RECTIFICATION OF MISTAKES

[Mr. M. GOVINDARAJAN]

Sec. 74 of the Finance Act, 1994 deals with the rectification of mistake. The Asst. Commissioner or Deputy Commissioner who has passed the order may rectify the same if there is any mistake apparent from the records within two years from the date of passing such order. The Assistant Commissioner or Deputy Commissioner may make amendment on his own motion or if such mistake is brought to his notice by the assessee or the Commissioner of Central Excise or the Commissioner of Central Excise (Appeals).

Sec. 35C (2) of the Central Excise Act, 1944 provides that the appellate tribunal may, with a view to rectify any mistake apparent from the record, amend any order passed by it and shall make such amendment if the mistake is brought to the notice by the parties to the appeal. The appellate tribunal may after hearing the parties shall pass the order or decision.

The following are some of the points in respect of rectification of mistake:

A mistake apparent from the record must be obvious and must not involve a debatable point of law;

A mistake apparent from the record should be such that it is self evident from the record itself and does not involve long drawn arguments;

Certain assessments became erroneous because Parliament enacted an amendment with retrospective effect. These amendments are taken to be suffering from a mistake apparent from the record;

'Record' means record or the case comprising the entire proceedings including documents and materials produced by the parties and taken on record by the authorities at the time of passing of the order which is subject matter of rectification;

A successor officer can always rectify a mistake of his predecessor in office;

Rectification of mistake cannot be invoked to open an assessment which has become final order;

Amending order must be in writing;

There is no restriction in the service tax provisions if an order is amended more than once and all the rectifications must be made within the prescribed period of two years from the date of passing of the final order;

If the rectification order enhances the liability of the assessee the same shall be done after giving reasonable opportunity to the assessee of being heard; steps will be taken to recover the sum so specified from the assessee;

If the rectification order reduces the liability of the assessee the concerned officer shall allow the refund to the assessee.

Seven case laws are given as follows in the matter of rectification of mistake:

1. Akbar Travels of India (P) Ltd., V. Commissioner of Central Excise, Trivandrum - [2009 -TMI - 32970 - CESTAT BANGLORE]

The applicant states that in the final paragraph of the order the penalties imposed under Sec. 78 of the Finance Act have been set aside but not the penalty under Sec. 70. It has been stated that there is mistake apparent on the face of the record. There is a prayer for setting aside the penalties under Sec. 76 also.

The tribunal held that it is seen that the tribunal has given a finding that the appellants had paid the major portion of the service tax before the issue of the show cause notice and balance amount even before the Orders-in-Original was issued. In these facts and circumstances, the tribunal had taken a lenient view and set aside only the penalties under Sec. 78. There were three Orders-in-appeal confirming the penalties under Sec. 78. The words used 'penalties' used in plural denote the penalties under Sec. 78 in respect of each order. It does not mean all the penalties had been set aside.

2. Cameo Corporation Services Ltd., V. Commissioner of Service Tax, Chennai - [2009 -TMI -32978 - CESTAT CHENNAI]

The original authority confirmed a demand of service tax against the appellants under the category of 'storage & warehousing service' whereas the relevant show cause notice had demanded service tax from them under a different category viz., 'business and other financial services'. The Commissioner (Appeals) noted that the lower authority had traveled beyond the scope of the show cause notice and set aside its order and remanded the case. In further appeal with the tribunal the decision of the lower appellate authority to remand the case to the original authority was approved. The applicant moved for rectification of mistake in the final order of the tribunal.

The tribunal held that sustaining the decision of the lower appellate authority to remand the case to the original authority for fresh decision within the scope of show cause notice is perfectly in keeping with the tenet of law. The tribunal has found no mistake whatsoever in the final order.

3. Commissioner of Central Excise, Patna V. Shakti Tubes Ltd., - [2008 -TMI - 30154 - CESTAT KOLKATA]

The present application for rectification of mistake has been filed by the applicant Commissioner praying for passing a fresh order. The assessee has taken a new stand before the tribunal which was not taken earlier before the adjudicating authority or before the first appellate authority. Impugned order is passed by the tribunal when departmental representative is not present; therefore Revenue got no opportunity to controvert the said new contention.

The tribunal held that it is for the department to make arrangement for its representation when a case is called up for hearing.   The tribunal is not precluded from entertaining a new ground for arriving at a proper contention. No case has been made out by the applicant Commissioner warranting any rectification of mistake in the order passed by the tribunal. On the other hand the applicant Commissioner is seeking review of the order on the ground that a new stand was taken by the appellant before the tribunal. Such a review is not permissible through an application for rectification of mistake.

4. Redsun Pharmaceuticals Ltd., V. Commissioner of Central Excise, Ahamedabad - [2009 -TMI - 32308 - CESTAT, AHMEDABAD]

The tribunal set aside the penalty on ground that matter was not free from doubt and during relevant period there was a decision by tribunal in favor of assessee.  The decision of larger bench relied upon by Revenue talks about legal issues and not deals with the penalty amount. Setting aside of penalty cannot held to be a mistake requiring any rectification.

5. Hindustan Lever Limited V. Commissioner of Central Excise, Mumbai - [2007 -TMI - 2355 - CESTAT, MUMBAI]

Decision of higher court is binding on tribunal, though pronounced subsequent to the decision of the tribunal. The tribunal's larger bench findings, followed while passing order, is reversed by Apex Court in other case subsequent to impugned order.   Rectification of mistake application is allowed and the matter will be placed before appropriate bench for disposal.

6. Bhartiben R. Patel V. Commissioner of Central Excise, Vapi - [2009 -TMI - 32529 - CESTAT, AHMEDABAD]

Assessee though not represented, a very detailed order is passed by the tribunal considering all facts. The plea of not giving of cab on rent but on per KM basis has not been substantiated as letter from service receiver clearly mentioned that payment made on account of service of rent-a-cab without giving number of kilometers for which vehicle was run. No case law is produced in support by assessee. There is no mistake apparent on record for rectification.

7. Firepro Systems Private Limited V. Commissioner of Service Tax, Bangalore - [2009 -TMI - 32309 - CESTAT, BANGALORE]

The tribunal has given a conscious decision that the said service rendered by them would come within the category of 'erection, commissioning and installation service' with effect from 16.6.2005 and not prior to that date. The benefit of Notification No. 12/2003 was given. Further the input credit was also allowed.   With those observations the tribunal has allowed the appeal of the appellants. Therefore not it cannot reverse its own finding and say that the appellant would fall within the category of the service of works contracts on turnkey basis. This will amount to review its own order. Even if the reasoning is incorrect, it would be better for the appellant to approach the normal appeal channels provided by law. Therefore the tribunal did not find any merit in the rectification of mistake application. There is no error apparent on the face of the record because the findings have been given on going through the contract. Hence the rectification of mistake is rejected.