Tax Management India. Com
                            Law and Practice: A Digital eBook ...
TMI - Tax Management India. Com
Case Laws Acts / Rules Notifications Circulars Tariff/ ITC HSN Forms Manuals SMS News Articles Highlights
Article Section
Home Articles Central Excise Mr. M. GOVINDARAJAN This
← Previous Next →


Submit New Article
December 5, 2017
  • Contents

Rectification of mistake

Section 35C(2) of the Central Excise Act, 1944 (‘Act’ for short) 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 section 35(1) and shall make such amendments, if the mistake is brought to its 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 made, 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.

It is settled legal position that the Appellate Tribunal can rectify only a mistake apparent on record, which must be in the nature of typographical or clerical error, or when a submission going to the root of the case was not considered or decided. But a final order passed on merits cannot be recalled only on the ground that the appeal was to be heard with another appeal. This has been confirmed in the following case law-

In Ahmedabad Packaging Industries Limited V. Union of India’ – 2017 (8) TMI 596 - GUJARAT HIGH COURT the petitioner is engaged in manufacture of HDPE tapes, which are excisable goods.The raw materials used by the petitioner are HDPE granules. A dispute was there between petitioner and the Department on HDPE tapes.  The trade claimed that the goods were articles of plastic classifiable under Chapter 39 of the Central Excise Tariff. The Revenue viewed as Chapter 54 of the tariff.

The petitioner paid the excise under protest under Chapter 54 heading 5406.90.  Later the CBEC issued a circular clarifying that these were goods were classifiable under Chapter 39 of the Tariff, n view of several decisions and judgments holding that HDPE tapes were the articles of plastic falling under Chapter 39 of the Tariff.  Therefore the petitioner filed refund of the duty which was sanctioned by the Assistant Commissioner, but he ordered to transfer the same to the Consumer Welfare Fund on the ground of unjust enrichment. Against this order the petitioner filed appeal before Commissioner (Appeals) who allowed the appeal holding that the refund claim was not hit by doctrine of unjust enrichment. The Revenue refunded the amount.

The Revenue filed appeal before the Tribunal. The Tribunal remanded the case to the Assistant Commissioner. The Assistant Commissioner, in the second round held that the petitioner company had not passed on incidence of duty to the customers and therefore the claim was not hit by the unjust enrichment.  The Revenue’s appeal against this order was rejected. The said order has been accepted by the Revenue and became a concluded matter.

The petitioner, thereafter, claimed interest for the delayed refund. The Assistant Commissioner sanctioned interest to the tune of ₹ 44,28,444/- in view of section 11BB of the Central Excise Act for interest on delayed refund. This amount has also been paid to the petitioner. Against the order of sanctioning the refund, the Revenue filed appeal before the Commissioner (Appeals) who allowed the same. The Appellate Tribunal remanded the matter to the Commissioner (Appeals). On the application of the petitioner, the Tribunal granted a stay order on recovery of the interest paid to the petitioner. This matter was pending for final hearing and disposal.

In the meanwhile a show cause notice was issued to the petitioner for recovering the above interest amount of ₹ 44,28,444/-. Joint Commissioner passed an order demanding recovery of the amount of interest on delayed refund. The petitioner filed appeal against this order which was rejected by the Commissioner (Appeal). The petitioner filed appeal before Tribunal along with the stay application. The Tribunal granted stay on 08.08.2011 by observing the recovery of amount of interest on delayed refund was the subject matter of the previous appeal wherein stay on merits was allowed and directed the Registry to connect this subsequent appeal with the earlier appeal for disposal. The Tribunal heard the earlier appeal and allowed the appeal of the petitioner on merits by delivering a detailed judgment by holding that the petitioner was legally entitled to interest on delayed refund in view of section 11BB of the Act.

The subsequent appeal was not listed with the earlier appeal.

The petitioner filed a rectification application before the Tribunal since there was a typographical error about a date in the final order on 29.09.2016. 2016 (11) TMI 571 - CESTAT AHMEDABAD The Revenue also filed an application for rectification of mistake on the ground that the Registry was directed to link the two appeals but which was not done by the Registry. The Tribunal heard both the parties. The Revenue prayed that the final order passed in the earlier appeal should be recalled because the subsequent appeal was not listed together for disposal.  The Tribunal recalled the order of earlier appeal which is decided in favor of the petitioner and directed to list both the appeals together on 26.07.2017.

