TMI Blog2000 (9) TMI 1068X X X X Extracts X X X X X X X X Extracts X X X X ..... ia falling under CET sub-heading 2933.90, and Carbon Dioxide. The appellants claimed the benefit of Notification No. 40/85, dated 17-3-85 for Ammonia on the ground that it is used in the manufacture of molten urea which is a fertilizer. The benefit of the notification was denied by the Department on the ground that the molten urea is not actually used as a fertilizer but is used for production of melamine. 3. The assessees came up in appeal to the Tribunal against the impugned order of the Collector of Central Excise (Appeals), Bombay and the Tribunal, vide final order No. 159/97-C, dated 28-2-97, upheld the denial of the benefit of Notification 40/85, holding that only that ammonia which is utilised for the production of mineral or chemical fertilizer will be eligible for the benefit of the Notification. 4. In coming to its conclusion, the Tribunal followed its earlier order in the case of the same assessees reported in 1991 (56) E.L.T. 257. As regards the alternative plea for exemption under Notification 217/86, the Tribunal held, relying upon its earlier order No. 58-59/96-C, dated 29-1-96, that exemption was available subject to fulfillment of conditions of the Notificati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether an exemption notification gets attracted on the facts of a given case, the express language of the exemption notification has to be given its due effect. In the light of the aforesaid settled legal position, we have, therefore, to confine ourselves in the express language employed by the exemption granting authority in its wisdom while it issued notification No. 40 of 1985. As noted earlier, the notification clearly refers to the goods of description specified in column (2) of the Table annexed to the notification and falling under enumerated chapters of the Tariff Act. One of the chapters mentioned therein is Chapter 31. The said chapter deals with fertilizers. Note No. 1 of the said chapter lays down that Heading Nos. 31.02, 31.03, 31.04 and 31.05 cover mineral or chemical fertilizers, even when they are clearly not to be used as fertilizers. When we turn to Heading No. 31.02, sub-heading No. 3102.00, we find the description of goods which refers to mineral or chemical fertilizers, nitrogenous. The only contention before CEGAT was whether the term 'fertilizer' in each of the exemption notifications covered chemical fertilizer like molten urea or was confin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of manufacture and, therefore, it must be held that ammonia was captively consumed for the purpose of manufacturing the ultimate product of melamine and not molten urea. On the express language of the Notification in question, it is not possible to agree with the contention of Shri Bhat, learned Additional Solicitor General that the term 'fertilizer' employed by the said notification must be understood by adopting the common parlance test to be referred to soil fertilizer only. As a result of the aforesaid discussion, it must be held that the Collector of Central Excise (Appeals) as well as the CEGAT had patently erred in law in taking the view that Notification No. 40 of 1985 did not cover captively consumed ammonia utilised by the appellant input for manufacturing molten urea. In the result, these appeals succeed and are allowed. The common judgment and order rendered by the CEGAT in all the six appeals as confirming in its turn the appellate orders passed by the Collector of Central Excise (Appeals) are quashed and set aside. 6. On the basis of the above judgment, the assessees filed an application for rectification of mistake apparent on the record of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C 611 (P H)] 7. M.K. Venkatachalam ITO v. Bombay Dyeing Mfg. Co. Ltd. [AIR 1958 SC 875] 8. Poothundu Plantations Pvt. Ltd. v. Agricultural Income-tax Officer [1996 (66) ECR 224 (S.C.)] He submits that the foundation of the Tribunal's final order No. 159/97-C is the Tribunal's decision reported in 1991 (56) E.L.T. 257 which has been set aside by the Hon'ble Supreme Court and therefore, the plank on which the Tribunal's finding on Notification No. 40/85 entirely rested, has fallen on the ground and therefore, the Tribunal's final order is required to be recalled and the mistake in denying the benefit of the above notification is required to be corrected by holding that the assessees are eligible to the benefit of the notification for captively consumed ammonia used in the manufacture of molten urea which in turn is used in the manufacture of melamine. 