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Elora Tobacco Co. Ltd. Versus Commissioner of Central Excise, Customs and Service Tax, Indore

2016 (8) TMI 836 - CESTAT NEW DELHI

Whether an appeal would lie against the decision rejecting the request for cross examination - Held that:- by following the judgement of the Hon'ble Delhi High Court in the case of J & K Cigarettes v CCE [2009 (8) TMI 64 - DELHI HIGH COURT] and Tribunal's decision in the case of Swiber Offshore Construction Pvt Ltd v CC [2013 (11) TMI 1232 - CESTAT AHMEDABAD] where it was held that it is always open to the affected party to challenge the invocation of provisions of Section 9D of the Act in a par .....

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tention of the appellant regarding Section 9D of the Act and the manner in which it is to operate and, therefore, seeks to be provided the records of the examination-in-chief of the witnesses whose statements are referred to in the Show Cause Notice dated 16.02.2012 issued to the appellant, so that the appellant could, if necessary, seeks cross-examination of the said witnesses are no longer res-integra and stands decided by a number of authorities, most recently by Hon'ble Punjab and Haryana Hi .....

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mandate of Section 9D of the Act, in accordance with the directions contained in the judgment of Hon'ble High Court of Punjab & Haryana in Ambika International (supra). - Appeal disposed of - E/51876/2016 - SM - 52571/2016 - Dated:- 23-6-2016 - Mr. M.V. Ravindran, Member (Judicial) Shri S. Sunil, Advocate for appellant Shri M.R. Sharma (AR) for respondent ORDER The appellant, in the present appeal has challenged the decision taken by the Principal Commissioner rejecting the request for cross-exa .....

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se, K-10, Globus, Budget, Red Rose-10 and Red Rose-20 etc brands of Cigarattes. Show Cause Notice, dated 16.02.2012, was issued to the appellant and other noticees, proposing differential duty demand along with interest and penalty, and calling upon the appellant to show cause there against. Any detailed reference to the allegations in the Show Cause Notice would not be merited in the present case, however, it may be mentioned that the Show Cause Notice relied on the statements of the following .....

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hri Santosh Jaiswal, employee of M/s Prem Agency, Kanpur (vi) Shri Rajat Gupta, Proprietor of M/s Babu Brothers, 51/104, Lal Phatak, Sakarpati, Nayaganj, Kanpur (vii) Shri Anil Khurana, Proprietor of M/s Khurana Brothers, 52/44, Nayagani, Kanpur (viii) Shri Pawan Gupta, Proprietor of M/s Pawan Gupta, 51/104, Lal Phatak Sakarpati, Nayaganj, Kanpur (ix) Shri Kotha Venkateshwarlu, the Proprietor of M/s Sri Gopala Krishna General Stores, Vijayawada, (x) Shri Shiv Narayan Kushwaha, owner of M/s Kushw .....

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Matheshwari Agency, AVM Complex, RG Street, Coimbatore (xvi) Shri Pawan Gupta, Proprietor, M/s Pawan Gupta, 51/104, Lal Pyatak, Sakarpatti, Nayaganj, Kanpur (xvii) Shri Chaganlal Dharmaram, Proprietor of M/s Ashapuri Marketing, 330/A, RG Street, Coimbatore (xviii) Shri P Abdul Latheef, Proprietor of M/s Harshin Enterprises, 9/419-K, Poonthala Building, Pan Bazar, Mavumkunnu Road, Tirur (xix) Shri Mangal Ram Rajm Purohit, proprietor of M/s Sri Samunda Trading Co 907, R G Street, Coimbatore and ow .....

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pur (xxv) Statement of Shri Gopal Goyal (Aggarwal) owner of godown situated near about 150/175 mtrs away from plot No. 317, Sector-F, Sanwer Road, Industrial Area (xxvi) Statement of Shri Ashish Ajmera, owner of godown situated plot No. 165/A Sector-F, Industrial area (xxvii) Shri Shyam Khemani, Director (xxviii) Statememt of Shri K. Devendrappa, Office clerk of M/s Lucky Bagga Transport Co., Hyderabad (xxix) Statememt of Shri Balbeer Singh Thakur, Office clerk of M/s Lucky Bagga Transport Co., .....

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letter, to the provisions of Section 9D of the Act, with the specific averment that any statement, recorded before a gazetted Central Excise officer, under the Act, would be relevant in adjudication proceedings only if the maker of the said statement was examined in chief and his cross examination is allowed. As such, it was requested, vide the said communication, that the records of examination in chief of the persons whose statements were relied upon in the Show Cause Notice dated 16.02.2012 .....

