Custom, Excise & Service Tax Tribunal
Elora Tobacco Co. Ltd vs Indore on 23 June, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI COURT No. I Application No. E/Misc/50894 and 50896/2016 Appeal No. E/51877/2016 (SM) (Arising out of Order-in-Appeal/Original F.No. V(24)15-02/2014/Adj-12534 dated 18.03.2016 passed by Principal Commissioner of Customs, Central Excise, & Service Tax, Indore) For approval and signature: Honble Mr. M.V. Ravindran, Member (Judicial) ================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the : No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen of the Order?
4. Whether Order is to be circulated to the Departmental : Yes authorities?
Elora Tobacco Co. Ltd.
Appellant Vs. Commissioner of Central Excise Indore Respondent Appearance:
Shri S. Sunil, Advocate for appellant Shri M.R. Sharma (AR) for respondent CORAM:
Honble Mr. M.V. Ravindran, Member (Judicial) Date of Hearing: 23.06.2016 Date of Decision: 23.06.2016 ORDER NO.52550/2016 Per: M.V. Ravindran The appellant, in the present appeal has challenged the decision taken by the Principal Commissioner rejecting the request for cross-examination of Shri J.C. Solanki (Noticee No.4) and panchas which has been communicated by the impugned letter dated 18.03.2016. The issue in controversy in the present appeals being extremely limited in nature, it is not necessary to dwell deep into the appreciation of facts and evidence of the case.
2. Elora Tobacco Company Ltd, 14-B, Sector-F, Industrial Area, Indore (Appellant) is registered with the Central Excise Authorities for manufacture of Forever, Harbour, Impact, Opera House, K-10, Globus, Budget, Red Rose-10 and Red Rose-20 etc brands of Cigarattes. Show Cause Notice, dated 11.05.2011, 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 thereagainst.
3. On receipt of the abovementioned Show Cause Notice, the appellant filed its reply, thereto, vide letter dated 18.02.2016. The attention of the Commissioner was invited, in the said 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 11.05.2011 (supra), be provided to the appellants, so that they could request for cross examination of the said persons if need be.
4. The impugned communication dated 18.03.2016 purports to be a response to the said letter dated 18.02.2016. The request for cross-examination stands rejected by the said letter. The said letter merits reproduction, in extenso, as under:
Please refer to your submission dated 18.02.2016, wherein you requested to allow cross examination of Shri J.C. Solanki (Noticee No. 4). On the captioned subject, the appropriate authority has observed that Shri J.C. Solanki is also a co-noticee and hence this authority cannot direct him to be present for cross examination which may cause him to incriminate himself and therefore, the request for their cross-examination is not granted. In this regard, reliance is placed on the following case law:
(i) In the case of A K Jayasankaran Nambiar, J N S Mahesh Versus Commissioner of Customs, Cochin [2016 (331) ELT 402 (Ker.)] where the Tribunal observed further as Shri Reji Cherian is a co-noticee, this authority cannot direct him to be present for proceedings that may cause him to incriminate himself and therefore the request for cross-examination of Sri Reji Cherian cannot be acceded to The aforesaid request of cross examination is hereby disposed off. This issues with the approval of the appropriate authority.
5. The present appeal is directed against the said letter 18.03.2016, 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 appellants earlier letter dated 18.02.2016 (supra). As the adjudicating authority was proceeding with the adjudication proceeding, the appellant made a request for immediate hearing of the appeal. The request of the appellant was allowed and with the consent of both the parties the appeal was taken up for hearing on 23.06.16.
