2009 (12) TMI 577 - HC - Central Excise

Rectification of mistake non-consideration of application for modification of stay order on merit as per order no manifest error in the stay order Tribunal not considered on merit Held that - if there is a manifest error, the Tribunal is justified in rectifying its mistake - Tribunal should have considered the miscellaneous application on merit - Tribunal is directed to consider the miscellaneous application afresh

Issues Involved:
Challenge to orders of Customs, Excise and Service Tax Appellate Tribunal on grounds of deposit amount directive, interest expenditure inclusion in cost of production, manifest error rectification, and consideration of miscellaneous application on merit.

Analysis:

1. Deposit Amount Directive:
The petitioners, a company engaged in manufacturing automotive axles, challenged the orders of the Tribunal directing them to deposit Rs. 4 crores within eight weeks. The petitioners contended that their application for stay was not considered by the Tribunal, leading them to file a modification application. However, the Tribunal dismissed the modification application without assessing its merits. The Court noted that the Tribunal failed to consider the miscellaneous application on its merit, leading to the setting aside and quashing of the order dated 9th October, 2009. The Tribunal was directed to reconsider the miscellaneous application and provide a reasoned order within twelve weeks, ensuring a fair hearing for the petitioner.

2. Interest Expenditure in Cost of Production:
The petitioner argued that interest expenditure should not be included in the cost of production based on standards set by the Institute of Cost Works and Accountants of India. Referring to a previous Tribunal order and a circular by CBEC, the petitioner contended that interest is a finance cost and not part of the cost of production. Citing a Supreme Court judgment, the petitioner emphasized that rectification should be made in case of a manifest error. The Court agreed with the petitioner's stance, highlighting the need for the Tribunal to consider the issue of interest expenditure in the cost of production from a legal perspective.

3. Manifest Error Rectification:
The Court emphasized that the Tribunal should have delved into the merits of the miscellaneous application before concluding that there was no manifest error in the stay order. By failing to consider the application on its merits, the Tribunal's order of 9th October, 2009 was deemed unsustainable and was overturned. The Court directed the Tribunal to reevaluate the miscellaneous application, ensuring a thorough examination of the legal aspects involved and providing a reasoned decision within a specified timeframe.

4. Consideration of Miscellaneous Application on Merit:
The Court's decision to set aside the Tribunal's order of 9th October, 2009 was primarily based on the Tribunal's failure to assess the petitioner's miscellaneous application on its merits. The Court stressed the importance of considering such applications thoroughly, highlighting the need for a reasoned decision that takes into account legal arguments and precedents. By allowing the Tribunal to revisit the application and provide a detailed judgment, the Court aimed to uphold the principles of fairness and legal scrutiny in the adjudicatory process.

5. Overall Decision:
The Court allowed the writ petition, disposing of the case at the admission stage without calling for further affidavits. It clarified that the allegations in the petition were not admitted by the respondents. No costs were awarded, and all parties were instructed to act based on the signed copy of the operative part of the order, subject to usual undertakings. The Court refrained from delving into the merits of the case, leaving all points open for the Tribunal to address in subsequent proceedings, thereby maintaining the scope for a comprehensive examination of the legal issues involved.

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