TMI Blog2009 (8) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... -D of the Act in a particular case by filing statutory appeal, which provides for judicial review. - 1854, 1895-98 of 1992 - - - Dated:- 28-8-2009 - A.K. SIKRI and VALMIKI J. MEHTA, JJ. WP (C) No. 1854 of 1992, 1895/1992 , 1896/1992 , 1897/1992 and 1898/1992 Mr. S.K. Bagaria, Sr. Adv. with Ms. Rohina Nath, Ms. Nisha Baghchi, Ms. Priyadeep Mr. S.K. Mongia and Ms. Suchi Kakkar, Advocates, for the Petitioners. Mr. Mohan Parasaran, ASG with Mr. Rajesh Katyal, Advocates and Mr. Satyavir Singh, for the Respondents. [Judgmernt A.K. SIKRI, J.]. - All these writ petitions filed by the same petitioner raise identical issue which relates to the constitutional validity and/or interpretation of the provisions of Section 9-D of the Central Excise and Salt Act, 1944 (hereinafter referred to as the "Act"). For this purpose, we are taking note of the facts as they appear in WP (C) No. 1854/1992. The question, as aforesaid, has arisen in the following backdrop: 2. A show-cause notice dated 30.3.1998 was issued to M/s. Kanpur Cigarette Limited and M/s. GTC Industries on the allegation that Kanpur Cigarette Ltd. had manufactured cigarettes during the period February 1985 to J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oss-examination, allowing production of defence evidence and thereafter hearing oral arguments. After this order of remand, the respondent No.1 proceeded with the matter afresh. 4. The respondent No.1 allowed cross-examination of the witnesses, as requested by the petitioners, from time to time leaving out those who were given up by the department. Those witnesses, who were summoned and appeared, were duly cross-examined by the petitioners. However, some of the witnesses did not appear for the reasons that would be taken note of hereinafter at the appropriate stage. The respondent No.1, in respect of those witnesses, took umbrage under Section 9-D of the Act and asked the petitioners to argue the matter as according to the respondent No.1 it was not possible for those witnesses to appear. The petitioners, vide letter dated 20.4.1992, reiterated their demand for cross-examination and at the same time stated that they would be addressing oral submissions without prejudice to their right to cross-examine those witnesses. The petitioners also submitted that in case those witnesses are not allowed to be cross-examined, their statements be not relied upon. According to the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal (now CESTAT) as well as the Supreme Court is as under :- Writ No. Position in CEGAT Position in Supreme Court 1854/1992 The CEGAT decided the Appeal on merits in favour of both the Petitioner and the job worker vide order dated 21.3.2001. The Department has filed an Appeal under Section 35L of the Central Excise Act 1944 before the Hon‟ble Supreme Court being Civil Appeal No. 6398-6403/02. The Court has admitted the Appeal without granting any interim stay. Last listed on 27.9.2002. 1895/1992 The CEGAT decided the Appeal on merits in favour of both the Petitioner and the job worker vide order dated 21.3.2001. The Department has filed an Appeal under section 35L of the Central Excise Act 1944 before the Hon‟ble Supreme Court being Civil Appeal No. 6398-6403/02. The Court has admitted the Appeal without granting any interim stay. Last listed on 27.9.2002. 1896/1992 The CEGAT in Appeal Nos. 5208/92-D and 5233/92-D confirmed the demand against the Petitioner vide order dated 4.3.1997. The Petitioner thereafter filed Civil Appeal No. 5134-35/97 before the Hon‟ble Supreme Court against the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mstances under which the Collector invoked these provisions in his impugned order. Section 9-D reads as under :- "9-D. 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 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 Court considers unreasonable; 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 the 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 proceedings under this Act, other than a proceeding before a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that necessity of allowing cross-examination of the witnesses in departmental adjudication proceedings is well-settled and accepted, as is clear from the following decisions :- (i) Laxman Exports Ltd. v. Collector of Central Excise (2005) 10 SCC 634 (ii) Swadeshi Politex Ltd. v. Commnr. Of Central Excise 2000 (122) ELT 641 (SC) (iii) Arya Abhushan Bhandar v. Union of India 2002 (143) ELT 25 (SC) (iv) Gyanchand Sant Lal Jain v. Union of India 2001 (136) ELT 9 (Bombay High Court) (v) Kellogg India Pvt. Ltd. Madhukar Patil v. UOI 2006 (193) ELT 385 Bombay High Court) (vi) Ripen Kumar v. Deptt. of Customs 2003 (160) ELT 60 (Delhi High Court) (vii) New Decent Footwear Industries v. UOI 2002 (150) ELT 71 (Delhi High Court) He also referred to the judgment of the Supreme Court in the case of CCE v. Duncan Agro Industries , (2000) 7 SCC 53 with regard to relevancy of statements recorded by the departmental officers under the Customs Act itself, in the following manner :- "The inculpatory statement made by any person under Section 108 is to non-police personnel and hence it has no tinge of inadmissibili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Magistrate or a person other than police officer." In this backdrop, he pointed out that Section 9-D of the Act makes a complete departure from the aforesaid well-settled principles relating to cross-examination. It was an exception to the normal rule and in the circumstances enumerated in the provision the accused/noticee is deprived of its valuable right of cross-examination. 