MAY 09, 2017

By Bharat Bhushan, Advocate

SECTION 9D of the Central Excise, 1944 and Section 138 B of the Customs Act, 1962 have been contained in the CGST Act, 2017 as Section 136. Section 136 of CGST Act, and Section 9D of the Central Excise Act are reproduced below.

Section 136 of the CGST Act, 2017

136. Relevancy of statements under certain circumstances. -A statement made and signed by a person on appearance in response to any summons issued under section 70 during the course of any inquiry or proceedings under this Act shall be relevant, for the purpose of proving, in any prosecution for an offence underthis 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 interest of justice.

Section 9D of the Central Excise Act, 1944

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.

A comparison of the said two statutory provisions reveals the difference. Sub-section (2) of Section 9D extends the provisions to the adjudication and appellate proceedings and there is no such provision in Section 136. In the Model GST Law released in November, 2016 the said legal provisions were contained in Section 95 and Sub-section (2) of Section 95 was a replica of sub-section (2) of Section 9D.

The Adjudicating Authorities under CBEC were always reluctant to allow cross-examination of witnesses. Various High Courts in different proceedings, placing reliance on Sub-section (2) of Section 9D held that allowing cross-examination of witnesses is mandatory even in adjudicating proceedings. The latest one is the judgment of Hon'ble Punjab & Haryana High Court in Ambica International, CWP Nos. 12615 to 12618 of 2016 - 2016-TIOL-1238-HC-P&H-CX Obviously, to get rid of requirement of cross-examination, the Section in present form is incorporated. Now, it is to be seen, whether the Officers concerned are successful in their objective or failed to foresee consequences of this deviation.

In the said section the phrase, "Relevancy of statements under certain circumstances" is merely a marginal note and not a part of the enactment. It is no more res-integra that marginal notes have no relevance while interpreting a statute except when the meaning of substantive provisions are not clear. The said section says that -

-   A statement recorded under given circumstances

-   Shall be relevant

-   In prosecution

-   For proving

-   Truth of the facts

-   Which it contains if

-   Either present of such person cannot be secured for the reasons stated in para a) or

-   Such person is examined in Court.

Thus, the said Section is an enabling section whereby an oral evidence is made relevant. Otherwise, an oral evidence is the weakest type of evidence. In absence of this section, the oral evidences are not direct evidence and have to be proved by following the principles contained in Indian Evidence Act. The said Section had made obligatory on the courts to admit such evidences as relevant, if conditions contained therein are satisfied. Findings of the Hon'ble High Court of Punjab & Harayana in Ambica International (supra) case also supports this interpretation, wherein the Hon'ble High Court held as under:-

"16. As already noticed hereinabove, 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).

17. 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."

Now, in the new legislation the application of the said section have been restricted to only prosecution, and the same have not been extended to adjudication proceedings. Therefore, in adjudication proceedings, such statements may not be considered as direct evidence.

(The views expressed are strictly personal.)