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14), Shri Goyal Agarwal (Noticee No.15) and Shri Ashish Ajmera (Noticee No.16). On the captioned subject, the appropriate authority has observed that Shri Shiv Narayan Kushwha, Shri Goyal Agarwal and Shri Ashish Ajmera are also the co-noticees, and hence this authority cannot direct them to be present for cross examination which may cause them to incriminate themself and therefore, the request for their cross-examination is not granted. In this regard, reliance is placed on the following case la .....

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the approval of the appropriate authority. 5. The present appeal is directed against the said letter 03.06.2016, issued to the appellant by the Superintendent (Adjudication) purporting to communicate, to the appellant, the decision of the Commissioner, rejecting the request contained in the appellant s earlier letter dated 24.05.2016 (supra). As the adjudicating authority was proceeding with the adjudication proceeding, the appellant made a request for immediate hearing of the appeal. The reques .....

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g with the appeals to the Appellate Tribunal. It was argued that the provision for appeal is very much clear inasmuch it clearly states that a decision or order taken by the adjudicating authority can be appealed before the Appellate Tribunal. Adjudicating authority has been defined under the Act to mean any authority competent to pass any order or decision under this Act, but does not include the Central Board of Excise and Customs constituted under the Central Boards of Revenue Act, 1963 (54 o .....

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ntention that no appeal lies against the decision rejecting cross examination: (i) Delta Overseas v Commissioner of C.Ex & S.T v Delta Overseas, 2016 (333) ELT 126 (T) (ii) Jhaveri Polymers Pvt Ltd v CCE, 2009 (236) ELT 508 (T) 8. I have carefully considered the arguments raised by both the sides on this preliminary issue. The decisions cited by the learned DR are of this Hon ble Tribunal. In this regard, I find that the issue of maintaining an appeal against the decision rejecting cross exa .....

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, 2014 (301) ELT 119 (T), entertained an appeal against the decision rejecting the prayer of the appellant in that case for permission to cross examine witness as an when the revenue was seeking to place reliance. Para 12 of the judgement of this Tribunal in the said case reads as under: 12. The appeals are therefore allowed with direction to the Respondent adjudicating authority to follow Section 138B and to forthwith summon the witnesses for examination under intimation to the appellant, and t .....

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arettes (supra) and this Tribunal s decision in Swiber Offshore (supra), I am of the view that an appeal is maintainable against the decision rejecting cross examination. Even as per the provisions of Section 35B of the Act read with the definition of adjudicating authority , this Tribunal has the power to entertain an appeal against the decision rejecting cross-examination. Therefore, the preliminary objection stands overruled. 8.3 On merits, the appellants, in the present case, limit their cha .....

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ction 9D (1) of the Act in all other cases, the maker of the said statement has to be examined in chief before the adjudicating authority, who, thereafter, has to arrive at a reasoned conclusion that the statement deserves to be admitted in evidence, where after he has to offer the maker of the said statement to the assessee, for cross-examination if sought. The appellant emphasises that, in fact, the impugned communication is not only clearly contrary to Section 9D of the Act it, in fact, compl .....

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ed upon in the Show Cause Notice, dated 16.02.2012, issued to the appellant, so that they could cross-examine the makers of the said statements. In fact, the impugned letter dated 03.06.2016 is completely silent on the actual request of the appellant as contained in its letter dated 24.05.2016. The appellant in support of their contention has handed over a compilation of judgments on the issue of examination in chief and cross examination. My attention was specifically drawn to the recent judgem .....

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as communicated vide the impugned communication dated 03.06.2016, does indeed reveal that the appellant is right in its contention that the impugned letter dated 24.05.2016 does not answer, in terms, the appellants request as contained in the letter dated 05.04.2016, but purports to reject indeed, the request of cross examination of S/Shri Narayan Kushwha, Shri Gopal Goyal Agarwal and Shri Ashish Ajmera. No such request is contained in the letter dated 24.05.2016 addressed by the appellant to t .....

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sed by the appellant, in its letter dated 24.05.2016, and argued before this Tribunal, are no longer res-integra. They stand decided by a number of authorities, most recently, by the judgement dated 17.06.2016 of the Hon ble Punjab & Haryana High Court in Ambika International v UOI. Section 9D of the Act reads as under: SECTION 9D.Relevancy of statements under certain circumstances. - (1) A statement made and signed by a person before any Central Excise Officer of a gazetted rank during the .....

