2009 (2) TMI 545 - AT - Central Excise

Summary

Issues involved: Rectification of error in earlier order regarding penalty under Section 11AC of the Central Excise Act.

Summary:
1. The department filed an application for rectification of an error in a previous order passed by the Bench regarding the classification of goods and penalty under Section 11AC of the Central Excise Act. The department pointed out a mistake in limiting the penalty to a specific period, not considering an amendment brought by the Finance Act, 2000, which gave retrospective effect to Section 11AC. After hearing both sides, the Bench restricted the penalty to a period from 28-9-1996, reducing the quantum of penalty imposed by the Adjudicating authority. The department filed the present application beyond six months from the final order but within six months from the order on the assessee's ROM application. The department argued that the explanation added to Section 11AC by the Finance Act, 2000, was not considered, allowing penalties for periods before 28-9-1996.

2. The respondent's counsel raised a preliminary objection, stating that the application was not maintainable under Section 35C(2) of the Act, as it sought to rectify an order passed on a miscellaneous application, not a final order of the Tribunal. Both sides cited case law to support their arguments, with the department claiming support from a Supreme Court decision regarding rectification of mistakes in an order amending an assessment order under the Income Tax Act. However, the Bench found that the present application could not be maintained under Section 35C(2) of the Central Excise Act based on precedents set by the Tribunal's Larger Bench.

3. The Bench noted that the department's error pertained to the order in the ROM application filed by the assessee, which could not be rectified under Section 35C(2). The doctrine of merger was invoked by the department, arguing that the mistake should be considered to occur in the amended final order. Even if the application was held to be maintainable, it would be time-barred. The Bench concluded that the department's plea did not advance their case in light of the maintainability issue.

4. It was observed that the assessee had filed a Civil Appeal against the final order before the Supreme Court, and the department was a party to those proceedings. The department could seek remedies available to them in relation to the final order and subsequent order on the ROM application. The Bench stated that dismissing the present application, which was not maintainable, would not prejudice the Revenue.

5. The application for rectification was dismissed by the Bench.