2011 (1) TMI 338 - HC - Central Excise

Application for rectification - Time limitation - the provisions of Section 35C(2) of the Central Excise Act, 1944 and the provisions of Section 254(2) of the Income Tax Act are identical - Since the period of six months has expired from the date of filing of the order, the application for rectification has become infructuous and has rejected the application and in view of answer to the question of law, the decision of the Division Bench of this Court in Commissioner of Central Excise, Bangalore-III v. Denso Kirloskar Industry Private Limited - (2007 -TMI - 48148 - HIGH COURT OF KARNATAKA) does not lay down the correct law and the period of six months for disposal of the application for rectification would not be applicable, when the power is exercised on the application filed by the aggrieved party, the order passed by the tribunal cannot be sustained - Appeal is allowed

Summary

Issues:
Interpretation of Section 35C(2) of the Central Excise Act regarding the time limit for rectification applications.

Analysis:
The judgment involved a question of law regarding the interpretation of Section 35C(2) of the Central Excise Act, specifically focusing on the time limit for rectification applications. The matter was referred to the Bench to determine whether the Division Bench decision in a previous case required reconsideration. The Division Bench had held that no order on rectification applications could be passed beyond six months, leading to the current issue at hand.

The appellant argued that the decision of the Division Bench needed reconsideration, citing a Supreme Court judgment on a similar provision in the Income Tax Act. The appellant contended that the limitation of six months under Section 35C(2) should only apply to cases where the Tribunal exercises suo-moto power, not to applications filed by the parties involved. The appellant relied on the Supreme Court's interpretation of Section 254(2) of the Income Tax Act to support this argument.

On the other hand, the senior standing counsel for the Central Government argued that Section 35C(2) mandated expeditious disposal of rectification applications within six months. The court carefully considered the contentions of both parties and scrutinized the relevant provisions of the Central Excise Act and the Income Tax Act to make a well-informed decision.

The court compared the provisions of Section 35C(2) of the Central Excise Act with Section 254(2) of the Income Tax Act and noted their similarity. It referred to the Supreme Court's interpretation of Section 254(2) in a specific case, emphasizing the distinction between rectification on suo-moto basis and rectification based on applications by the parties. The court highlighted that the limitation period under Section 35C(2) should apply to the first part where the Tribunal exercises suo-moto power, not to applications filed by the aggrieved party.

Based on the principles established by the Supreme Court in interpreting similar provisions under the Income Tax Act, the court held that the Division Bench's decision in the previous case did not lay down the correct law. Consequently, the court overruled the Division Bench decision and allowed the appeal. The court set aside the order of the Customs, Excise and Service Tax Appellate Tribunal, remitting the matter for fresh consideration in accordance with the law.