11. Opposing the prayer of the applicants, the learned DR Shri H.K. Jain submits that a subsequent decision either of the Tribunal or High Court or Supreme Court is not a ground for rectification as the Tribunal has decided the case in the light of the law in force at the time of passing o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dditional tax on excess dividend declared by the respondent company. Thereafter, the Bombay High Court, in the case of Khatau Makanji Spinning Weaving Co. Ltd. v. Commissioner of Income-tax [1956 (30) ITR 841] held that levy of tax on excess dividend was illegal. The respondent company applied to the ITO for refund of tax paid although it was not expressly stated in the application that the order be rectified under Section 35 of the Income-tax Act. The ITO rejected the request by order dated 2-11-1957 on the ground that the assessment was completed well before the judgment of the Bombay High Court. Against the order of ITO, the company applied to the Commissioner of Income-tax under Section 33A of the Income-tax to revise that order but the Commissioner of Income-tax rejected the application as time-barred, treating it as an application for cancellation of the levy of tax, and, as an application against refusal of ratification, he held that it was not maintainable because the error was not apparent from the record but was one which could be discovered only by a process of argument and debate. The High Court allowed the Writ petition filed by the respondents under Article 226 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stake was subsequently discovered in the order as a result of later judicial pronouncements. The High Court held that the submission of the Revenue was not well founded. The Court held as under : It is true that the Wealth-tax officer did not have before him the decision of this Court in Raipur Manufacturing Company case or that of the Supreme Court in Kesoram Industries and Cotton Mills case when he passed the assessment orders in the petitioner's cases and that both the decisions were given after the assessment orders were made. But these decisions did not enact or make the law in any sense but merely interpreted the expression 'debt owed' occurring in section 2(m) of the Act which was undoubtedly on the statute book at the time when the assessment orders were made by the Wealth-tax officer. These decisions, insofar as they declared that the amounts claimed by an assessee in respect of provision for taxation are deductible in computing the net wealth of the assessee since they represent 'debt owed' by the assessee within the meaning of section 2(m) of the Act, merely stated that the law had always been and must always be understood to have been. The fact t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rectified. In that case, the question related to interest on advance tax paid beyond the due date. The question was answered in the negative by the Income-tax officer; the Commissioner of Income-tax (Appeals) upheld the plea of the assessee and reversed the order of the Income-tax officer. In second appeal, the Income-tax Appellate Tribunal held that the belated payments are not to be taken into account as advance tax for the purpose of section 214 of the Income-tax Act, 1961, therefore, interest is inadmissible for such belated payments. The Tribunal's order was based upon the decision of the Kerala High Court reported in 1980 (122) ITR 587 in the case of Sethumadhavan v. Commissioner of Income-tax. The judgment of the Single Judge in Sethumadhavan s case was reversed by the Division Bench of the Kerala High Court which is reported in 1982 (135) ITR 49. The petitioner applied for rectification on the basis of the Division Bench decision, and prayed that the ITAT may be pleased to hold that interest is admissible even for belated payment of advance tax. The Tribunal dismissed the petition filed by the petitioner under Section 154 of the Income-tax Act holding that rectification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t judgment . 14. In the case of B.V.K. Seshavataram, the Hon'ble Andhra Pradesh High Court held that a decision of the Supreme Court which was passed subsequent to finalisation of assessments giving the benefit of depreciation allowance to the assessees can form the basis for rectifying the order of assessment under Section 164 of the Income-tax Act, 1964. The claim for depreciation allowance by the assessees who were co-owners of a Rice Mill was, intially allowed by the Assessing officer. Subsequently by an order under Section 154 of the Income-tax Act, 1961, the depreciation allowance was withdrawn on the basis of decision rendered by the Supreme Court in Seth Banarsi Dass v. CIT - (1983) 166 ITR 783. The assessees successfully challenged the rectification order under Section 154 before the Deputy Commissioner of Income-tax. The Revenue carried the matter in appeal to the Income-tax Appellate Tribunal which allowed the appeal of the Revenue, holding that a fractional owner is not entitled to claim depreciation allowance and that the rectification done on the basis of the subsequent Supreme Court decision was fully justified. The assessees filed Reference Application befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b Haryana (supra). 