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2016 (6) TMI 956 - PUNJAB & HARYANA HIGH COURT

2016 (6) TMI 956 - PUNJAB & HARYANA HIGH COURT - 2016 (340) E.L.T. 67 (P & H) - Demand of duty based on statement recorded u/s 14 of the Central Excise Act, 1944 - flagrant violation of Section 9D by relying upon statements without admitting them in evidence by following the prescribed procedure contained therein. - Held that:- In fact, Section 138 of the Indian Evidence Act, 1872, clearly sets out the sequence of evidence, in which evidence-in-chief has to precede cross-examination, and cross-e .....

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mar, Advocate ORDER M. Jeyapaul, J. 1. Heard the submissions made by learned counsel appearing for the petitioners. 2. On asking of the Court Mr. V.K. Kaushal, Advocate took notice for the respondents. 3. The petitioners have filed the Writ Petition for issuance of a Writ of Mandamus directing respondent no.2 before whom Show Cause Notice No. C.No.V(33)84/HQ/Adj/CE/J&K/JDL/12/1275 dated 5.11.2012 is presently pending adjudication to follow the mandate of Section 9D(1) of the Central Excise A .....

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ers units are located in the State of Jammu and Kashmir. By virtue of the Notification 56/2002-CE dated 14.11.2002 the manufacturing unit of the Writ Petitioners are exempted from payment of duty under the Act. Under the said Notification units entitled to exemption thereunder are required to pay duty on the clearance effected by them where after refund of the said duty to the extent it has been paid otherwise than by way of utilization of Cenvat Credit i.e. to the extent it has been paid from t .....

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t the petitioners had without manufacturing any finished products in its premises namely premises in Jammu, wrongly taken refund of ₹ 48,10,79,820/- during the period November 2007 to March 2010 proposing to demand a recovery thereof along with interest and penalty and requiring the petitioners to Show Cause there against. 7. Petitioners filed reply to the Show Cause Notice and attended the personal hearing before respondent no. 2. It is contended by the petitioners that the 2nd respondent .....

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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 .....

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A plain reading of sub-section (1) of Section 9D of the Act makes it clear that clauses (a) and (b) of the said sub-section set out the circumstances in which a statement, made and signed by a person before the Central Excise Officer of a gazetted rank, during the course of inquiry or proceeding under the Act, shall be relevant,for the purpose of proving the truth of the facts contained therein. 10. Section 9D of the Act came in from detailed consideration and examination, by the Delhi High Cou .....

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. As already noticed herein above, 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 word .....

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ircumstances 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 s .....

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unreasonable delay or expense. 15. Once discretion, to be judicially exercised is, thus conferred, by Section 9D, on the adjudicating authority, it is self-evident inference that the decision flowing from the exercise of such discretion, i.e. the order which would be passed, by the adjudicating authority under Section 9D, if he chooses to invoke clause (a) of sub-section (1) thereof, would be pregnable to challenge. While the judgment of the Delhi High Court in J&K Cigarettes Ltd. (supra) h .....

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ng a reasoned and speaking order in that regard, which is amenable to challenge by the 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. .....

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re 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. Th .....

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d before the adjudicating authority, as, in such an atmosphere, there would be no occasion for any trepidation on the part of the witness concerned. 19. Clearly, therefore, the stage of relevance, in adjudication proceedings, of the statement, recorded before a gazetted Central Excise officer during inquiry or investigation, would arise only after the statement is admitted in evidence in accordance with the procedure prescribed in clause (b) of Section 9D(1). The rigour of this procedure is exem .....

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e truth of the contents thereof, he has to first admit the statement in evidence in accordance with clause (b) of Section 9D(1). For this, he has to summon the person who had made the statement, examine him as witness before him in the adjudicating proceeding, and arrive at an opinion that, having regard to the circumstances of the case, the statement should be admitted in the interests of justice. 20. In fact, Section 138 of the Indian Evidence Act, 1872, clearly sets out the sequence of eviden .....

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itness to the assessee, for crossexamination, 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 als .....

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16) ELT 659 (SC), which upheld the decision of the Tribunal in Bussa Overseas Properties Ltd v C.C., 2001 (137) ELT 637 (T). 25. In the light of the above, respondent no. 2 is directed to adjudicate the Show Cause Notice issued to the writ petitioners by following the procedure contemplated by Section 9D of the Act and the law laid down by various judicial authorities in this regard, including the principles of natural justice, in the following manner: (i) In the event that the Revenue intends t .....

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