RECTIFICATION OF MISTAKES UNDER CENTRAL EXCISE ACT, 1944

[Mr. M. GOVINDARAJAN]

            Section 35C (2) of the Central Excise Act, 1944 provides that the appellate tribunal may, at any time within six months from the date of the order, with a view to rectifying any mistake apparent from the record, amend any order passed by it under sub section (1) and shall make such amendments if the mistake is brought to the notice by the Commissioner of Central Excise or the other party to the appeal. An amendment which has the effect of enhancing an assessment or reducing a refund or otherwise increasing the liability of the other party, shall not be under this sub section unless the appellate tribunal has given notice to him of its intention to do so and has allowed him a reasonable opportunity of being heard.  Some case laws are discussed in this article on rectification of mistakes for the benefit of the readers.

            In 'Commissioner of Central Excise, Mumbai V. Bharat Bijlee Limited' - 2006 -TMI - 47638 - (SUPREME COURT OF INDIA) the Supreme Court held that failure to take into consideration the material evidence which is present on record, would amount to mistake apparent on face of record and the tribunals have jurisdiction to correct such mistake in exercise of its powers laid down under Section 35C (2) of the Central Excise Act, 1944.

            In 'Deva Metal Powders Private Limited V. Commissioner, Trade Tax, UP' - 2007 -TMI - 48122 - (SUPREME COURT OF INDIA) the Supreme Court held that a mistake which is patent and which is obvious and whose discovery is not dependent on argument or elaboration could be rectified and such a power rectification is not confined to clerical or arithmetical mistake but the same should be evident and patent thereof. It has also been stated that the rectification of mistake does not cover any mistake, which may be discovered by a complicated process of investigation, argument or proof.  A decision on a debatable point of law or fact or failure to apply the law to a set of facts, which remains to be investigated, cannot be corrected by way of rectifications.

            In 'Honda Siel Power Products Ltd., V. Commissioner of Income Tax, Delhi' - [2008 -TMI - 2694 - SUPREME COURT OF INDIA] it has been laid down by the Hon'ble Supreme Court that if any prejudice has resulted to any of the parties and which prejudice is attributable to the Tribunal's mistake, error or omission and which error is manifest error, then the tribunal would be justified in exercising the power for rectification of the same and hence the said principles laid down would become applicable to the facts and circumstances of the matter that is involved herein.

            In 'Sapthagiri Cements Pvt. Ltd., V. Commissioner of Central Excise, Chandigarh' - 2009 (241) ELT 447 (Tri. Bang) the appellant stated that the Bench has not considered all the submissions made in the appeal/synopsis during the hearing held. It is further contended that the submission goes to the root of the matter. The demands confirmed as per Order-in-Original is erroneous. Non consideration of the specific pleadings made amounts to a mistake patent on the records of the case. Therefore, the appellant prayed that in the interest of justice the Final Order passed has to be rectified or recalled.  Further it was stated that the impugned Order-in-Original traversed beyond the scope of the show cause notice. The Department submitted that the final order has considered the entire factor into consideration and has upheld the order of the original authority.

            The tribunal considered the arguments of both the sides.  It held that the tribunal has given elaborate reasoning for upholding the order-in-original. Every point has been considered.  It is not necessary that every information given by the appellant has to be incorporated in the finding to show that they have been considered.  This is a case of clandestine clearance.  The Revenue has investigated and they have brought enormous evidence. It is not only the computer printout.  There have been various other records, very incriminating records, which have been brought on records and which have all been considered by the Commissioner and after a careful scrutiny, the tribunal had no other option but to accept the same.  In any case, the applicants, the tribunal held, have not pointed out any apparent error on the face of the record so as to rectify the mistake supposed to have been committed by the tribunal in the final order.  The rectification application itself is very elaborate.  They have brought out the same points which have been made in the appeal.  All these things have been considered by the tribunal. Even if the judgment of the tribunal is wrong, it is not for the tribunal to recall the order and pass another order. The rectification of mistake application has no merit.  If they are challenging the findings of the tribunal which was upheld the order of the Commissioner, then the proper course in the case would be for the applicants to approach a higher court.  They could have gone in appeal to the High Court against the final order. Since there is no error apparent on the face of the record, the rectification of mistake is rejected.

            In 'Commissioner of Central Excise, Mumbai V. Pleasant time Products' - 2009 (241) ELT 459 (Tri. Mumbai) the adjudicating authority confirmed the demand and imposed penalty under Section 11AC of the Central Excise Act, 1944.  The same was confirmed by the appellate authorities. The assessee filed an application for rectification of mistake under Section 35C (2) of Central Excise Act, 1944 pointed out what they considered as apparent mistakes in the final order both in relation to classification and penalty.  The tribunal gave partial relief. No error was found in the order of classification of the goods and found mistake with regard to the penalty under Section 11AC of the Act.  Accordingly the tribunal restricted the quantum of penalty.  The present application for rectification of mistake was filed by the Department saying that there is an apparent mistake regarding penalty under Section 11AC. The mistake pointed out by the department is that, while limiting the quantum of penalty under Section 11AC to the period from 28.9.1996, the tribunal did not have regard to the amendment brought to that Section by the Finance Act, 2000. Explanation (1) to Section 11AC was added vide Finance Act, 2000 which reads as follows:

"Explanation: For the removal of doubts, it is hereby declared that the provisions of this section shall apply to cases in which the order determining the duty under sub section 11A relates to notices issued prior to the date on which the Finance Act, 2000 receives the assent of the President."

            The above explanation purports to give retrospective effect to Section 11AC so that a penalty could be imposed under the said section. The assessee raised a preliminary objection. It is submitted that under Section 35C (2) of the Act, only a final order of the tribunal can be rectified and that, the provision cannot be invoked to rectify any order passed on misc. application. The department relied on the judgment in 'Hind Wire Industries Limited V. Commissioner of Income Tax', - 1995 -TMI - 5463 - (SUPREME Court) in which the SC held that an earlier order of the assessing authority amending its order of assessment could be rectified in a second application filed by the assessee. The tribunal relied on the judgment in 'Commissioner of Central Excise, Belapur V. Kellog India Pvt Ltd.,' 2008 (228) ELT 493 (Tri. Mumbai) in which it was held that the second application for rectification of mistake is not maintainable.  In the instant case, obviously, the error pointed out by the department pertains to the order in rectification of mistake application filed earlier by the assessee.  Section 35C(2) of the Central Excise Act, ex facie, permits apparent mistake in final orders passed under sub section (1) to be rectified suo motu or an application filed by the aggrieved party.  This provision does not permit rectification of any mistake found in any order passed by the tribunal in rectification of mistake application filed under Section 35C.  Therefore, the present application of the department cannot be maintained in law.