16. In the case of Poothundu Plantations Pvt. Ltd. v. Agricultural Income-tax officer [1996 (66) ECR 224 SC], the case arose out of an order of rectification of mistake apparent on the face of the record under Section 36 of the Kerala Agricultural Income-tax Act. The question before the Supreme Court was whether an Agricultural Income-tax officer could rectify the order passed by his predecessor in office on the ground that the assessment order was passed by wrong construction of Section 12 of the Kerala Agricultural Income-tax Act, dealing with carrying forward of loss, on the strength of the decision of the Apex Court in the case of Anglo French Textile Company Ltd. v. Commissioner of Income-tax (1993 23 ITR 82). The Assistant Appellate Commissioner took the view that his predecessor had committed an apparent mistake of carrying forward of losses in computing agricultural Income-tax under the Kerala Agricultural Income-tax Act. The question was whether Section 12 of the Kerala Agricultural Income-tax Act must be interpreted in the manner in which the Supreme Court interpreted Section 24 of the Indian Income-tax Act in the case of Anglo French Textile Compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave observed that the concerned Revenue authorities or the Income-tax Appellate Tribunal were not justified in refusing/rejecting ROM on the ground that a subsequent pronouncement by High Court or the Apex Court cannot be considered as a mistake apparent from the record. This makes it clear that the Appellate Tribunal has jurisdiction to rectify a mistake apparent from the record on the basis of a subsequent decision of a High Court or the Supreme Court, in cases where no further investigation on facts is required and where the principle of the High Court or the Supreme Court decision could be straightaway applied to show that the decision already issued was a mistake. However, the position is different in respect of subsequent decisions of the Tribunal because orders of the Tribunal unlike those of the High Court or the Supreme Court are not declaratory of what the law has always been or what must be understood to have been. In the case of Sirpur Paper Mills v. C.C.E. [1986 (24) E.L.T. 49], Saurashtra Cement and Chemical Industries [1987 (29) E.L.T. 87], M.C. Desai v. Collector [1991 (56) E.L.T. 425] and National Rayon Corporation Ltd. [1993 (67) E.L.T. 186], the Tribunal has held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt had given liberty to raise the questions of reviewability of the judgment of the High Court, the question arises whether the High Court could not have embarked upon appreciation of evidence and considered whether there was an error apparent on the face of the record. It was contended before the learned Single Judge that various decisions were not cited; proper consideration was not paid, in fact the sale deed was acted upon; and that there was no proof that the sale was not for valid consideration. The omission to cite an authority of law is not a ground for reviewing the prior judgment saying that there is an error apparent on the face of the record, since the Counsel has committed an error in not bringing to the notice of the Court the relevant precedents. In fact, since the respondent had claimed that it is not a sale deed but was executed for collateral purpose, it was for the respondent to establish that the sale was for real consideration and he had valid sale deed duty executed by the appellant. The High Court wrongly placed the burden on the appellant and reviewed the order and heard the matter on merits. The entire approach of the learned Single Judge is not court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 254(2) of the Act. 24. In para 38 of the order, the Court has held as under, In the case of hand the documents in which the order dated 24-10-1996 came to be passed, is a matter of controversy. According to the petitioners, it was the opinion of the Tribunal that it shall first hear the application for additional evidence. According to the respondent the petitioners were trying to create a procedural mess, by insisting on arguing the appeal first on merits and strategically reserving submissions on the application to be made in the event of their failing on merits; that was the effort of the petitioners which was sought to be stalled by the Tribunal. In the later case, it was obligatory on the part of the petitioners to invite the attention of the Tribunal to its earlier order and then press the application for hearing. It is also a matter of controversy whether the Tribunal committed a procedural or jurisdictional error in not disposing of the application or the application should be deemed to have been abandoned as not pressed by the petitioners. Before us the learned Counsel for the parties have made long drawn submissions on these aspects highlighting the issue from ever ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat a subsequent decision of the High Court and Supreme Court can form the basis of an application for rectification of mistake for the following reasons : 30. Sub-section (2) to Section 35C of the Central Excise Act provides that the Appellate Tribunal may at any time within four years 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 in the mistake is brought to its notice by the Commissioner of Central Excise or the other party to the Appeal. It is worthwhile to notice that the power to rectify any mistake under this sub-section can be exercised only if the mistake is apparent from the record . If, there is no mistake apparent from record the Tribunal is not empowered to amend any order passed by it under sub-section (1) of Section 35(C). It is well settled that only an apparent error of fact or law can be rectified by an Officer. It is also well settled that under the cover of an application for rectification of mistake, Tribunal is not to exercise Appellate Power of Power of review against the order passed earlier. 