IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 4409 of 2010
COMMISSIONER OF CENTAL EXCISE, BELAPUR, MUMBAI …..APPELLANT.
1. Being aggrieved by the Order dated 23rd November, 2009, passed in Appeal No.E/2032/06-Mum. by the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), West Zonal Bench at Mumbai, this appeal has been filed by the Revenue – Commissioner of Central Excise, Belapur, Mumbai.
2. By virtue of the impugned order, the CESTAT has rectified its Order dated 4th November, 2008 passed in Appeal No.E-2032-2033/06 in pursuance of an application for rectification filed by the present respondent assessee under Section 35C(2) of the Central Excise Act, 1944 (hereinafter referred to as ‘the Act’).It is the case of the appellant that the aforestated final order dated 4th November, 2008 passed by the CESTAT has been rectified in pursuance of the application filed by the respondent herein. The case of the appellant, in this appeal, is that under the garb of rectification, the CESTAT has modified its order dated 4th November, 2008 in such a way as if the respondent asessee had filed an appeal against the said order and the CESTAT has virtually allowed the appeal against its own order.
3. Mr. B. Bhattacharya, learned Additional Solicitor General, appearing for the Revenue submitted that the CESTAT has limited power to rectify its mistake under the provision of Section 35C(2) of the Act. The relevant portion of the said section reads as under:“35C(2) – 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 sub-section (1) and shall make such amendments if the mistake is brought to its notice by the Commissioner of Central”
The learned counsel submitted that as per the language of the aforestated sub-section, it is clear that the Appellate Tribunal, i.e. the CESTAT has power to rectify any mistake which is apparent from the record of any order passed by it under Section 35C(1) of the Act. The learned counsel submitted that the CESTAT had passed final order dated 4th November, 2008 in an appeal filed before it by the respondent. By virtue of the final order passed in the said appeal filed by the respondent, the CESTAT had upheld the demand of duty of Rs.90,89,480.56 together with interest and equivalent penalty of Rs. 90,89,480.56 but the order imposing penalty of Rs. 25,00,000/- had been set aside. Moreover, the penalty imposed upon Shri Sanjay Bahadur had been reduced to Rs. 1,00,000/-.
4. In pursuance of the application submitted by the respondent for rectification, the CESTAT modified the original final order to such an extent that the entire demand of duty has been quashed and set aside and as a consequence thereof the penalty imposed upon the respondent company and upon the Directors of the company has also been set aside.
7. Coming to details, as to how the CESTAT exceeded its jurisdiction, the learned counsel narrated the facts in a nutshell. He submitted that the respondent-company is a manufacturer of ‘Unipaved Interlocking Concrete Blocks’ (pavers), being excisable goods falling under chapter 68 of the First Schedule to the Central Excise Tariff Act, 1985. In pursuance of specific information received by the Department of Central Excise with regard to evasion of duty by the respondent, officers of the Head Quarters (Preventive) Wing had given a surprise visit to the factory premises of the respondent on 13th February, 2002 and had checked the company’s record and recorded statements of its officers. In pursuance of investigation, it was found that the pavers manufactured by the respondent were valued by the respondent at Rs. 250/- per sq. mtr. and accordingly excise duty was paid thereon. The said pavers were sold by the respondent to a related person or its inter-connected company – M/s. Uni tech Ltd. (UTL) for Rs.53 1/- per sq. mtr. and thereafter UTL was selling the same for Rs. 826.50 per sq. mtr. to Senorita Builders Pvt. Ltd. Thus, according to the learned counsel, the goods manufactured by the respondent were shown at a substantially low value only for the purpose of evasion of excise duty.
8. In the aforestated circumstances, a Cost Accountant was appointed to ascertain value of the goods manufactured by the respondent. The Assistant Director (Cost) of the Excise Department, who was a Cost Accountant, was appointed, though he was in service of the Department. An objection was raised by the respondent before the CESTAT at the time of hearing of the appeal referred to hereinabove that an employee of the Department, who was not in practice as a Cost Accountant, could not have been appointed to ascertain value of the goods manufactured by the respondent.
