2011 (2) TMI 232 - HC - Central Excise

Penalty - Application for rectification of mistake - The appellant submits that the point was specifically raised in the grounds of appeal and mistake was legal and apparent on the face of the record - Hence, the point raised was purely legal and could be considered in the interest of justice. The appellant having been required to pay duty, penalty of equal amount, interest @ 24%, question whether any further penalty was called for requires consideration - Hence,the questions raised are answered in favour of the assessee - The matter is remanded to the Tribunal for a fresh decision on the application for rectification of mistake in accordance with law.

Summary

Issues:
1. Imposition of penalty under Rule 173Q/25 when penalty is imposed under Section 11AC of the Act
2. Tribunal's error in not allowing the Application for Rectification of mistake
3. Legitimacy of the impugned order passed by the Tribunal

Analysis:

Issue 1: Imposition of penalty under Rule 173Q/25 when penalty is imposed under Section 11AC of the Act
The appellant filed an appeal under Section 35G of the Central Excise Act, 1944 against an order of the Customs, Excise & Service Tax Appellate Tribunal, New Delhi. The appellant contested the imposition of a penalty under Rule 173Q of the Central Excise Rules, 1944 along with penalties under Section 11AC of the Act. The Tribunal dismissed the appellant's application for rectification of mistake, citing that the point regarding the additional penalty was not raised during the appeal hearing. However, the appellant argued that the issue was indeed raised in the grounds of appeal and was a legal mistake apparent on record. The High Court, after considering the arguments, found in favor of the appellant, stating that the question of whether further penalty under Rule 173Q or Rule 25 was justified, especially when duty and penalty of equal amount and interest had already been imposed, required consideration. Consequently, the High Court allowed the appeal and remanded the matter to the Tribunal for a fresh decision on the application for rectification of mistake.

Issue 2: Tribunal's error in not allowing the Application for Rectification of mistake
The appellant had applied for rectification of mistake (ROM) regarding the imposition of additional penalty under Rule 173Q of the Central Excise Rules, 1944. The Tribunal rejected the application on the grounds that the appellant had not raised this point during the appeal hearing. However, the appellant contended that the issue was raised in the grounds of appeal and was a legal mistake evident on the face of the record. The High Court, after reviewing the arguments, found merit in the appellant's claim and directed the matter to be reconsidered by the Tribunal. The High Court emphasized that the legal question raised by the appellant deserved consideration in the interest of justice.

Issue 3: Legitimacy of the impugned order passed by the Tribunal
The High Court examined the impugned order passed by the Tribunal and found that the appellant's argument regarding the imposition of an additional penalty under Rule 173Q or Rule 25, in addition to duty, penalty, and interest already levied, raised a substantial legal question. The High Court ruled in favor of the appellant, stating that the questions raised by the appellant were valid and required further consideration. Consequently, the High Court allowed the appeal and instructed the Tribunal to reevaluate the application for rectification of mistake in accordance with the law.

In conclusion, the High Court's judgment favored the appellant, highlighting the importance of addressing legal mistakes and ensuring that all relevant issues are considered in the interest of justice.