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2023 (1) TMI 53 - AT - Central ExciseRectification of mistake - mistake apparent on the face of record or not - whether non-consideration of the contentions relevant to the issue for determination which were raised before Bench of the Tribunal, can be said to be mistakes apparent from the record so as to be rectified under section 35C(2) of the Excise Act? - invocation of extended period of limitation - entitlement to avail CENVAT Credit - HELD THAT - In ASSISTANT COMMISSIONER, INCOME TAX, RAJKOT VERSUS SAURASHTRA KUTCH STOCK EXCHANGE LTD 2008 (9) TMI 11 - SUPREME COURT the Supreme Court held that non-consideration of a decision of a High Court or the Supreme Court can be said to be a mistake apparent from the record , which mistake can be rectified. It was pointed out that the error apparent from the record should be so manifest and clear that no Court would permit it to remain on record. It should be pertinent and self-evident and not require any elaborate discussion of evidence or argument. It was also observed that rectification of an order stems from the fundamental principle that justice is above all and it is to be exercised to remove the error and to disturb the finality - If non-consideration of a decision of the High Court or the Supreme Court can be said to be a mistake apparent from the record‟, there can be no doubt that non-consideration of two important submissions which were advanced at the time of hearing of the appeal would constitute a mistake apparent from the record which would require rectification. Invocation of extended period of limitation - HELD THAT - It would be seen that the ER-III/ER-I returns filed by the applicant clearly show that the applicant had categorically declared that it had cleared the final products by availing the exemption under the notification dated 17.03.2012. The applicant had furnished the returns on the basis of self assessment. Even in a case of self-assessment, the Department can always call upon an assessee and seek information. It is under sub-rule (1) of rule 6 of the Central Excise Rules, 2002 the 2002 Rules that the assessee is expected to self assess the duty and sub-rule (3) of rule 12 of the 2002 Rules provides that the proper officer may, on the basis of information contained in the return filed by the assessee under sub-rule (1), and after such further enquiry as he may consider necessary, scrutinize the correctness of the duty assessed by the assessee. Sub-rule (4) of rule 12 also provides that every assessee shall make available to the proper officer all the documents and records for verification as and when required by such officer. Hence, it was the duty of the proper officer to have scrutinized the correctness of the duty assessed by the assessee and if necessary call for such records and documents from the assessee, but that was not done. It is, therefore, not possible to accept the contention of the learned authorized representative appearing for the Department that the appellant should have filed a proper assessment return under rule 6 of the Rules. Not only do the 2002 Rules mandate officers to scrutinise the Returns to verify the correctness of self assessment and empower the officers to call for documents and records for the purpose, Instructions issued by the department also specifically require officers at various levels to do so - the finding in the order of the Commissioner that the applicant had deliberately filed incorrect returns as a result of which the extended period of limitation could be invoked cannot be sustained. The Department was aware of the material facts, more particularly when the availment of exemption benefit under notification dated 17.03.2012, had been categorically declared by the applicant in the excise returns. Thus, it is clear that material facts were in the knowledge of Department but still the Department issued show cause notice after inordinate delay of three years - the invocation of extended period of limitation for confirmation of the duty cannot be sustained and is set aside - penalty imposed for this period cannot, therefore, also be sustained. Entitlement to avail CENVAT Credit - HELD THAT - The paragraph 23 of the final order dated 22.04.2022 passed by the Tribunal shall stand deleted and shall be replaced by the following paragraph - The impugned order dated 15.07.2019 passed by the Principal Commissioner is modified to the extent that the duty demand confirmed for the extended period of limitation i.e. for the period upto November, 2016 and the imposition of penalty are set aside. The appellant would also entitled to avail CENVAT credit of duty paid on the inputs, input services and capital goods in the manufacture of final products. The remaining part of the demand confirmed by the Principal Commissioner in the order dated 15.07.2019 is confirmed. The appeal is, accordingly, allowed to the extent indicated above. The matter is remitted to the Principal Commissioner to re-determine the duty demand in the light of the observations made above. Application disposed off.
Issues Involved:
1. Non-consideration of submissions by the Tribunal. 2. Invocation of the extended period of limitation under Section 11A(4) of the Central Excise Act. 3. Entitlement to avail CENVAT credit. Issue-wise Detailed Analysis: 1. Non-consideration of submissions by the Tribunal: The appellant filed an application for rectification of mistakes in the final order dated 22.04.2022, arguing that the Tribunal did not consider two critical submissions: (a) the extended period of limitation under Section 11A(4) of the Central Excise Act could not be invoked, and (b) if the exemption under the notification was not applicable, the appellant should be entitled to CENVAT credit for duty paid on inputs, input services, and capital goods. The Department's representative did not dispute that these submissions were made during the hearing. The Tribunal examined Section 35C(2) of the Excise Act, which allows rectification of any mistake apparent from the record. The Supreme Court's judgment in Asstt. Commr., Income Tax, Rajkot vs. Saurashtra Kutch Stock Exchange Ltd. was cited, emphasizing that non-consideration of relevant contentions constitutes a "mistake apparent from the record." 2. Invocation of the extended period of limitation under Section 11A(4) of the Central Excise Act: Section 11A of the Excise Act deals with the recovery of duties not levied or paid. The normal period of limitation is two years, extendable to five years under certain conditions such as fraud, collusion, or suppression of facts. The demand raised in the show cause notice dated 03.01.2019 was for the period from December 2013 to June 2017, with the normal period of limitation covering December 2016 to June 2017. The Supreme Court's interpretation in Pushpam Pharmaceuticals Company vs. Collector of Central Excise, Bombay, and subsequent cases like Anand Nishikawa Co. Ltd. vs. Commissioner of Central Excise, Meerut, and Uniworth Textiles Ltd. vs. Commissioner of Central Excise, Raipur, was discussed. These judgments clarified that suppression of facts must be deliberate to evade duty. The Tribunal found that the appellant had regularly filed ER-III/ER-I returns, declaring the exemption under the notification dated 17.03.2012. The Department's failure to scrutinize these returns and the subsequent delay in issuing the show cause notice indicated a lack of deliberate suppression by the appellant. The Tribunal concluded that the invocation of the extended period of limitation was not justified and set it aside, along with the penalty imposed for this period. 3. Entitlement to avail CENVAT credit: The appellant argued that if duty was payable on the final product, they should be entitled to CENVAT credit for duty paid on inputs, input services, and capital goods. The Tribunal accepted this submission, citing the Supreme Court's decision in Siddhartha Tubes Ltd. v/s Commissioner of Central Excise, Indore (M.P.), which established that if duty is held payable on the final product, the assessee is entitled to credit for duty paid on inputs, input services, and capital goods. Conclusion: The Tribunal modified the impugned order dated 15.07.2019, setting aside the duty demand for the extended period of limitation and the penalty. The appellant was entitled to avail CENVAT credit. The remaining part of the demand was confirmed, and the matter was remitted to the Principal Commissioner to re-determine the duty demand in light of these observations. (Order pronounced in the open Court on December 19, 2022)
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