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or (b) when the person who made the statement is examined as a witness in the case before the Court and the Court is of opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interests of justice. (2) The provisions of sub-section (1) shall, so far as may be, apply in relation to any proceeding under this Act, other than a proceeding before a Court, as they apply in relation to a proceeding before a Court. 9.3 Even without referring to t .....

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a gazetted officer of Central Excise, can be treated as relevant for the purposes of proving the truth of the contents thereof, if the case falls either under clause (a) or clause (b) thereof. Sub-Section (2) of the said Section makes the provision of sub-Section (1) applicable to adjudicatory proceedings under the Act as well, as also held by the Hon ble Delhi High Court in para 12 of its judgment in J & K Cigarettes (supra), in the following words: Sub-section (2) extends the provision of .....

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by the adverse party, and (v) the presence of the person who made the statement cannot be obtained without an amount of delay or expense which, under the circumstances of the case, the Court considers unreasonable. 9.4 In case none of the above circumstances contemplated in clause (a) of Section 9D(1) applies, then clause (b) categorically mandates that the statement shall be treated as relevant for the purposes of proving the truth of the facts which contains only when the person who made the .....

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tted officer of Central Excise, has to be examined as witness before the adjudicating authority who, thereafter, has to arrive at an opinion that having regarded to the circumstances of the case, the statement should be admitted in evidence in the interests of justice. It is only after both these steps are complied with, that the statement would be eligible for being treated as relevant in the proceedings so that the assessee can, if it so chooses, exercise its option to test the evidence by way .....

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dgment of the Hon ble High Court in Basudev Garg v CC, 2013 (294) ELT 353. as well as the recent decision of the Honble Punjab & Haryana High Court in Ambika International (supra). 9.7 Reference may, however, be made to various judicial authorities relied upon by the appellant, which delineated the contours of Section 9D of the Act, as under: (i) In Sukhwant Singh V State of Punjab (1995) 3 SCC 367, referring to Section 138 of the Evidence Act, 1872, clearly held as under: Section 138. Evid .....

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the Hon ble High Court of Karnataka in Sharadamma v Kenchamma, MANU/KA/8690/2006 (equivalent-2006 (4) KCCR 2221) which holds as under: Even with regard to the prayer for permitting the applicant to cross-examine the plaintiff, the prayer is misconceived as the question of cross-examination arises only when a witness has tendered evidence in chief examination. Under Section 138 of the Indian Evidence Act, cross-examination follows chief examination, but not without chief-examination. If there is .....

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l for the appellant. We find no reason to justify rejection of request made by the appellant to the adjudicating authority in light of Section 138B of the Act, to summon witnesses for examination and to offer them for cross-examination if their statements were to be considered as relevant and admitted in evidence in the interest of justice. 11. We also find that the denial of request to permit cross-examination of the Chief Chemist (DGH), whose opinion is relied in the show cause notice, is also .....

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extend its full co-operation in expediting the adjudication process so that it can be completed within the time as directed by the Hon ble High Court. 9.9 Similarly, para 16 of the judgement of the Hon ble Allahabad High Court in CCE v Parmath Iron Pvt Ltd, 2010 (250) ELT 514 (All.) holds in a similar vein thus: 16. We, therefore, have no hesitation in holding, that there is no requirement in the Act or Rules, nor do the principles of natural justice and fair play require that the witnesses whos .....

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cable to adjudicatory proceedings under the Act, has also been settled by the judgement of the Hon ble Supreme Court in CC v Bussa Overseas Properties Ltd, 2007 (216) ELT 659 (SC) by upholding the order of this Tribunal in Bussa Overseas Properties Ltd v CC, 2001 (137) ELT 637 (T). 9.11 That any official action has to be done in the manner prescribed, or not at all, is a well settled axiom of administrative law, which was first expostulated in Taylor v Taylor LR1 Ch.D 426, adopted by the Privy C .....

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he main contention of the appellant is that the deponents whose statements have been relied upon by the adjudicating authority were not put to examination-in-chief before providing an opportunity of cross examination. A plain reading of sub-section (1) of section 9D 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 gazette rank, during the course of inquiry or proceedi .....

