2017 (3) TMI 1349 - AT - Customs

Rectification of Mistake application - DEPB scrips were obtained on the basis of forged documents and the appellants were the bona fide transferee of the said scrips - Held that - a rectification of mistake application can be entertained in the case the apex court has laid down in law, even if the said decision is subsequent to the decision in which the rectification of mistake application has been filed - the statement that ROM has been filed against the decision of the Tribunal in the case of Alpha Chemie Sapthagiri in appeal No. C/1122/04 has not been substantiated by learned AR. It is seen that in the order dated 17.10.2016, no reliance was placed on the decision of the Tribunal in the case of Alpha Chemie Sapthagiri solely on the ground that a rectification of mistake application has been filed. Since learned AR has not been able to produce any rectification of mistake application, it is apparent that there has been a mistake in the order dated 17.10.2016 - ROM application allowed - decided in favor of appellants.

Summary

Issues Involved:
1. Rectification of Mistake (ROM) Application.
2. Applicability of Supreme Court and High Court Decisions.
3. Bona Fide Transferee of DEPB Scrips.
4. Error Apparent on the Face of the Record.
5. Non-Consideration of Binding Precedents.

Detailed Analysis:

1. Rectification of Mistake (ROM) Application:
The application for rectification of mistake was filed by Sun Chemicals in respect of the CESTAT order dated 17.10.2016. The applicant argued that there was an apparent mistake in the order due to non-consideration of a binding precedent set by the Supreme Court in a similar case involving Vallabh Design Products.

2. Applicability of Supreme Court and High Court Decisions:
The learned counsel for the applicant cited the Supreme Court's decision in the case of Vallabh Design Products, which upheld the Punjab & Haryana High Court's ruling that DEPB scrips obtained on the basis of forged documents but purchased in good faith by the appellants should not penalize the bona fide transferee. The Tribunal in the present case had not considered this binding precedent, leading to an error apparent on the face of the record.

3. Bona Fide Transferee of DEPB Scrips:
In both the cited case and the present case, the DEPB scrips were obtained fraudulently, but the appellants were bona fide transferees with no involvement in the forgery. The High Court had previously held that the assessee-respondent had purchased the DEPB from the open market in the bona fide belief of its being genuine and had availed the benefit accordingly.

4. Error Apparent on the Face of the Record:
The Tribunal found that the decision dated 17.10.2016 was at variance with the Supreme Court's decision in the Vallabh Design Products case. The non-consideration of such binding precedent constituted an error apparent on the face of the record. The Larger Bench of the Tribunal in the Hindustan Lever Ltd. case established that non-consideration of a Supreme Court decision could warrant rectification of the order.

5. Non-Consideration of Binding Precedents:
The Tribunal noted that the statement about a ROM being filed against the decision in the Alpha Chemie Sapthagiri case was factually incorrect, as no such application was substantiated by the learned AR. This mistake further emphasized the need for rectification.

Conclusion:
Respectfully following the decision of the Hon’ble Supreme Court in the Vallabh Design Products case, the rectification of mistake application was allowed. Consequently, the order dated 17.10.2016 was modified, and the appeal of Sun Chemicals was allowed. The judgment was pronounced in court on 8.3.2017.