31. It is not in dispute that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Supreme Court in which it has been held that the subsequent decision of the Supreme Court will be a valid ground for rectification of mistake apparent on record. No doubt in the case of Poothundu Plantations Pvt. Ltd. v. Agricultural Income Tax Officer - 1996 (66) ECR 224 (SC), it was held that if the Supreme Court has construed a menaing of section, then any decision to the contrary given by any other authority must be held to be erroneous and such error must be treated as an error apparent on the record. However, in this case the Supreme Court on merit held that the Section 12 of the Kerala Agriculture Income Tax can not be interpreted in the manner in which section 24 of the Indian Income Tax Act has been interpreted by the High Court. 32. I observe that on the other hand the Supreme Court in the case of Dokka Samuel v. Dr. Jacob Lazarus Chelly, 1997 4 SCC 478 held that Omission to cite an authority of law is not a ground for reviewing the prior judgment saying that their is an error apparent on the face of the record, .. . This decision of the Supreme Court lays down the law that even if an authority of law remains to be cited before the court deciding the matter it can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bject is achieved by amending any order passed by it . The power so conferred does not contemplate a rehearing which would have the effect of rewriting an order affecting the merits of the case. 34. The facts of Deeksha Suri case, may be different but the ratio laid down by the Delhi High Court that power conferred by Section 254(2) of the Income Tax Act does not contemplate a rehearing is very relevant to the facts of the present matter. The appellants, if aggreived with the Tribunal's Order, have the right to go in appeal before the Supreme Court. 35. Further, the Madras High Court in the case of Shree Palaniappa Transports v. Commissioner of Income Tax, 1999 (238) ITR 492 (Madras) has held that on a bare reading of Section 254(2) we have no hesitation in coming to the conclusion that a Tribunal deciding a case on certain debatable issues, wherein there is no decision of the jurisdictional High Court could not be deemed to have made mistake because subsequent to the decision of the Tribunal a judgment has been rendered by the jurisdictional High Court. Similarly, Calcutta High Court, in the case of Jiyajee Rao Cotton Mills v. I.T.O. - 1981 (130) ITR 710 (Calcutta) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision is held to be the basis for an application for rectification of mistake, the finality of any decision will be hit adversely as subsequent decisions can be made basis for moving an application for rectification from time to time. In any case for a Tribunal having all India status a subsequent decision of a High Court cannot be made basis of an application for rectification of mistake. Further, a Larger Bench of this Tribunal has taken a view in Dinkar Khindria case, supra, that the Tribunal under no. circumstances can recall an order passed and issued. Under the cover of rectification of mistakes, the Tribunal cannot exercise any power to recall an order. 38. Following the ratio of the decision of the Supreme Court in Dokka Samuel's case and the views expressed by Madras High Court and Calcutta High Court, supra, I hold that a subsequent decision of the Supreme Court and/or High Court cannot form the basis of an application for rectification of mistake. Only a glaring and obvious mistake can be corrected under the provision of Section 35C(2) of the Central Excise Act but a debatable issue on the question of law cannot be rectified under the said Section. The reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nkar Khindria [2000 (38) RLT 442]. Exercise of inherent power of review for rectification of errors of judgment is a realm that belongs only to courts of plenary jurisdiction. The power of this Tribunal to amend its own orders by way of rectification of mistake under Section 35C(2) of the Central Excise Act, 1944, is circumscribed by the limiting factor, viz. that the rectification must be confined to mistakes apparent from the record . Such power can not be enlarged so as to assume the sweeping dimensions of the power of review which is a forbidden area for the Tribunal. It is a power conferred by statute on the Appellate Tribunal as the final fact-finding authority to correct its own errors of facts and/or of law. 41. While exercising the power of rectification of mistake, Tribunal must bear in mind the provisions of sub-section (4) of Section 35C, which reads as under :- Save as