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ficer shall be relevant, for the purpose of proving the truth of the facts contained therein. If the circumstances are absent, therefore, the statement, which has been made during the course of inquiry/investigation, before a gazette Central Excise Officer, cannot be treated as relevant for the purpose of proving the facts contained therein as observed by Hon'ble Delhi High Court in the case of J.k.Cigarettes (supra) wherein hon'ble high court has observed as under:- 12. Bare reading of .....

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tains, in any prosecution for an offence under the Act in certain situations. Sub-section (2) extends the provision of sub-section (1) to any proceedings under the Act other than a proceeding before the Court. In this manner, Section 9D can be utilized in adjudication proceedings before the Collector as well. In the present case, provisions of Section 9-D of the Act were invoked by the Collector holding that it was not possible to procure the attendance of some of the witnesses without undue del .....

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the case falls within the parameters of section 9D(1). Therefore, two steps are required to be followed by the adjudicating authority, under clause (b) of section 9D(1) (t) the person who made the statement has to first be examined as a witness in the case before the adjudicating authority, and (ii) the adjudicating authority has, thereafter, to form the opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interest of justice. The sam .....

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ses in adjudication, their statements cannot be considered as evidence. However, if the Revenue choose to rely on the statements, then in that event, the persons whose statements are relied upon have to be made available for cross-examination for the evidence or statement to be considered. 10. We further find that in the case of Smt.Sharadamma (supra), hon'ble Karnataka High Court has observed as under:- 9. It is not the duty of the Court to direct the parties or compel the parties as to in .....

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ction 138 of the Indian Evidence Act, cross-examination follows chief-examination, but not without chief-examination. If there is no chief-examination, there is no cross examination. It is only witness who is examined in chief who can be cross-examined. Therefore, a prayer for cross-examination of the plaintiff even when the plaintiff has not been examined in chief is ridiculous and not provided for under Section 138 of the Evidence Act. The Trial Court has rightly rejected the application. No s .....

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not been examined despite specific reliance by the appellant on Section 138B without there being any objective formation of opinion based on any material on record to come to the conclusion that any specified circumstance mentioned in Section 138B(1)(a) exists. These circumstances mentioned in Section 138B(1)(a) are also contained in pan materia Section 9D(1)(a) and were recorded as follows in J.K. Cigarettes Ltd., 2009 (242) E.L.T. 189 (Del.) "25. Section 9D of the Act stipulates following .....

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for any of these five reasons, the statement previously recorded would be relevant. The adjudicating authority was therefore bound to follow the binding precedent and in absence of any specified circumstance to consider the statement relevant without examining the witnesses, erred in rejecting the request of the appellant to examine the witnesses and to offer them for cross-examination. 8. The appellant has also relied on the judgment of Hon'ble Apex Court inSukhwant Singh v. State of Punja .....

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calling him so desires) re-examined. The examination and cross-examination must relate to relevant facts but the cross-examination need not be confined to the facts to which the witness testified on his examination-in-chief. Direction for re-examination. - The re-examination shall be directed to the explanation of matters referred to in cross-examination; and if new matter is, by permission of the Court, introduced in re-examination, the adverse party may further cross-examine upon that matter.& .....

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bserved as under:- 24. The fact that in cases relating to smuggling or indeed any case civil or criminal cannot or need not been proved for degree of mathematical precision or that the department governed by strict rules of evidence is again no answer, The department is certainly bound by the contents of the Customs Act, 1962 and the general principles of evidence. which has been affirmed by the Apex Court. 13. We further find that Hon'ble Punjab & Haryana High Court in the case of Sukhw .....

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mination-in-chief. Direction for re-examination. - The re-examination shall be directed to the explanation of matters referred to in cross-examination; and if new matter is, by permission of the Court, introduced in re-examination, the adverse party may further cross-examine upon that matter." 9. It would, thus be seen that Section 138 (supra) envisages that a witness would first be examined-in-chief and then subjected to cross-examination and for seeking any clarification, the witness may .....

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clear that during adjudication, the adjudicating authority is required to first examine the witness in chief and also to form an opinion that having regard to the facts and circumstances of the case, the statements of the witness are admissible in evidence. Thereafter, the witness is offered to be cross examined. In the absence of examination in chief, allowing the cross examination, is a futile exercise. We further find that the appellant have challenged the impugned order on the ground that t .....

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tively, perhaps, this position of law is now crystallized by the judgment dated 17.06.2016 of the Honble Punjab & Haryana High Court in Ambika International (supra). Paras 15 to 34 thereof are reproduced as under: 15. 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 in .....

