2021 (3) TMI 187 - HC - Customs

Rectification of Mistake - mistake apparent from the records - Application was rejected with the view of Third Member of the tribunal - While, the Judicial Member of the Tribunal held that there had been a mistake apparent from the records and that if the mistake was not rectified, the very purpose of remanding the matter to the Authority would be lost and if the observations were allowed to stand, it would be fatal to the order of assessment. - Power of the tribunal u/s 129B(2) - HELD THAT - The concept of mistake, which is capable of being rectified under Section 129B(2) of the Act has been explained to mean that it is not confined to clerical or arithmetical mistakes alone. At the same time, the mistake to be rectified must be one apparent from the record and it should not be a mistake, which can be discovered by long drawn reasoning. While analyzing the legal principle for exercise of power under Section 129B of the Act in the said decision, the Court also noted the power given under the Civil Procedure Code where the words are an error apparent on the face of the records . It was pointed out that the power of Tribunals under Section 129B(2) of the Act to rectify any mistake apparent from the record is undoubtedly not more than that of the High Court to entertain a writ petition on the basis of an error apparent on the face of the record . Further, it was pointed out that mistake is an ordinary word, but in taxation laws, it has a specific and special significance, that it is not an arithmetical or clerical error alone that comes within its purview and that it comprehends errors which,after a judicious probe into the record from which it is supposed to emanate, are discerned. It was also held that in order to attract the power to rectify under Section 129B(2) of the Act, it is not sufficient if there is merely a mistake in the order sought to be rectified; and the mistake to be rectified must be one apparent from the record. Certain materials were placed when the Tribunal was hearing the matter for the first time and therefore, the Tribunal opined that adequate opportunity was not granted to the assessee and thought fit to remand the matter for de novo consideration. Having arrived at such a conclusion, the Tribunal ought not to have ventured to give a finding on the very same issue, which the Tribunal though fit to remand to the Adjudicating Authority for a fresh consideration - the Judicial Member, who agreed with the petitioner, rightly held that if the observations made in the other portion of the impugned order were not eschewed, it would be fatal to the case of the petitioner. Furthermore, the mistake is clearly visible from the records and it does not require any long drawn reasoning for a prudent man to come to a conclusion that there is a mistake. Hence, we are of the opinion that the Tribunal ought to have exercised its power under Section 129B(2) of the Act and deleted the conclusive observations made by the Tribunal on the issue, which it thought fit to remand for de novo consideration because the issue is an open issue. The findings rendered by the Judicial Member stating that the miscellaneous petition is maintainable and that the mistake should be rectified are upheld - Petition allowed.

Summary

Issues:
Challenge to order of Customs, Excise and Service Tax Appellate Tribunal regarding classification of product as computer software. Tribunal's power under Section 129B(2) of the Customs Act, 1962 for rectification of apparent mistakes.

Analysis:
The petitioner, a public limited company with an export-oriented unit, challenged the Tribunal's order on the classification of their product as computer software. The Tribunal, after considering expert opinions, remanded the matter for de novo proceedings due to lack of effective opportunity for the petitioner to explain their stand. However, the Tribunal later concluded that the product was not computer software, denying the petitioner's benefit claim under a relevant notification.

The petitioner filed a miscellaneous petition requesting the Tribunal to amend its order under Section 129B(2) of the Act. The Tribunal's decision was split, with the Judicial Member favoring rectification due to an apparent mistake, while the Technical Member disagreed. A third party concurred with the Technical Member, leading to the rejection of the petition, which was challenged in the writ petition.

In analyzing the Tribunal's power under Section 129B(2), legal precedents were cited, emphasizing that rectification is for apparent mistakes visible from the record, not for revising orders. The Court highlighted that the mistake should be clear without elaborate argument or investigation. Mistakes under this provision are not limited to clerical errors but must be evident from the record.

Referring to a Supreme Court case, the Court cautioned against liberal interpretations leading to instability in administration. In the present case, the Court found that the Tribunal erred by giving a conclusive finding on a technical issue it had remanded for reconsideration. The Judicial Member's view on rectification was upheld, emphasizing that the mistake was visible from the records and did not require extensive reasoning.

Consequently, the writ petition was allowed, setting aside the order rejecting the miscellaneous petition. The Tribunal was directed to delete the conclusive observations, remand the matter for a fresh decision in line with its earlier directive, and complete proceedings promptly. No costs were awarded in this matter.