2008 (8) TMI 189 - AT - Service Tax

Application for rectification of mistake to rectify error in Miscellaneous order passed rectifying error in final order of tribunal - revenue submission that application for rectification of mistake u/s 35C(2) is maintainable against the final order passed u/s 35(C)(1), is acceptable application filed u/s 35C(2) to rectify the order passed u/s 35C(2), is not maintainable further submission on non-imposition of penalty not raised on earlier occasion, so application is not maintainable

Issues:
Rectification of mistake in the Tribunal's order reducing penalty amount, maintainability of the application under Section 35C(2) of the Central Excise Act, 1944, consideration of penalty imposition based on different values in Income Tax Returns and bank statements, application for rectification of mistake against the Final Order dated 14-11-2007, and the Tribunal's authority to rectify mistakes in orders.

The Applicant filed an application seeking rectification of a mistake in the Tribunal's order which reduced the penalty amount from Rs. 1,57,896.00 to Rs. 50,000.00. The Tribunal had considered discrepancies in the values declared in the Income Tax Return and bank statement, attributing the difference to a lack of awareness of the rules due to a new levy. The Tribunal, in its Final Order, reduced the penalty amount based on the immediate deposit of the duty along with interest by the Applicant. The Applicant filed subsequent applications for rectification, with the Tribunal allowing the first application on the point of limitation. However, the Tribunal, in the subsequent order, rejected the application for rectification, emphasizing that the Applicant voluntarily deposited the tax without protest, rendering the argument of limitation not sustainable. The Tribunal clarified that the rectification of mistakes under Section 35C(2) of the Act is limited to orders passed under Section 35C(1) and not applicable to orders passed under Section 35C(2).

The Applicant contended that the corrigendum to the show cause notice, invoking the extended period of limitation, was ineffective, implying that the penalty under Section 78 of the Finance Act, 1994 should be set aside. The Applicant argued that the penalty was not warranted based on the Tribunal's findings. However, the Revenue strongly opposed the application, asserting that the penalty reduction by the Tribunal was justified considering the discrepancies in values declared by the Applicant and the invocation of penal provisions in the original show cause notice. The Tribunal, after hearing both sides, agreed with the Revenue's submission, highlighting the limitations of rectification under Section 35C(2) and the absence of provisions for rectifying mistakes in orders under this section.

Upon reviewing the earlier application for rectification against the Final Order dated 14-11-2007, it was noted that the Applicant had raised concerns regarding the limitation period and the alleged suppression of facts to evade duty payment. The Tribunal's subsequent order emphasized the voluntary tax deposit by the Applicant and rejected the argument of limitation. The Tribunal also observed that the issue of penalty imposition was not raised in the earlier application and deemed the current application without merit. The Applicant's submission on the penalty was considered a new issue, not previously addressed, leading to the rejection of the application.

In conclusion, the Tribunal rejected the Applicant's application for rectification of mistake, emphasizing the limitations of rectification under Section 35C(2) and the lack of merit in the new issues raised by the Applicant. The Tribunal's decision was based on the understanding that rectification under Section 35C(2) pertains to orders passed under Section 35C(1) and does not extend to orders passed under Section 35C(2). The rejection was grounded in the absence of substantive arguments and the failure to raise the penalty imposition issue in the earlier application.

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