6. Before proceeding with the hearing the appeal on merits, a preliminary query was raised by the Bench as to whether an appeal would lie against the decision rejecting the request for cross examination. On this issue, the learned Senior Counsel for the appellant had drawn my attention to the provisions of the Central Excise Act, 1944 [hereafter referred to as the Act] dealing 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 of 1963), Commissioner of Central Excise (Appeals) or Appellate Tribunal. My attention was also invited to the following decisions in support of the contention that an appeal would lie against the decision rejecting cross-examination:
(i) J & K Cigarattes Ltd v CCE, 2009 (242) ELT 189 (Del)
(ii) Swiber Offshore Construction Pvt Ltd v CC, 2014 (301) ELT 119
7. Countering the arguments of the appellant, the learned DR relied upon following judgements of the Honble Tribunal in support of the contention 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 Honble Tribunal. In this regard, I find that the issue of maintaining an appeal against the decision rejecting cross examination stands decided and acknowledged in para 32(v) of the judgment of the Honble Delhi High Court in J & K Cigarettes v CCE, 2009 (242) ELT 189 (Del), which reads as under:
32.?Thus, we summarize our conclusions as under :-
(v) it is always open to the affected party to challenge the invocation of provisions of Section 9D of the Act in a particular case by filing statutory appeal, which provides for judicial review. 8.1 This Tribunal has also, in Swiber Offshore Construction Pvt Ltd v CC, 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 to offer them for cross-examination by the appellant if their statements are to be considered as relevant and admitted in evidence in the interest of justice. The appellant is also entitled for cross examination of the Chief Chemist (EC), DGH. The appellant shall also extend its full co-operation in expediting the adjudication process so that it can be completed within the time as directed by the Honble High Court. 8.2 Therefore, following the judgement of the Honble High Court in J & K Cigarettes (supra) and this Tribunals 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 challenge to the rejection, by the Commissioner of the request contained in their letter dated 18.02.2016 (supra), vide the impugned communication dated 18.03.16. In the appellants submission, a statement recorded, before a gazetted Central Excise officer under Section 14 of the Act, cannot be relied upon, for proving the truth of the contents thereof, straightaway by the adjudicating authority, unless and until the said statement falls within one of the categories referred to in clause (a) of Section 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, completely misunderstood the request of the appellant, as it merely communicates rejection of the appellants request for cross examination of Shri J.C. Solanki. The appellant submits that its communication dated 18.02.2016, was not for cross-examination of Shri J.C. Solanki but was for being provided copies of the records of the examination in chief of all witnesses, whose statements are relied upon in the Show Cause Notice, dated 11.05.2011 issued to the appellant, so that they could cross-examine the makers of the said statements. In fact, the impugned letter dated 18.03.2016 is completely silent on the actual request of the appellant as contained in its letter dated 18.02.2016. 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 judgement dated 17.06.2016 of the Honble Punjab and Harayana High High Court in Ambika International & others v UOI, on the issue of examination in chief and cross-examination as per Section 9D of the Act. The learned DR on the other side supported the decision taken by the adjudicating authority.
9. I have carefully considered the submissions made by both the parties.
9.1 A comparison of the request made by the appellant, in the said letter dated 18.02.2016, with the response of the Commissioner as communicated vide the impugned communication dated 18.03.2016, does indeed reveal that the appellant is right in its contention that the impugned letter dated 18.03.2016 does not answer, in terms, the appellants request as contained in the letter dated 18.02.2016, but purports to reject indeed, the request of cross examination of Shri J.C. Solanki. No such request is contained in the letter dated 18.2.2016 addressed by the appellant to the Commissioner. The letter dated 18.2.2016, quite categorically, sets out the contention 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 11.05.2011 (supra) issued to the appellant, so that the appellant could, if necessary, seeks cross-examination of the said witnesses.
9.2 In fact, the issues raised by the appellant, in their letter dated 18.2.2016, 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 Honble 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 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 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 the various judicial authorities on the subject, there appears to be no ambiguity whatsoever in the wording of Section 9D. The Section deals expressly with the circumstances in which a statement recorded before a gazetted officer of Central Excise (under Section 14 of the Act) can be treated as relevant for the purposes of proving the truth of the contents thereof and is pari materia with Section 138B of the Customs Act, 1962. Sub-Section (1) of Section 9D states that a statement, recorded before 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 Honble 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 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. Clause (a) of sub-section (1) of Section 9D deals with a case in which
(i) the person who made the statement is dead
(ii) the person who made the statement cannot be found,
(iii) the person who made the statement is incapable of giving evidence,
(iv) the person who made the statement is kept out of the way by the adverse party, and
(v) thepresence 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 statement is examined as a witness in the case before the Court (or adjudicating authority) and the Court (or adjudicating authority) is of the opinion that having regard to the circumstance of the case the statement should be admitted in evidence in the interest of justice.