9. The aforestated objection raised by the respondent was duly considered by the CESTAT and was rejected for the reason that the Act or Rules made there under nowhere provides that only a Cost Accountant, who is in practice should be appointed to ascertain value of the goods, when the Revenue feels that the value of the goods shown by the concerned manufacturer is required to be ascertained. In pursuance of the rectification application, the CESTAT had heard the matter again and a similar objection was raised by the respondent in the rectification application. Once again it was submitted before the CESTAT that an officer of the department, though a Member of the Institute of Cost and Works Accountants of India, could not have been entrusted with the work of ascertaining the value of the goods because the person so appointed was in service of the department and was not in practice. The learned counsel submitted that after hearing the rectification application, the CESTAT accepted the aforesaid submission (which had not been accepted by the CESTAT earlier) and the valuation arrived at by the Cost Accountant was not accepted by the CESTAT and accordingly the order was modified.
14. On the other hand, the learned counsel for the respondent-assessee submitted that it was open to the CESTAT to change its view because it apparently noted its mistakes which had been committed while passing its earlier order dated 4th November, 2008. The counsel further submitted that the view expressed by this Court in the judgements referred to by the learned counsel appearing for the appellant had been subsequently changed in the judgements delivered in cases of Commissioner of Central Excise, Mumbai v. Bharat Bijlee Limited, 2006 (198) ELT 489, Honda Siel Power Products Ltd. vs. Commissioner of Income Tax, Delhi ,2008(22 1) ELT 11 and of Saci Allied Products Ltd. v. Commissioner of C. Ex., Meerut, 2005 (183) ELT 225. Thus, the learned counsel submitted that the CESTAT did not exceed its power and rightly rectified the mistakes which were apparent on the record while deciding the rectification application.
At an earlier point of time, the CESTAT came to a conclusion that the company to which the respondent-assessee sold its goods was an interconnected company. In the circumstances, according to the CESTAT, the decision of the department to appoint a Cost Accountant to ascertain value of the goods manufactured by the asessee was considered to be just and proper. However, after considering the submissions made in pursuance of the rectification application, the CESTAT came to a different conclusion to the effect that the asessee company and the buyer of the goods were not inter-connected companies. Different conclusions were arrived at by the CESTAT because it re appreciated the evidence in relation to common directors among the companies and inter se holding of shares by the companies. Re-appreciation of evidence on a debatable point cannot be said to be rectification of mistake apparent on record.
17. Similarly, in pursuance of the rectifying application, the CESTAT came to the conclusion that an officer of the department, who was working as Assistant Director (Cost) and who was also a Member of an Institute of Cost and Works Accountants was not competent as a Cost Accountant to ascertain value of the goods. It is strange as to why the CESTAT came to the conclusion that it was necessary that the person appointed as a Cost Accountant should be in practice. We do not see any reason as to how the CESTAT came to the conclusion that the Cost Accountant, whose services were availed by the department should not have been engaged because he was an employee of the department and he was not in practice. The aforestated facts clearly show that the CESTAT took a different view in pursuance of the rectification application. The submissions which were made before the CESTAT by the respondent-assessee while arguing the rectification application were also advanced before the CESTAT when the appeal was heard at an earlier stage. The arguments not accepted at an earlier point of time were accepted by the CESTAT after hearing the rectification application. It is strange as to how a particular decision taken by the CESTAT after considering all the relevant facts and submissions made on behalf of the parties was changed by the CESTAT. There was no mistake apparent on record when the CESTAT did not accept a submission of the respondent-assessee to the effect that the officer appointed to value the goods manufactured by asessee should not have been engaged as a cost accountant.
22. For the aforestated reasons, we are of the view that the CESTAT exceeded its powers and it tried to re-appreciate the evidence and it reconsidered its legal view taken earlier in pursuance of a rectification application. In our opinion, the CESTAT could not have done so while exercising its powers under Section 35C(2) of the Act, and, therefore, the impugned order passed in pursuance of the rectification application is bad in law and, therefore, the said order is hereby quashed and set aside. The appeal is allowed with no order as to costs.
(Dr. MUKUNDAKAM SHARMA)
(ANIL R. DAVE)
August 9, 2011.