Case: Commissioner of Central Excise Vs. ASCU Ltd

1. This appeal is against the order dated 19th April, 1999. 2. Briefly stated, the facts are as follows :- The respondents were called upon to show cause as to why they should not be made liable to pay duty and penalty for not having disclosed that they were manufacturing densified wood. The Commissioner, after hearing the respondents, held that the respondents were not manufacturing densified wood and that therefore they were not liable to pay duty.3. The Department filed an appeal before the Customs, Excise & Gold (Control) Appellate Tribunal (CEGAT). By an order dated 24th July, 1998 it was held that the respondents were manufacturing densified wood. It was further held that the respondents had not suppressed any material or mis-stated any fact and that therefore the extended period of limitation was not available to the Department. The matter was then remanded to the Commissioner for determination of the duty payable for the period of six months which was available to the Department. In passing the order dated 24th July, 1998, CEGAT relied upon, reports of Alipore Test House, Central Revenue Control Laboratory and Commercial Literature of the respondents. 4. The respondents filed an application for rectification of the order dated 24th July, 1998. This application was filed under the provisions of Section 35C(2) of the Central Excise Act, 1944 which reads as follows :- "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 if the mistake is brought to its notice by the (Commissioner of Central Excise) or the other party to the appeal :Provided that 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 under this sub-section, 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." 5. At this stage it must be mentioned that under the Act there is no power of review available to the Tribunal. The only power available is the power of rectification of a mistake apparent from the record.6. Mr. S.K. Bagaria, learned Counsel for the respondents had drawn our attention to the case of Collector of Central Excise, Calcutta v. Pradyumna Steel Ltd., 1996 (82) ELT 441 (SC) wherein by a cryptic order, it has been mentioned that even if reliance is placed on a wrong provision of law, so long as power can be exercised under a different provision, then the power does not get invalidated. It is held that the exercise of the power under a wrong provision is error apparent on the face of the record. In our view, this judgment has no relevance and is of no assistance to the question before us. 7. This Court has in two judgments viz. T.S. Balaram, Income Tax Officer, Company Circle IV, Bombay v. Volkart Brothers, Bombay, 1971 (2) SCC 526 and Commissioner of Income Tax (CNTL), Ludhiana v. Hero Cycles Pvt. Ltd., Ludhiana 1997 (8) SCC 502 considered the extent to which power can be exercised under Section 154 of the Income Tax Act, 1961. Section 154 is pari materm to Section 35C(2). In both these decisions, it has been held that a mistake apparent on the face of the record must be an obvious and patent mistake. It is held that "mistake apparent from the record" cannot be something which would have to be established by a long drawn process of reasoning on points on which there may conceivably be two opinions. It has been held that a decision on a debatable point of law cannot be a "mistake apparent from the record". 8. The application under Section 35C(2) was on the ground that the Tribunal had in its order dated 24th July, 1998 taken into consideration the reports of Alipore Test House and the Central Revenue Control Laboratory. It was claimed that these reports did not pertain to any product of the respondent company and that these reports could not have been used. 9. When the application for rectification came up for consideration, the Vice President opined that the application was in fact an application for review and re-consideration. The Vice President held that the Tribunal did not have any power of review. He held that the application should be rejected. The Judicial Member took a contrary view. The Judicial Member, inter alia, observed in her order, as follows :- "... I fully agree with the observations made by the Honble Vice President that a conscious decision given by the Tribunal based upon appreciation of evidence on record cannot be put to question by either side by pointing out to the errors and seeking their rectification and the proper course available is to challenge the order before the higher appellate authority........ Even in the absence of these test reports, the Tribunal might have come to the same conclusion, but in my views reliance on the reports is an error apparent on the record and needs rectification. ....... The applicants in the garb of rectification of mistake cannot seek review of the Order. ..." 10. In spite of so observing, the Judicial Member held that as the Tribunal had relied upon the test reports, the order should be recalled and the appeal should be re-fixed for hearing. 11. As there was difference of opinion, the application was referred to a third member. The third member has concurred with the opinion of the Judicial Member. Therefore, by the final order dated 19th April, 1999, the earlier order dated 24th July, 1998 has been set aside. The appeal has been recalled for re-consideration. 12. It may be noted that in the original order, there was decision even on the question of limitation in respect of which there was no error apparent on the face of the record even that portion of the order has been set aside.13. As stated above, the scope of correction which can be made by the Tribunal under Section 35C(2) is limited. Undoubtedly if a decision is based solely on material which is irrelevant or which could not have been used then possibly it could be said that there is a mistake apparent from the record. However, if a decision is based on more than one material, then merely because in the process of arriving at the final decision, reliance was placed on some material which could not have been used it can never be said that in the final decision there is a mistake apparent from the record. This is because the final opinion could also have been based on the other material which was relevant and which could be used.14. In this case, admittedly while passing the order dated 24th July, 1998, apart from the reports, reliance had also been placed upon the literature of the respondents themselves. The Judicial Member notes that reliance had been placed upon this literature. Judicial Member therefore records, as noted above, that the Tribunal may again come to the same conclusion. If that be so, then it is clear that there is no mistake apparent on the record. In such a case there can be no rectification under Section 35C(2). We, therefore, set aside the impugned order and restore the original order dated 24th July, 1998.

Decision reasoning: 1[ds]10. In spite of so observing, the Judicial Member held that as the Tribunal had relied upon the test reports, the order should be recalled and the appeal should beIt may be noted that in the original order, there was decision even on the question of limitation in respect of which there was no error apparent on the face of the record even that portion of the order has been set aside.13. As stated above, the scope of correction which can be made by the Tribunal under Section 35C(2) is limited. Undoubtedly if a decision is based solely on material which is irrelevant or which could not have been used then possibly it could be said that there is a mistake apparent from the record. However, if a decision is based on more than one material, then merely because in the process of arriving at the final decision, reliance was placed on some material which could not have been used it can never be said that in the final decision there is a mistake apparent from the record. This is because the final opinion could also have been based on the other material which was relevant and which could be used.14. In this case, admittedly while passing the order dated 24th July, 1998, apart from the reports, reliance had also been placed upon the literature of the respondents themselves. The Judicial Member notes that reliance had been placed upon this literature. Judicial Member therefore records, as noted above, that the Tribunal may again come to the same conclusion. If that be so, then it is clear that there is no mistake apparent on the record. In such a case there can be no rectification under Section 35C(2). We, therefore, set aside the impugned order and restore the original order dated 24th July, 1998.