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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

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                                                         REPORTABLE

             IN THE SUPREME COURT OF INDIA

              CIVIL APPELLATE JURISDICTION

                CIVIL APPEAL NO. 4409 OF 2010

COMMISSIONER OF CENTAL

EXCISE, BELAPUR, MUMBAI                            .....APPELLANT.

                                  VERSUS

RDC CONCRETE (INDIA) P. LTD.      .....RESPONDENT.

                           J U D G M E N T

ANIL R. DAVE, J.

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

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 

                                                3

        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/-.

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.

                                                4

5.      The   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.

6.      He   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. 

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 

                                              5

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.

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 

                                               6

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 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 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.

                                               7

10.     The   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.

11.     Similarly, 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 

                                                8

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.

12.     According 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.

13.     The   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.

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 

                                            9

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.   

15.    We   heard   the   learned   counsel   at   length   and   also   considered   the 

judgments cited by them and the orders passed by the CESTAT.

16.    Upon 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" 

                                               10

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.   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   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. 

                                              11

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 

                                               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 cost 

accountant.  

18.     We 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 is concerned.

19.     So 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 

                                             13

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 

the respondent-assessee.

20.    So   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.

21.    This   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 

                                                      14

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.

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. 

                                                       ................................................J.

                                                       (Dr. MUKUNDAKAM SHARMA)

                                                                   ......

                                                       ..............................................J.

                                                               (ANIL R. DAVE)

New DelhiAugust 9,   2011.

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