2007 (9) TMI 280 - HC - Central Excise

Rectification of mistake - Whether the rectification order passed by the CESTAT in exercise of its power under section 35C(2) of the Act is beyond six months from the date of the final order is legal and valid? Held that - Having regard to the undisputed fact that the final order was passed on 29-6-2005 and the rectification order is passed on 12-1-2006 the assessees must have filed a petition before six months before the CESTAT. It is the duty of the Tribunal to have passed the rectification order within six months from the date of order by it. Therefore the order passed beyond six months from the date of the final order in the appeal is not legal and valid and the same is passed without jurisdiction. Therefore we accept the legal submissions made on behalf of the assessee and answer the aforesaid question which we have framed today in favour of the revenue.

Summary

Issues:
1. Challenge to the correctness of the order passed by the Tribunal dated 12-1-2006 in Misc. Order No. 29-31/2006 by the CESTAT, South Zonal Bench, Bangalore.
2. Whether the rectification order passed by the CESTAT in exercise of its power under section 35C(2) of the Act is beyond six months from the date of the final order is legal and valid?

Analysis:
1. The appeal challenges the order passed by the Tribunal on 12-1-2006, where the CESTAT allowed the ROM stating no interest was payable by the assessee on a balance amount. The substantial question of law raised was whether the rectification order by CESTAT was beyond the six-month limitation period. The appellant argued that the order was beyond the prescribed time limit, making it invalid in the eyes of the law.

2. The learned Counsel for the appellant highlighted that under Section 35C(2) of the Act, the CESTAT has the power to rectify any mistake in its order within six months from the date of the final order. The final order was passed on 29-6-2005, stating the respondent was liable to pay interest under Section 11AB of the Act. The rectification sought by the respondent was made after the limitation period, rendering the order beyond jurisdiction and null in the eyes of the law. The Counsel argued that the rectification order should have been passed within the stipulated time frame.

3. The respondent's Counsel justified the order, stating a Miscellaneous Petition was filed within three months of the final order, and the delay in passing the rectification order was not the fault of the assessee. The interpretation of Section 35C(2) was debated, with the Counsel arguing that the order was within the time limit prescribed in the provision. It was contended that no substantial question of law arose for consideration, and the appeal should be dismissed.

4. The Court analyzed Section 35C(2) of the Act, emphasizing that the word 'may' should be considered as 'shall,' making it mandatory to rectify any mistake within six months. The order passed beyond this period was deemed invalid and without jurisdiction. It was established that statutory provisions must be held as mandatory when the order has serious civil or penal consequences. Therefore, the Court accepted the legal submissions made on behalf of the assessee and answered the question in favor of the revenue. The appeal was allowed.