination if sufficient corroborative evidence exists, but in the present case we are unable to find the sufficient corroborative evidence against the appellants and therefore the appellants were justified in asking for cross-examination. The Hon’ble High Court of Judicature at Allahabad in the matter of COMMISSIONER OF CENTRAL EXCISE, MEERUT-I, MEERUT & ANOTHER VERSUS M/S PARMARTH IRON PVT. LTD., BIJNOR. [2010 (11) TMI 109 - ALLAHABAD HIGH COURT], while relying upon the law laid down by the Hon’ble Supreme Court in cases of ARYA ABHUSHAN BHANDAR VERSUS UNION OF INDIA [2002 (3) TMI 54 - SC ORDER] and SWADESHI POLYTEX LTD. VERSUS COLLECTOR OF CENTRAL EXCISE, MEERUT [2000 (7) TMI 85 - SC ORDER] and of the Hon’ble High Court of Judicature at Bombay in case of GYAN CHAND SANT LAL JAIN VERSUS UNION OF INDIA [1975 (10) TMI 33 - HIGH COURT OF JUDICATURE AT BOMBAY], has held that at the stage of adjudication, it is the right of an assessee to seek cross-examination of the witnesses whose statements are sought to be relied upon by the Revenue and that cross-examination is necessary so that it could be established whether the statements recorded had been voluntarily given and/or are relevant for the issue or based on personal knowledge or hearsay and the like. The department has miserably failed to substantiate the allegation of clandestine manufacture and clearance by any tangible or corroborative evidence. The diaries or pen-drive from a third party cannot be said to be sufficient proof of such allegation and the department has failed to make out a case beyond any doubt. Appeal allowed.
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