The petitioner against this order filed a writ petition before the High Court. Before the High Court the only challenge is the order passed by the Tribunal 14.06.2017 2017 (6) TMI 1160 - CESTAT AHMEDABAD in application in purported exercise of power under section 35C(2) of the Central Excise Act, 1944 recalling the order dated 29.09.2016 wherein the appeal had been allowed on merits.  The petitioner submitted the following before the High Court-

  • The purport and scope of section 35C(2) is unfortunately not appreciated by either the department or the Tribunal, which has resulted into undertaking the exercise, which was not available to the Tribunal to undertake for recalling the order, which was otherwise absolutely just and proper.
  • When the earlier appeal had been disposed of on merits vide order dated 29.09.2016 which was absolutely just and proper order and non hearing of the subsequent appeal together could not have given any cause of action whatsoever for filing or moving an application under section 35C(2) of the Act.
  • The Tribunal could not have embarked upon the exercise of examining the order and recalling the same on erroneous pleadings of so called mistake, which could not have been attributed to Tribunal at all.
  • The impugned order deserves to be quashed and set aside.

The Revenue contended the following-

  • The order was passed by the Division Bench of the Tribunal and therefore, the same could not have been overlooked or ignored by the Single Judge Bench, which was rendering decision on 29.09.2016 and therefore the error was apparent on the face of the record which was required to be rectified.
  • Therefore the department was justified in allowing the application under section 35C (2) of the Central Excise Act.
  • The error apparent on the face of the record would clothe the Tribunal with a power to review and recall an order and therefore the order dated 08.08.2011 was not taken into consideration by the Tribunal while passing order on 29.09.2016 and therefore, to the extent the same was erroneous when the error was rectified and order of Tribunal was recalled, there was no mistake whatsoever, which was giving any rise to file a petition under section 226 of the Constitution of India.

The High Court analyzed the provisions of section 35C(2) of the Act. The High Court held that the plain and simple reading of section 35C(2) would reflect that the Tribunal does not have any power to review the order and the purport and scope of section 35C(2) of the Act is limited to rectifying the mistake only and that too the error on mistake apparent on the face of the record.  This provision is not required to be so enlarged as to clothe the tribunal with the power of reviewing its own order, which otherwise is conspicuous lacking in the statutory provision of the Act.

The High Court further held that if there was any error apparent in deciding the appeal and the final order called for any correct because of a typographical or clerical error or the like; then further orders could made by the Appellate Tribunal correcting such error in exercise of power conferred under section 35C(2). But when there was no error in rendering the final order on merits after hearing both the parties and it was not even the case of the Revenue that the final order suffered from any error or mistake the Appellate Tribunal could not have recalled the whole order only because the Registry had not tagged one more appeal involving the same issue with the appeal which was heard and decided on merits. The power to correct any mistake apparent on record can be exercised only when there was such mistake in the order made by the Appellate Tribunal, but not because of an error of the Registry, and that too when the only error of the Registry was not putting up two cases together for disposal.

The High Court further held that the petitioner suffered a grave prejudice by virtue of the impugned order of the Appellate Tribunal because the appeal heard and decided on merits is now ordered to be heard against, and the final order on the appeal passed on the petitioner’s favor on merits and a full fledged bi-parte hearing is recalled robbing the petitioner of the fruits of the efforts made by them for a decision on merits in that case. The order of the Appellate Tribunal recalling the final order made on merits after hearing both the parties is therefore, ex facie illegal, impermissible and without jurisdiction. The High Court quashed the impugned order and allowed the appeal.


By: Mr. M. GOVINDARAJAN - December 5, 2017


Discussions to this article


The manner in which the case has been dealt by the departmental officers show cases the hazards of doing business with the bureaucrats playing their own game to harass the manufacturer. It is a sad commentary.

Dated: 06/12/2017


← Previous Next →
Discussion Forum
what is new what is new

|| Home || About us || Feedback || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members ||

© [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.