provided in Section 35G or Section 35L, orders passed by the Appellate Tribunal on appeal shall be final. Section 35G provides for reference to High Court of questions of law arising from orders passed by the Tribunal in appeals. Section 35L provides for appeals to the Supreme Court from jud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed an examination of argument to establish it. This test might afford a satisfactory basis for decision in the majority of cases. But there must be cases in which even this test might break down, because judicial opinions also differ, and an error that might be considered by one Judge as self-evident might not be so considered by another. The fact is that what is an error apparent on the face of the record cannot be defined precisely or exhaustively, there being an element of indefiniteness inherent in its very nature, and it must be left to be determined judicially on the facts of each case. (Emphasis supplied). 43. The element of indefiniteness inherent in the very nature of an error apparent on the face of the record is, as I understand, not meant to be handy for the Tribunal to hold that a subsequent decision of the Supreme Court or a High Court or the Tribunal on a question of law has the effect of introducing an 'error apparent on the face of the record' to be rectified under Section 35C(2) of the Act. On the other hand, it casts a burden on the Tribunal to perceive the error (if any) in its order by a judicial evaluation of the facts of the case. This, in my view, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch appellate order during the said period. The inevitable result will be a chaotic situation on account of multiplicity of proceedings. This cannot be the legislative intent behind Section 35C(2). 46. I am also in full agreement with the findings of learned Brother, Shri V.K. Agrawal on the referred issue. 47. The ROM Application only requires to be rejected. Dated : 11-8-2000 Sd/- (P.G. Chacko) Member (J) 48. [Order per : K.K. Bhatia, Member (T)]. - I agree with the views in the Order recorded by Shri V.K. Agrawal, ld. Member (Technical) and that by Shri P.G. Chacko, ld. Member (Judicial). I reject the ROM Application. Dated : 18-8-2000 Sd/- (K.K. Bhatia) Member (T) 49. [Order per : S.S. Sekhon, Member (T)]. - I have had the benefit of the orders prepared by my learned colleagues. For the sake of brevity I am not repeating the facts of the case and the submissions and case laws which have already been brought out. 50. I have considered the order of my learned brother Member (Technical) Mr. K.K. Bhatia, since no reasons are recorded by him, I cannot agree with him. 51. I have considered the order prepared by my learned brother Mr. P.G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis of that order of Tribunal. On that very day, the Supreme Court having reversed it, the basis on which the Tribunal's order was made on 28-2-1997, having been knocked off, the edifice which has been built on the foundation having been removed, can not have given shelter to the Tribunal to reject the present case before them on that date. The point I am trying to emphasise is that in our judicial system there is a theory known as merger of the order of the lower authorities with that of the superior authority, especially when the superior authority reverses the finding and the decision made by the lower authority in appeal as in this case. The lower authority s order merges with the superior authority's order and such lower authority's order does not exist in law and fact, in the eyes of law. I am, therefore, of the view that when the decision of the Tribunal ceases to exist in fact and in law, therefore, reliance on it, according to me, would be a mistake apparent on the face of the record. The theory of merger is an important element in our judicial system, in the hierarchy of Courts especially with the High Courts and the Supreme Court having writ jurisdiction a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uent decision of the Tribunal, then there is no debatable issue to be determined. I cannot find any reason to classify the errors/mistakes which could be rectified into 'glaring and obvious mistake' and error/mistake of an another kind.' As I do not find any qualifications before the word error in the Section 35C(2) of the Central Excise Act, 1944, and such a classification of errors as arrived at by the ld. Brother would be adding words which do not exist in the provisions of law. Therefore, I cannot agree with the conclusions arrived by him. 55. I would agree with and follow the findings of ld. Member (Judicial) Ms. Jyoti Balasundaram, as arrived at and allow the ROM application. Dated : 5-9-2000 Sd/- (S.S. Sekhon) Member (T) MAJORITY ORDER We hold that a subsequent decision of the Tribunal or a High Court or the Supreme Court cannot form the basis for an application for rectification of mistake in terms of Section 35C(2) of the Central Excise Act, 1944 and accordingly reject the ROM application. Sd/- (P.G. Chacko) Member (J) Sd/- (V.K. Agrawal) Member (T) Sd/- (Jyoti Bala ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
