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TMI Blog2025 (1) TMI 140X X X X Extracts X X X X X X X X Extracts X X X X ..... uary 2008 rejecting Petitioner's application for rectification of mistake (ROM) in the above order dated 16 October 2007. 4. Earlier, the Petitioner (revenue) had instituted Central Excise Appeal (L) No. 218 of 2008 in this Court to challenge the CESTAT's order rated 22 February 2008. However, the coordinate bench, comprising Dr D Y Chandrachud and A A Sayed JJ, by their order dated 12 October 2011, pointed out that the remedy of the revenue against such an order does not lie in the form of an appeal, but in a writ proceeding under Article 226 of the Constitution. Accordingly, the appeal was dismissed as not being maintainable on that ground, leaving it open to the Revenue to pursue an appropriate proceeding in accordance with law. 5. This petition was instituted based on the liberty in the above-referred order dated 12 October 2011. As noted above, the rule was issued in this petition on 30 June 2014 after hearing Mr M H Patil, the learned counsel for the Respondents (assessee). 6. Technically, we think that the revenue should have filed an appeal under Section 35G of the Central Excise Act, 1944 ("Said Act") to impugn CESTAT's order dated 16 October 2007 and a writ petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bstantial questions of law arise: - (A) What could be the impact of the Respondent classifying and paying duty under Heading 3917 in respect of officially cleared goods and, after that, insisting that the very same goods, which are allegedly clandestinely removed, should have been treated as goods under the Heading 8424, which were exempted from the payment of duty? (B) Was the CESTAT justified in not addressing the clandestine removal of goods issue, but proceeding on the premise that such clandestine removal was irrelevant and granting the assessee relief without disturbing the Commissioner's finding regarding the clandestine clearance of goods? (C) Was the CESTAT's approach in this matter consistent with the law declared by the Hon'ble Supreme Court in Santosh Hazare v. Purushottam Tiwari AIR 2001 SC 965? 13. Ms Cardozo and Mr Patil were accordingly heard on the above substantial questions of law involved. The grounds in the writ petition also raised these questions, though not in the form of substantial questions of law or, rather, not by precisely styling them as substantial questions of law. Thus, there was no surprise, and none was claimed. The Counsel addressed us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the issue before him viz. of clandestine removal. Once the products in dispute were not required to discharge duty liability for the reason that they were eligible to exemption under the above notifications, the demand confirmed in the impugned order, cannot be sustained. The contention of the Representative for the Revenue that the appellants had availed modvat credit of duty paid on the products in dispute and hence the duty demand requires to be confirmed, is not tenable, for the reason that the credit has been taken by the appellants of the duty paid by them, and it is the settled position that the payment of duty on the products which are not required to discharge duty liability, amounts to reversal of credit. Further the issue before the Tribunal is whether the duty confirmed by the Commissioner is required to be upheld or not and the issue of recovery of credit is not the issue in the appeal before us. In this view of the matter, further submission of the appellants that the duty paid by them on the products in dispute under protest is in excess of credit taken, is not required to be examined. 3. Since the demand is being set aside, the penalties also cannot be sus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quarely arose, warrants interference with the CESTAT's order. Without any decision on these issues, CESTAT was not justified in allowing the assessee's appeal by cursorily observing that such issues were irrelevant. 23. Besides, Mr Patil argued that there was no clandestine removal as alleged and submitted that this was a case of moving the goods from the factory to the depot. He urges all this because he realised that much turns on this factual aspect. The revenue relies on documents and circumstances to support its contention of clandestine removal of goods. Again, the CESTAT simply does not consider this issue. Without considering it, the impugned order was made by observing that clandestine removal was an irrelevant issue. This is, again, not correct. 24. The CESTAT's order is quite cursory and fails to come into close quarters with the Commissioner's order, which was appealed before it. Certain portions of the Commissioner's order are referred to say that there was no dispute that the products on which the duty has been confirmed fall under Heading 8424. There is no discussion about the assessee paying duty on the same goods when officially cleared but claiming that thes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not competent to reverse a finding of fact arrived by a trial judge....." 28. The Court held that; "Secondly, while reversing a finding of fact the appellate Court must come into close quarters with the reasoning assigned by the trial Court and then assign its own reasons for arriving at a different finding. This would satisfy the Court hearing a further appeal that the first appellate Court had discharged the duty expected of it. We need only remind the first appellate Courts of the additional obligation cast upon them by the scheme of present Section 100 substituted in the Code. The first appellate Court continues, as before, to be a final Court of facts; pure findings of fact remain immune from challenge before the High Court in second appeal. Now the first appellate Court is also the final Court of law in the sense that its decision on a question of law even if erroneous may not be vulnerable before the High Court in second appeal because the jurisdiction of the High Court has now ceased to be available to correct errors of law or the erroneous finds of the first appellate Court even on questions of law unless such question of law be a substantial one." 29. Applying t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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