The Kolkata Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) Quashed the order of the commissioner for denying cross-examination opportunity citing that it is in violation of section 9D of the Central Excise Act, 1944.
Devender Kumar (appellant) director of Shree Krishna Laxami Steel Udyog Private Limited, engaged in the business of steel manufacturing etc., The department found incriminating documents while conducting a search operation on the premises of the appellant.
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The department issued a show cause notice to the appellant to explain the discrepancies related to Short of Stock, receipt of payments, etc., found in the document. The department observed that the documents sought were not submitted by the appellant.
The department concluded that the appellant did not cooperate with the investigation. Therefore, the department confirmed the Excise Duty and imposed penalties upon the appellant. Aggrieved by the order, the appellant filed an appeal before CESTAT.
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The counsel for the appellants submitted that the case was decided based on the documents recovered from Sati Ram, who claimed to be the appellants’ accountant, on their premises.
The counsel for appellants also argued that the commissioner denied the opportunity to cross-examine the witnesses. The counsel also submitted that the witness statements have been relied on to incriminate the appellant. The counsel for the appellant further contended that the denial of the opportunity to cross-examine the witnesses was a violation of section 9D of the Central Excise Act, 1944.
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On the other hand, the counsel for the revenue submitted that the documents were recovered from the employees of the appellant company. The counsel also contended that Sati Ram made statements that these documents belong to the appellant company. Therefore the counsel for the revenue justified the demand against the appellants.
The two-member bench comprising Ashok Jindal (Judicial Member) and Rajeev Tandon (Technical Member) observed that section 9D of the Central Excise Act, 1944 mandates any statement recorded during the investigation should be examined in chief and provide cross-examination to the appellant.
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Therefore, the tribunal relying on the judgment of the Supreme Court in Andaman Timber Industries and also the judgment of the High Court of Delhi in Flevel International held that the statements recorded in the investigation without Examination in Chief and absence of Cross-examination were not sustainable in law.
Therefore, the tribunal set aside the demand order of the commissioner for violation of Section 9D of the Central Excise Act, 1944.
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