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bt about the legal position that the procedure prescribed in sub-section (1) of Section 9D is required to be scrupulously followed, as much in adjudication proceedings as in criminal proceedings relating to prosecution. 17. 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 circumstan .....

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as proving the truth of the contents thereof is concerned, is, therefore, completely lost, unless and until the case falls within the parameters of Section 9D(1). 18. 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 o .....

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he statement is incapable of giving evidence, iv) when the person who made the statement is kept out of the way by the adverse party, and v) when the presence of the person who made the statement cannot be obtained without unreasonable delay or expense. 21. 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, b .....

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ssed by the adjudicating authority under Section 9D of the Act could be challenged in writ proceedings as well. Therefore, 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. 22. 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 prescr .....

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ted in evidence in the interests of justice. 23. There is no justification for jettisoning this procedure, statutorily 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 th .....

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confessional statements. It is obviously in order to neutralize this possibility that, before admitting such a statement 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. 25. Clearly, therefore, the stage of relevance, in adjudication proceedings, of the statement, recorded before a gazetted Central .....

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igation/inquiry before the gazetted Central Excise officer, unless and until he can legitimately invoke clause (a) of Section 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 .....

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re the adjudicating authority, and (ii) the adjudicating authority arrives at a conclusion, for reasons to be recorded in writing, that the statement deserves to be admitted in evidence, that the question of offering the witness to the assessee, for cross-examination, can arise. 28. 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 .....

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ments cannot be considered as evidence. 30. That adjudicating authorities are bound by the general principles of evidence, 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). 31. It is clear, from a reading of the Orders-in-original dated 19.05.2016 and 01.06.2016 supra, that Respondents No.2 has, in the said Orders-in-Origi .....

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. The Orders-in-Original, dated 19/05/2016 and 01/06/2016, having been passed in blatant violation of the mandatory procedure prescribed by Section 9D of the Act, it has to be held that said Orders-in-Original stand vitiated thereby. 32. The said orders-in-Original, dated 19/05/2016 and 01/06/2016, passed by Respondent No.2 are, therefore, clearly liable to be set aside. 33. Insofar as the writ petitions filed by M/s Ambika International CWP 12615 of 2016 and M/s Jay Ambey Aromatics CWP 12617 of .....

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the event that the Revenue intends to rely on any of the statements, recorded under Section 14 of the Act and referred to in the Show Cause Notices issued to Ambika and Jay Ambey, it would be incumbent on the Revenue to apply to Respondent No 2 to summon the makers of the said statements, so that the Revenue would examine them in chief before the adjudicating authority, i.e. before Respondent No 2. (ii) A copy of the said record of examination-in-chief, by the Revenue, of the makers of any of t .....

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y, would be open to the Revenue to rely on the said statements to support the case sought to be made out in the Show Cause Notice. (iv) Once examination-in-chief, of the makers of the statements, on whom the Revenue seeks to rely in adjudication proceedings, takes place, and a copy thereof is made available to the assessee, it would be open to the assessee to seek permission to cross-examine the persons who have made the said statements, should it choose to do so. In case any such request is mad .....

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he Hon'ble Supreme Court in Arya AbhushanBhandar v U.O.I., 2002(143)ELT 25 (SC), Swadeshi Polytex v Vollector, 2000 (122) ELT 641 (SC). 34. In the case of M/s Fine Aromatics CWP 12616 of 2016 and M/s Shiva Mint Industries CWP 12618 of 2016, identical to those which had been issued to Ambika and Shiva Mint and which stand adjudicated by Respondent No.2 vide Orders-in-Original dated 19.05.2016 and 01.06.2016 supra, have been issued, and are presently pending adjudication before Respondent No.2 .....

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t by the impugned letter dated 03.06.2016, and the matter is remanded to the Principal Commissioner with a direction to adjudicate the Show Cause Notice strictly by complying with the mandate of Section 9D of the Act, in accordance with the directions contained in para 33 of the judgment of the High Court of Punjab & Haryana in Ambika International (supra) which are, for ready reference, reiterated as under: (i) In the event that the Revenue intends to rely on any of the statements, recorded .....

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lable to the assessee, i.e. to Ambika and Jay Ambey in this case. (iii) Statements recorded during investigation, under Section 14 of the Act, whose makers are not examined in chief before the adjudicating authority, i.e. before Respondent No 2, would have to be eschewed from evidence, and it would not be permissible for Respondent No 2 to rely on the said evidence while adjudicating the matter. Neither, needless to say, would be open to the Revenue to rely on the said statements to support the .....

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