9.5 It does not appear that there is any ambiguity in the drafting of clause (b) of Section 9D(1) of the Act. What the said clause categorically requires is that the person, whose statement was earlier recorded before a gazetted 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 of cross examination.
9.6 It may be stated, at this juncture, itself, that there does not appear, at this point of time, to be any uncertainty regarding the requirement of allowing cross examination by an assessee, of the statements upon which the adjudicating authority proposes to rely against it. The law, in this regard, stands settled by the judgement of the Honble Supreme Court in Arya AbhushanBhandar v UOI, 2002 (143) ELT 25 (SC) and Swadeshi Polytex Ltd v CCE, 2000 (122) ELT 641 (SC), judgment of the Honble 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. Evidence Act envisages that a witness would first be examined in-chief and then subjected to cross-examination and for seeking any clarification, the witness may be re-examined by the prosecution. There is no meaning in tendering a witness for cross-examination only. Tendering of a witness for cross examination, as a matter of fact, amounts to giving up of the witness by the prosecution as it does not choose to examine him in chief.
9.8 The same principle is to be found in para 9 of the judgment of the Honble 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 no chief-examination, there is no cross-examination. It is only witness who is examined in chief who can be cross-examined. 9.9 Sukhwant Singh (supra) was followed by this Honble Tribunal in Swiber Offshore Construction Pvt Ltd v State of Punjab (supra), which reproduces paras 8, 9 and 18 of the judgement in Sukhwant Singh (supra), where after paras 10 to 12 of the judgement set out the operative portion thereof in the following words:
10.?We therefore find force in the submission of the ld. counsel 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 wholly unjustified.
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 to offer them for cross-examination by the appellant if their statements are to be considered as relevant and admitted in evidence in the interest of justice. The appellant is also entitled for cross-examination of the Chief Chemist (EC), DGH. The Appellant shall also extend its full co-operation in expediting the adjudication process so that it can be completed within the time as directed by the Honble High Court. 9.10 Similarly, para 16 of the judgement of the Honble 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 whose statements were recorded and relied upon to issue the show cause notice, are liable to be examined at that stage. If the Revenue choose not to examine any witnesses 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.
9.11 That the principles of evidence are applicable to adjudicatory proceedings under the Act, has also been settled by the judgement of the Honble 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).
9.12 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 Council in Nazir Ahmed v King Emperor AIR 1936 PC 253 and thereafter followed by the Honble Supreme Court in a catena of authorities, including most recently, the judgment of the Honble Supreme Court in Mohinuddin Jamal Alvi v UOI JT 2016 (5) SC 214.
9.13 The above interpretation of Section 9D was also accepted by this Honble Tribunal in its recent orders in CCE v Kuber Tobacco Ltd v CCE [Final Order No:5038-50942/2016-CHD dated 4.03.15], paras 8 to 14 of which merit reproduction as under:
8. The 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 proceeding under the Act, shall be relevant, for the purpose of proving the truth of the facts contained therein. Therefore, there is no doubt about the legal position that the procedure prescribed in sub-section (1) of section 9D is required to be scrupulously followed, as much as in adjudication proceedings as in criminal proceedings relating to prosecution. Therefore, sub-section (1) of section 9D set out the circumstances in which a statement, made and signed by a person before the Central Excise Officer 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 the above section manifests that under certain circumstances, as stipulated therein, statement made and signed by those persons before any Central Excise Officer of a gazetted rank during the course of inquiry or proceedings under this Act can be treated as relevant and taken into consideration if under the given circumstances such a person cannot be produced for cross-examination. Thus, this provision makes such statements relevant for the purposes of proving the truth of the facts which it contains, 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 delay or expense. Whether such a finding was otherwise justified or not can be taken up in the appeal.
