Delhi HC Upholds Statutory Exception to Cross-Examination: Section 9D Validated in Excise Adjudication Framework

Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 05.05.2026

Delhi HC Upholds Statutory Exception to Cross-Examination: Section 9D Validated in Excise Adjudication Framework

Section 9-D of the Central Excise and Salt Act, 1944, has been at the center of a significant legal dispute involving major cigarette manufacturers and the Central Excise authorities. The Delhi High Court case, involving J & K Cigarettes Ltd., GTC Industries Ltd., and others, examined the constitutional validity and procedural fairness of Section 9-D, which governs the admissibility of statements in excise proceedings.

Background of the Case

Multiple show-cause notices were issued to Kanpur Cigarette Ltd. and GTC Industries, alleging duty evasion through deceptive pricing and false declarations. The notices relied heavily on statements from wholesale dealers and other witnesses. The petitioners requested cross-examination of these witnesses, a request initially denied by the authorities, leading to a series of writ petitions and appeals.

Key Legal Issues

1. Constitutional Validity of Section 9-D: Petitioners challenged the extension of Section 9-D to quasi-judicial proceedings, arguing it deprived them of the right to cross-examine witnesses whose statements were used against them.
2. Principles of Natural Justice: The right to cross-examination is a fundamental aspect of natural justice, especially in proceedings that may result in civil or penal consequences.
3. Safeguards and Guidelines: Petitioners argued Section 9-D lacked sufficient safeguards, allowing excise officers unfettered discretion to admit statements without cross-examination.

Section 9-D Explained

Section 9-D allows statements made before a gazetted Central Excise Officer to be admitted as evidence under certain circumstances:

• The witness is dead, cannot be found, is incapable of giving evidence, is kept out of the way by the adverse party, or cannot be produced without unreasonable delay or expense.
• These provisions apply both to court proceedings and other proceedings under the Act.

Arguments Presented

Petitioners

• Right to Cross-Examination: Essential for fairness; denial violates natural justice.
• Lack of Safeguards: No requirement for prior intimation, opportunity to respond, or recording of reasons.
• Potential for Abuse: Uncontrolled discretion could lead to arbitrary decisions.

Respondents (Central Excise Authorities)

• Inherent Safeguards: Section 9-D mirrors Section 32 of the Indian Evidence Act, which has been upheld as constitutional.
• Exceptional Circumstances: Only applies when witness production is genuinely impossible or impractical.
• Judicial Review: Decisions can be challenged through statutory appeals.

Court’s Findings

1. Section 9-D Is Not Unconstitutional: The Court found that the provision is not arbitrary, as it is limited to specific, exceptional circumstances and requires objective formation of opinion based on material evidence.
2. Safeguards Are Inherent: The requirement to form an opinion, record reasons, and provide an opportunity to the affected party are implicit in the exercise of quasi-judicial powers.
3. Judicial Review Available: Aggrieved parties can challenge the invocation of Section 9-D through appeals, ensuring oversight.

Practical Implications

• Cross-Examination: While the right is valuable, it can be restricted under Section 9-D if justified by circumstances.
• Procedural Fairness: Authorities must base their decisions on sufficient material and provide affected parties a chance to respond.
• Appeal Rights: Parties retain the right to challenge decisions in higher forums.

Conclusion

The Delhi High Court upheld the constitutional validity of Section 9-D, emphasizing that its application is limited to exceptional situations and is subject to inherent procedural safeguards. The ruling clarifies the balance between efficient adjudication and the rights of parties to a fair hearing, reinforcing the importance of reasoned decisions and opportunities for judicial review.

Connected Matter

CESTAT Mumbai Sets Aside Customs Duty Demands and Penalties in Imports of Second-Hand Machinery

Source: Delhi High Court

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