2007 (5) TMI 129 - AT - Service Tax

Revenue instead of filing the review petition or an appeal before the commissioner (Appeal), had filed an application for rectification of order before the same authority who has passed the order praying for enhancing the penalty. Not allowed as per law order in original set aside.

Summary

Issues:
- Rectification of mistake apparent on the face of record by the Assistant Commissioner leading to the imposition of higher penalty.
- Interpretation of Section 74 of the Finance Act regarding the scope of rectification powers.
- Applicability of the judgment in the case of Commissioner of Central Excise, Calcutta v. A.S.C.U. Ltd. to the present case.

Analysis:
The appeal before the Appellate Tribunal CESTAT, Bangalore was filed by the Revenue against the Order-in-Appeal No. 248/2005-C.E. dated 26-10-2005, which set aside the Order-in-Original No. 21/2005 passed by the Assistant Commissioner of Central Excise, ST & EOU Division, Mangalore. The Assistant Commissioner had rectified the earlier Order-in-Original No. 34/2003 dated 15-10-2003 by choosing to impose a penalty, which was challenged by the Revenue. Instead of opting for a review or appeal, the Revenue filed an application for rectification seeking an increase in the penalty imposed. The Commissioner (Appeals) noted that under Section 74 of the Finance Act, the authority can only rectify mistakes apparent on the face of the record and cannot review the order.

The Appellate Tribunal considered the law laid down by the Apex Court in the case of Commissioner of Central Excise, Calcutta v. A.S.C.U. Ltd., which emphasized that a mistake apparent on the face of the record must be obvious, patent, clerical, arithmetical, or grammatical in nature. In the present case, the Assistant Commissioner had initially imposed a lesser penalty, but the Revenue sought to enhance it through a rectification application instead of following the proper procedures of review or appeal. The Commissioner (Appeals) correctly set aside the Order-in-Original that increased the penalty, as it was beyond the scope of the rectification powers under Section 74 of the Finance Act. The Tribunal upheld the Commissioner (Appeals)'s decision, stating that the order was proper and justified based on the legal provisions and the Apex Court's judgment.

In conclusion, the Appellate Tribunal rejected the Revenue's appeal, affirming the correctness of the Commissioner (Appeals)'s order in setting aside the enhanced penalty imposed by the Assistant Commissioner through a rectification application. The judgment underscores the importance of following proper legal procedures and limitations when seeking rectification of mistakes in official orders.