9. In other words, in the absence of the circumstances specified in section 9D(1), the truth of the facts contained in any statement, recorded before a gazetted Central Excise officer, has to be proved by evidence other than the statement itself. The evidentiary value of the statement, in so far as proving the truth of the contents thereof is concerned, therefore, completely lost, unless and until 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 same view has been taken by hon'ble Allahabad High Court in the case of Parmarth Iron Pvt.Ltd. (supra) wherein the High Court has observed as under:-
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 whose statements were recorded and relied upon to issue the show cause notice, are liable to be examined at that stage. If the Revenue choose not to examine any witnesses 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 what manner they should conduct their case before the Court or also what quality of evidence they should place before the Court. But the duty of the court is only to appreciate the case in the proper perspective and on the basis of what is placed before the Court. 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 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 scope for interference with an order of this nature.
11. We further find that in the case of Swiber Offshore Construction Pvt.Ltd. (supra), this Tribunal has further observed as under:
6. We therefore have no hesitation in holding that the impugned Order passed by the Commissioner as an adjudicating authority is appealable order in terms of Section 129A of the Act, even as per the ratio laid down in the above binding precedent. Request for cross-examination has been denied and the witnesses have 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 five circumstances, already taken note of, under which statements previously recorded can be made relevant.
These are:-
(a) when the person who had given the statement is dead;
(b) when he cannot be found;
(c) when he is incapable of giving evidence;
(d) when he is kept out of the way by the adverse party; and
(e) when his presence cannot be obtained without an amount of delay or expense, which the Officer considers unreasonable."
These circumstances show that if witness cannot be examined 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 Punjab, (1995) 3 SCC 367 to give emphasis on his submission that examination of witness is mandatory unless specified exceptional circumstances mentioned in clause (a) of Section 138B(1) exist. The Hon'ble Apex Court was pleased to hold that -
"8. It will be pertinent at this stage to refer to Section 138 of the Evidence Act which provides:
"138. Order of examinations. - Witnesses shall be first examined-in-chief then (if the adverse party so desires) cross-examined, then (if the party 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."
10. We therefore find force in the submission of the ld. counsel 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.
12. We further find in the case of Bussa Overseas Properties Ltd., this Tribunal again observed 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 Sukhwant Singh it has been observed as under:-
8. It will be pertinent at this stage to refer to section 138 of the Evidence Act which provides:
"138. Order of examinations. - Witnesses shall be first examined-in-chief then (if the adverse party so desires) cross- examined, then (if the party 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."
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 be re-examined by prosecution. There is, in our opinion, no meaning in tendering a witness for cross-examination only. Tendering of a witness for cross-examination, as a matter of fact, amounts to giving up of the witness by prosecution as it does not choose to examine him in chief. However, the practice of tendering witness for cross-examination in session trials had been frequently resorted to since the enactment of the code of Criminal Procedure, 1898.
14. In view of the above anaylsis, it is 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 the evidence in the form of statements gathered have no link of the appellant to the activities took at Sandeep Poultry Farm which is required to be examined on the basis of records available during the course of adjudication and the same has not been considered judicially. 9.14 The judgment in Kuber Tobacco stands reiterated in the subsequent Final Order dated 29.04.2016, passed by this Tribunal in Alliance Alloys Pvt Ltd v CCE [Final Order No:343-347/2016-CHD dated 29.04.16] 9.15 Most authoritatively, 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 inquiry or proceeding under the Act, shall be relevant,for the purpose of proving the truth of the facts contained therein.
16. Section 9D of the Act came in from detailed consideration and examination, by the Delhi High Court, in J.K. Cigarettes Ltd. vs. CCE, 2009 (242) ELT 189 (Del). Para 12 of the said decision clearly holds that by virtue of sub-section (2) of Section 9D, the provisions of sub-section (1) thereof would extend to adjudication proceedings as well. There can, therefore, be no doubt 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 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 words, in the absence of the circumstances specified in Section 9D(1), the truth of the facts contained in any statement, recorded before a gazetted Central Excise Officer, has to be proved by evidence other than the statement itself. The evidentiary value of the statement, insofar 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 on irrelevant material. Such reliance would, therefore, be vitiated in law and on facts.
19. Once the ambit of Section 9D (1) is thus recognized and understood, one has to turn to the circumstances referred to in the said subsection, which are contained in clauses (a) and (b) thereof.