16. Mr. S.K. Bagaria, learned senior counsel appearing for the petitioners, was candid that the petitioners had no quarrel about sub-section (1) to Section 9-D which applies to the proceedings under the Act before a court of law. The objection was about the extension of this provision, by sub-section (2), upon the Central Excise Officers. Learned counsel also conceded that there can be circumstances in which departure can be made from the aforesaid important principle relating to cross-examination even with regard to proceedings before the Central Excise Officers. However, his objection was that wherever any such departure is to be made, the law, at the same time, should also lay down full and proper safeguards, conditions, guidelines and restrictions. This was so done while enacting Sections 32 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bilities upon the assessee and one of the bare minimum safeguards that ought to be there is giving of prior intimation and grant of an opportunity to the assessee to make its submissions on invocability of Section 9-D itself and thereby enabling the assessee to take appropriate steps, as may be possible, in the circumstances of the case. Thus, for instance, if it is a matter of unreasonable expense, assessee may satisfy the officer that keeping in view the demand involved, the expenses are not unreasonable or may offer to bear the expenses. If it is a matter of unreasonable delay, the assessee may satisfy the officer that it is not attributable to the assessee and that it is ready and willing to take all possible steps to expedite the cross-examination. The assessee may also try to contact the witness through his own resources and inform him about the time and place of cross-examination. In case the adjudicator is of the view that the witness is "kept out of the way" by the assessee, the assessee may clarify the relevant facts and assist and cooperate with the adjudicator in contacting the witness. Giving these examples as merely illustrative examples, the learned counsel submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nesses is not necessary in each and every case. Even then, in the interest of justice, cross-examination of witnesses, to the extent possible has been allowed by the adjudicating authority in the instant quasi-judicial proceedings under the Act. These statements, relied upon in the impugned case, are primarily based on documentary evidences collected/seized during investigations and, therefore, are relevant also in terms of provisions under Section 32(2) of the Evidence Act. The facts stated therein do not necessarily require the test of cross-examination. The test of cross-examination, may in given circumstances, be superfluous, especially if the test is impossible of employment. 21. The learned ASG also referred to the earlier order passed by this Court in extenso and submitted that the petitioner was given proper opportunity to cross-examine the available witnesses even when provisions of Evidence Act apply only to judicial proceedings and have no strict application in quasi-judicial proceedings. He also submitted that no specific or sufficient grounds were to be fulfilled by the petitioners while challenging the provisions of Section 9-D of the Act. What exactly is the arbi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resaid circumstances are not exceptional circumstances. They are the circumstances which naturally would be beyond the control of the parties and it would not be possible to produce such a person for cross-examination who had made a statement on earlier occasion. The provisions under Section 9-D of the Act are necessary to ensure that under certain circumstances, as enumerated therein, viz. if the witness has been won over by the adverse party or is avoiding appearance despite several opportunities being given. The rationale is that decision making in a case cannot be allowed to continue in perpetuity. These provisions are based on the Doctrine of Necessity. It provides for relevancy of statements recorded under Section 14 of the Act dispensing with or without the opportunity for testing the truth of such evidence by cross-examination. For, when a person is dead or incapable of giving evidence or cannot be found, no better evidence can be had in the circumstances than the statement tendered by witnesses before a quasi-judicial authority. The safeguards which are enumerated in the provision under Section 32 of the Evidence Act are essential as the provision provides for an excepti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only when the stated ground is proved. For example, in those cases where the person who made the statement is dead, there should be sufficient proof that he is dead. In case, where a person cannot be found, the authority would have to form an opinion, based on some material on record, that such a person cannot be found. It would not be mere ipse dixit of the officer. In case, cogent material is not there to arrive at such a finding, the persons against whom the statement of such a person is relied upon can always challenge the opinion of the authority by preferring appeal to the higher authority, which appeal is statutorily available. Same yardsticks would apply to other grounds. If the quasi judicial authority opines that a person is incapable of giving evidence, formation of such an opinion has also to be predicataed on proper material on record, which could be in the form of mental or physical disability of such a person. 29. Thus, when we examine the provision as to whether this provision confers unguided powers or not, the conclusion is irresistible, namely, the provision is not uncanalised or uncontrolled and does not confer arbitrary powers upon the quasi judicial author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , in the circumstances of the case. He submitted that if a particular witness was not allowed to be cross-examined by stating that it was not possible to procure his presence without delay or expense, had the opportunity been given to the petitioners to meet the expenses, the petitioners would have borne the expenses and could have procured the presence of witnesses. Likewise, he argued that if the opinion was that it is the adverse party, i.e. the petitioner, who kept a particular person out of the way, the petitioner should have been confronted with that so as to enable him to contact the witness through his own resources and inform him about the time and place of the cross-examination, or else, to enable the petitioners to clarify the relevant facts and assist and cooperate with the adjudicator in contacting the witness. These examples, at the most, would indicate as to how the powers are to be exercised by the adjudicating authority. That would not make the provision arbitrary. As stated in the beginning, validity of the provision is totally different from exercise of powers by an authority invoking those provisions. We may only refer, at this stage, to the judgment of the Supr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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