Commissioner of Central
Excise, Belapur, Mumbai Vs. RDC Concrete (India) P. Ltd.
J U D G M E N T
ANIL R. DAVE, J.
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.
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
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 Excise or the other party to the appeal.........
"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/-.
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.
learned counsel appearing for the Revenue submitted that in pursuance of the rectification
application, the CESTAT has not only substantially changed its order but has also
changed its legal view on the subject. According to him, while rectifying any order,
the CESTAT can rectify any mistake which is apparent from the record. Under the
guise of rectification, the CESTAT cannot altogether take a different view in
law and it cannot reappreciate evidence which had been led before it.
further submitted that the CESTAT has practically reviewed its order though it
has no power to review its order and, therefore, it was not open to the CESTAT
to review the decision rendered by it on 4th November, 2008. He further
submitted that no judicial or quasi judicial authority has power to review its
order unless the statute gives such a power.
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
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. Unitech Ltd. (UTL) for
Rs.531/- 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.
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
aforestated objection raised by the respondent was duly considered by the
CESTAT and was rejected for the reason that the Act or Rules made thereunder 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
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.
learned counsel for the Revenue submitted that the CESTAT could not have changed
its view as stated above because what was permissible to the CESTAT was only rectification
of a mistake, if found apparent from the record. The interpretation with regard
to the provision relating to the appointment of the Cost Accountant, which the
CESTAT had accepted at an earlier point of time could not have been changed by the
CESTAT while deciding the rectification application because by changing the
legal view, the CESTAT was not rectifying any mistake apparent from the record
but the CESTAT was changing its view altogether, which is not permissible under
the provision of Section 35C (2) of the Act.
the learned counsel further submitted that the CESTAT had earlier arrived at a finding
that the respondent company had sold its excisable goods to a related person or
an inter-connected undertaking at a particular price and immediately thereafter
the inter-connected company had sold the very same goods at much higher price to
another company. The CESTAT had earlier come to a conclusion that it was
nothing but an attempt to evade duty and subsequently, in pursuance of the
rectification application, the CESTAT took altogether a different view whereby it
came to the conclusion that the company with which the respondent-assessee had dealings,
was in no way inter-connected. Thus, the facts which had been ascertained at an
earlier point of time were found to be incorrect or the CESTAT had reappreciated
evidence while deciding the rectifying application.
to the learned counsel, the CESTAT should not have re-appreciated the evidence so
as to come to a different conclusion while exercising its power under Section
35C(2) of the Act.
learned counsel relied upon judgments of this Court in Commissioner of Central Excise,
Calcutta v. Ascu Ltd., Calcutta 2003(9) SCC 230, Commissioner of Central
Excise, Vadodara v. Steelco Gujarat Ltd. 2003(12) SCC 731, Deva Metal Powders Pvt.
Ltd. v. Commissioner, Trade Tax, U.P. 2008(221) E.L.T 16 and Mepco Industries Limited,
Madurai v. Commissioner of Income Tax and Another 2010(1) SCC 434.
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 judgments referred to by the learned counsel appearing for the appellant had
been subsequently changed in the judgments 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(221) 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.
heard the learned counsel at length and also considered the judgments cited by
them and the orders passed by the CESTAT.
perusal of both the orders viz. earlier order dated 4th November, 2008 and order
dated 23rd November, 2009 passed in pursuance of the rectification application,
we are of the view that the CESTAT exceeded its powers given to it under the
provisions of Section 35C(2) of the Act. This Court has already laid down law
in the case of T.S. Balram v. M/s.Volkart Brothers, 82 ITR 50 to the effect
that a "mistake apparent from the record" cannot be something which
can be established by a long drawn process of reasoning on points on which
there may conceivably be two opinions. It has been also held that a decision on
a debatable point of law cannot be a mistake apparent from the record.
If one looks at the subsequent
order passed by the CESTAT in pursuance of the rectification application, it is
very clear that the CESTAT re-appreciated the evidence and came to a different
conclusion than the earlier one. 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 inter-connected 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.
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 reappreciated 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.
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
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 12 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
are not impressed by the judgments cited by the learned counsel for the
respondent. So far as the judgment delivered in the matter of Saci Allied Products
Ltd. v. Commissioner of C. Ex., Meerut, 2005(183) E.L.T 225 (S.C.) is
concerned, it pertains to sale of goods by an asessee to an independent and
unrelated dealers and its effect on valuation. The said judgment pertains to a
transaction with a related person in the State of U.P., at lower price and as
such deals with the facts of that particular case. In our opinion, the said judgment
would not help the respondent so far as the matter pertaining to rectification
far as the judgment delivered in Commissioner of Central Excise, Mumbai v. Bharat
Bijlee Limited, (supra) is concerned, this Court held therein that when the Tribunal
had totally failed to take into consideration something which was on record,
the Tribunal had committed a mistake apparent on the face of the record. In the
instant case, the evidence which was on record was duly appreciated by the Tribunal
at the first instance but the Tribunal made an effort to re-appreciate the
evidence and re-appreciation can never be considered as rectification of a mistake.
We are, therefore, of the view that the aforementioned judgment would not help
far as judgment delivered in the case of Honda Siel Power Products Ltd. v. Commissioner
of Income Tax, Delhi, 2008(221) E.L.T 11 (S.C.), is concerned, there also the
Tribunal had not considered certain material which was very much on record and
thereby it committed a mistake which was subsequently rectified by considering and
appreciating the evidence which had not been considered earlier. As stated
hereinabove, in the instant case, the position is absolutely different.
Court has decided in several cases that a mistake apparent on record must be an
obvious and patent mistake and the mistake should not be such which can be
established by a long drawn process of reasoning. In the case of T.S. Balram v.
M/s. Volkart Brothers (supra), this Court has already decided that power to
rectify a mistake should be exercised when the mistake is a patent one and
should be quite obvious. As stated hereinabove, the mistake cannot be such which
can be ascertained by a long drawn process of reasoning. Similarly, this Court has
decided in ITO v. Ashok Textiles, 41 ITR 732 that while rectifying a mistake,
an erroneous view of law or a debatable point cannot be decided. Moreover,
incorrect application of law can also not be corrected.
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)