20. Clause (a) of Section 9D (1) refers to the following circumstances :
i) when the person who made the statement is dead,
ii) when the person who made the statement cannot be found,
iii) when the person who made the 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, 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) holds that the said challenge could be ventilated in appeal, the petitioners have also invited attention to an unreported short order of the Supreme Court in UOI and another vs. GTC India and others in SLP ( C) No. 2183/1994 dated 03/01/1995 wherein it was held that the order passed 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 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. i) 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 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 they pertain to conferment of admissibility to oral evidence they would, even otherwise, have to be recorded as mandatory.
24. The rationale behind the above precaution contained in clause (b) of Section 9D(1) is obvious. The statement, recorded during inquiry/investigation, by the gazetted Central Excise officer, has every chance of having been recorded under coercion or compulsion. It is a matter of common knowledge that, on many occasions, the DRI/DGCEI resorts to compulsion in order to extract 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 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 exempted only in a case in which one or more of the handicaps referred to in clause (a) of Section 9D(1) of the Act would apply. In view of this express stipulation in the Act, it is not open to any adjudicating authority to straightaway rely on the statement recorded during investigation/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 opinion that, having regard to the circumstances of the case, the statement should be admitted in the interests of justice.
26. 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-examination has to precede re-examination.
27. It is only, therefore, (i) after the person whose statement has already been recorded before a gazetted Central Excise officer is examined as a witness before 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 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.
29. Reliance may also usefully be placed on para 16 of the judgment of the Allahabad High Court in C.C.E. V Parmarth Iron Pvt Ltd, 2010 (250) ELT 514 (All), which, too, unequivocally expound the law thus: If the Revenue choose (sic chose?) not to examine any witnesses in adjudication, their statements 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-Original, placed extensive reliance on the statements, recorded during 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 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 2016 are concerned, they are allowed by setting aside the Orders-in-Original, dated 19/05/2016 and 01/06/2016, passed by Respondent No 2 and impugned therein. Resultantly, the Show Cause Notices, issued to Ambika and Jay Ambey, are remanded, to Respondent No 2 for adjudication de novo, 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 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 the statements on which the Revenue chooses to rely, would have to be made available 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 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 made by the assessee, it would be incumbent on the adjudicating authority, i.e. on Respondent No2 to allow the said request, as it is trite and well-settled position in law that statements recorded behind the back of an assessee cannot be relied upon, in adjudication proceedings, without allowing the assessee an opportunity to test the said evidence by cross-examining the makers of the said statements. If at all authority is required for this proposition, reference may be made to the decisions of the 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. No further orders would be required to be passed, in the said writ petitions, apart from directing that Respondent No.2 would adjudicate the said Show Cause Notices by following the procedure prescribed in para 33 supra. Therefore, CWP 12616 of 2016 and 12618 of 2016 stand disposed of accordingly.
9.16 In view of the above unequivocal expression of law as contained in a plethora of judicial authorities, the present appeal is allowed by setting aside the decision as communicated to the appellant by the impugned letter dated 18.03.2016, 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 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 the statements on which the Revenue chooses to rely, would have to be made available 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 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 made by the assessee, it would be incumbent on the adjudicating authority, i.e. on Respondent No2 to allow the said request, as it is trite and well-settled position in law that statements recorded behind the back of an assessee cannot be relied upon, in adjudication proceedings, without allowing the assessee an opportunity to test the said evidence by cross-examining the makers of the said statements. If at all authority is required for this proposition, reference may be made to the decisions of the Hon'ble Supreme Court in Arya AbhushanBhandar v U.O.I., 2002(143)ELT 25 (SC), Swadeshi Polytex v Collector, 2000 (122) ELT 641 (SC). 9.17 A reading of the last para of the judgment of the Honble Punjab & Haryana High Court in Ambika International (supra), reveals, in fact, that in two of the writ petitions, which were decided by the said judgment, dealt with pending Show Cause Notices, which were disposed of by the Honble High Court by directing the adjudicating authority to adjudicate the said Show Cause Notices following the directions reproduced, hereinabove.
10. In view of the foregoing, appeal is disposed of.
(operative part pronounced in open Court on 23.06.2016) (M.V. Ravindran) Member (Judicial) nsk 1 2 Appeal No. E/51877/2016