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2016 (6) TMI 957 - PUNJAB & HARYANA HIGH COURT

2016 (6) TMI 957 - PUNJAB & HARYANA HIGH COURT - 2016 (339) E.L.T. 209 (P & H) - Demand of differential duty of excise - admissibility of statement recorded u/s 14 as evidence - flagrant violation of Section 9D of the Central Excise Act, 1944 - Held that:- 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-examination has to precede re-examination. - Clearly, if this procedure, which is s .....

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g investigation under Section 14 of the Act. He has not invoked clause (a) of sub-section (1) of Section 9D of the Act, by holding that attendance of the makers of the said statements could not be obtained for any of the reasons contemplated by the said clause. - That being so, it was not open to Respondent No.2 to rely on the said statements, without following the mandatory procedure contemplated by clause (b) of the said sub-section. - the Show Cause Notice issued to the petitioner is rema .....

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ocate took notice for the respondents. 3. The petitioner seeks, by means of the present Writ Petition, to challenge Order-in-Original No. V(29) 15/ce/Commr.Adj/Chd-II/44/2015, dated 4.4.2016 issued by respondent no.2 whereby respondent no. 2 has confirmed differential Central Excise Duty (hereinafter referred to as duty ) demand of ₹ 7,08,38,008/- with interest and equivalent penalty. It is contended that the impugned order in original has been passed in flagrant violation of Section 9D of .....

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der 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 .....

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Act, other than a proceeding before a Court, as they apply in relation to a proceeding before a Court. 5. 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 ther .....

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lously followed, as much in adjudication proceedings as in criminal proceedings relating to prosecution. 8. 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 Of .....

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e falls within the parameters of Section 9D(1). 9. The consequence would be that, in the absence of the circumstances 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. 10. Once the ambit of Section .....

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e adverse party, and v) when the presence of the person who made the statement cannot be obtained without unreasonable delay or expense. 12. 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 b .....

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re, it is clear that the adjudicating authority cannot invoke Section 9D(1)(a) of the Act without passing a reasoned and speaking order in that regard, which is amenable to challenge by the assessee, if aggrieved thereby. 13. 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 st .....

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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 pertain to conferment of admissibility to oral evidence they would, even otherwise, have to be recorded as mandatory .....

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nt in evidence, clause (b) of Section 9D(1) mandates that the evidence of the witness has to be recorded before the adjudicating authority, as, in such an atmosphere, there would be no occasion for any trepidation on the part of the witness concerned. 16. 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 accord .....

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ection 9D(1). In all other cases, if he wants to rely on the said statement as relevant, for proving the 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 just .....

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in writing, that the statement deserves to be admitted in evidence, that the question of offering the witness to the assessee, for crossexamination, can arise. 19. 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 considera .....

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, stands affirmed in the judgement of the Supreme Court in C.C. V Bussa Overseas Properties Ltd, 2007(216) ELT 659 (SC), which upheld the decision of the Tribunal in Bussa Overseas Properties Ltd v C.C., 2001 (137) ELT 637 (T). 22. It is clear, from a reading of the Order-in-original dated 4.4.2016 supra, that Respondents No.2 has, in the said Orders-in-Original, placed extensive reliance on the statements, recorded during investigation under Section 14 of the Act. He has not invoked clause (a) .....

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e Act, it has to be held that said Orders-in-Original stand vitiated thereby. 23. The said order-in-Original, dated 4.4.2016, passed by Respondent No.2 is, therefore, clearly liable to be set aside. 24. In view of the above facts and circumstances, the impugned Order-in-Original dated 4.4.2016 passed by respondent no.2 stands set aside. Resultantly, the Show Cause Notice issued to the petitioner is remanded to respondent no.2 for adjudication de-novo by following the procedure contemplated by Se .....

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