The Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ), Kolkata Bench held that statements without cross-examination are unsustainable for demand as there has been non- compliance with Section 9D of the Central Excise Act, 1944.
In this case, the appellant, Shree Krishna Laxmi Steel Udyog Pvt Ltd. was engaged in the activity of clandestine manufacture and removal of goods. The show-cause notice issued to the appellant alleged that the appellant was engaged in the clandestine manufacture and removal of goods without proper records, evading excise duty and thus they are liable for duty, interest, and penalties.
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The counsel on behalf of the appellant stated that the case against them is based on documents recovered from Shri Sati Ram, an accountant, and statements from various individuals. It was submitted that no discrepancies were found at their factory, and physical stock checks were in order and that the show-cause notice proposed duty demand, interest, and penalties based on these documents and statements.
It was contended by the appellant’s counsel that although it was for requested cross-examination of the witnesses during adjudication, it was denied, violating Section 9D of the Central Excise Act, 1944.
One of the issues raised by the appellants in this case was whether, in the absence of giving cross-examination to the witnesses, whose statements have been relied upon to implicate the appellants in the proceedings, is admissible or not ?
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The CESTAT opined that there is a clear violation of Section 9D of the Central Excise Act, 1944, which mandates that any statement recorded during the course of investigation under Section 14 of the Act, is to be first examined in Chief and then the appellant should be allowed to cross- examine.
The bench noted that the Delhi High Court in the case of Flevel International Vs. Commissioner of Central Excise-2016 (332) ELT 416(Del), had held that the denial of an opportunity of cross-examination of a witness whose statements have been relied upon in the adjudication order would vitiate the order of adjudication.
The bench held that the statements recorded in the course of investigation are not sustainable due to the absence of cross examination by the appellants.
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The CESTAT comparing Ashok Jindal ( Judicial Member ) and Rajeev Tandon ( Technical Member ) set aside the impugned order and ruled in favour of the appellant.
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