2015 (3) TMI 80 - AT - Central Excise

Clarification of Tribunal s order - Tribunal in respect of issue No.3, held that the unabsorbed overheads referable to abnormal idle capacity for lack of order shall not form part of the cost of production and the demand of duty is not sustainable - Assessee submits that the demand of duty on 3rd issue is on unabsorbed overheads and cost of closing stock. It appears from para 7.4 of the order that the words closing stock were escaped from the notice of the Tribunal. He submits that in order to implement this order, it may kindly be clarified that the words cost of closing stock should be incorporated therein - Held that - It is apparent on the face of record, the unabsorbed overheads referable to abnormal idle capacity for lack of order would include the closing stock, which shall not form part of the cost of production - inadvertently the words the cost of closing stock were omitted in the said paragraph. Hence, it is required to clarify that the words cost of closing stock would be included in para 7.4 of the final order of the Tribunal. - application filed by the applicant is not for review of the order. It is an error apparent on the face of the records that words cost of closing stock should be incorporated in the paragraph 7.4 of the Final Order. The Ld. Special Counsel emphasizes that the applicant should be approached the department for implementation of Final Order in respect of the 3rd issue. We do not find any force in the submission of the Ld. Special Counsel. Since the Tribunal noticed the omission of the words the cost of closing stock in paragraph 7.4 of the Final Order, it should pass necessary order for rectification/ clarification of the said Interim Order, in the interest of justice. - It is clarified that in paragraph 7.4 of the Final Order it would be read as the unabsorbed overheads referable to abnormal idle capacity for lack of order and the cost of closing stock shall not form part of the cost of production and the demand of duty is not sustainable - Decided in favour of appellant.

Summary

Issues: Application for clarification of an interim order regarding unabsorbed overheads and closing stock in the cost of production.

Analysis:
1. The applicant sought clarification of an interim order where the Tribunal decided in favor of the applicant on three issues, with the fourth issue referred to the Larger Bench. The applicant requested the inclusion of "cost of closing stock" in the order related to unabsorbed overheads for abnormal idle capacity. The Tribunal noted the omission of the words "cost of closing stock" in the final order's paragraph 7.4, necessitating clarification for implementation. The Ld. Senior Counsel represented the applicant's stance on the issue.

2. The Ld. Special Counsel for the Revenue opposed the application, citing the need for apparent clerical or arithmetical errors for rectification. Referring to legal precedents, the Special Counsel argued against invoking Rule 41 of the CESTAT Procedural Rules, emphasizing the lack of material from the applicant to implement the final order. The Special Counsel highlighted the applicant's failure to approach the Department for order implementation and the absence of errors in the final order.

3. Upon review, the Tribunal found that the issue revolved around whether unabsorbed overheads due to idle capacity should be part of the cost of production, including the cost of closing stock. Both the Revenue and the applicant presented their positions on the matter. The Tribunal acknowledged the oversight in omitting "cost of closing stock" in the final order's paragraph 7.4, necessitating clarification for accuracy and implementation.

4. The Tribunal referenced legal cases to distinguish the present matter as a clarification request, not a review of the final order. Emphasizing the need for rectification to ensure justice, the Tribunal clarified that the "cost of closing stock" should be included in paragraph 7.4 of the final order to align with the decision's intent. The Tribunal dismissed the Revenue's objections and disposed of the applicant's miscellaneous application accordingly.

In conclusion, the Tribunal clarified the inclusion of the "cost of closing stock" in the final order's paragraph 7.4 concerning unabsorbed overheads, ensuring accuracy in the cost of production determination and upholding the applicant's favorable decision on the issue.