Customs, Excise and Gold Tribunal - Delhi
Gujarat State Fertilizers And Chem. ... vs Commr. Of C. Ex. on 20 September, 2000
Equivalent citations: 2002(82)ECC759, 2000(122)ELT282(TRI-DEL)
ORDER Jyoti Balasundaram, Member (J)
1. The issue referred to the Larger Bench is as to whether a subsequent decision of the Tribunal or a High Court or the Supreme Court can form the basis for rectification of mistake in terms of Section 35C(2) of the Central Excise Act, 1944 ?
2. The facts leading up to the reference are that the assessees are engaged in the manufacture of fertilizers and chemicals. One of the products manufactured by them is Melamine falling under CET sub-heading 2933.90. The raw material for the manufacture of melamine is molten urea under CET sub-heading 3102.00 which is an intermediate product produced in the continuing process of manufacture of melamine from ammonia falling under CET sub-heading 2933.90, and Carbon Dioxide. The appellants claimed the benefit of Notification No. 40/85, dated 17.03.85 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 28.02.97, 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 29.01.96, that exemption was available subject to fulfillment of conditions of the Notification and since the lower authorities had not dealt with this aspect, remanded the matter to the Assistant Collector for examining the assessees prayer for the benefit of Notification 217/86.
5. On the same day, 'namely 28.02.97, the Hon'ble Supreme Court disposed of Civil Appeal Nos. 3041-3046/91 filed by the assessees against the Tribunal's decision reported in 1991 (56) E.L.T. 257, reversing the Tribunal's order and holding that the benefit of Notification 40/85 was available to the assessees for captively consumed ammonia utilised as an input for manufacturing molten urea which in turn is used in the manufacture of melamine. The relevant extracts from the Apex Court judgment are reproduced below:
"Then next we turn to exemption Notification No. 40 of 1985, dated 17.03.1985. As per the said Notification, as amended from time to time, it had been laid down that the Central Government was pleased to exempt goods of the description mentioned in column (2) of the Table and falling under Chapters 25, 27, 28, 29 and 31 or 32, as the case may be, of the Schedule to the Tariff Act, from the whole of the duty of excise leviable thereon under Section 3 of the Central Excises and Salt Act, 1944, subject to the conditions, if any, laid down in the corresponding entry in Column (3) thereof. Column (2) of the Table referred to the description of goods and at SI. No. 3 is mentioned Ammonia. Thus ammonia which was manufactured by the appellants out of raw naphtha came under the sweep of the said exemption notification. The condition for earning exemption from excise duty on ammonia as laid down in column (3) which is relevant for our present purpose, is condition No. (ii) which provides that ammonia should be used in the manufacture of fertilizers. It is not in dispute that ammonia was captively consumed by the appellant in manufacturing molten urea. Therefore, the moot question is whether ammonia could be said to have been utilised for manufacturing any fertilizer. It is no doubt true that molten urea in its turn became an input for producing the final product namely, melamine which admittedly was not a fertilizer. But as required by the express language of the notification, we have to find out whether molten urea which was manufactured out of ammonia was a fertilizer or not. It is now well settled by a catena of decisions of this Court that for deciding whether 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 confined only to soil fertilizer. There was no controversy between the parties as to whether molten urea was chemical fertilizer or not. It was an admitted position between them that it was a chemical fertilizer exigible to excise duty under Tariff item 31.02."
"Consequently, on a conjoint reading of the express terms of Notification No. 40 of 1985 and the relevant headings and sub-headings of Chapter 31 of the Tariff Act, it must be held that the appellant by captively consuming ammonia had manufactured molten urea, a chemical fertilizer. It is difficult to appreciate the contention of Shri Bhat, learned Additional Solicitor General that the spirit of the notification was to give the benefit only to soil fertilizers as final product which could be utilised by the cultivator in agriculture and with that end in view the notification was promulgated. On the express language of the notifications, it is only possible for us to agree with this contention. If that was the view of the Central Government while promulgating the said notification, nothing prevented the Central Government from indicating that it was not seeking to cover the goods mentioned in Chapter Heading No. 31 or in not confining the said exemption notification only to soil fertilizers. In the absence of any such restrictive words in the said notification, the express and wide terminology 'fertilizer' employed in the notification cannot be curtailed by any process of reasoning about the supposed intention of the Central Government underlying the issuance of the said Notification."
"Therefore, it must be held that if molten urea as covered by Heading No. 31.02 was not to be used as fertilizer and on the other hand was utilised as an input for producing melamine, still it would remain a chemical fertilizer within the sweep of Chapter 31. If it remained a fertilizer, it could not be said that ammonia which was captively consumed for manufacturing molten urea had not satisfied the condition for earning total exemption under Notification No. 40 of 1985 as ammonia had resulted in the manufacture of molten urea being a fertilizer."
"The only stand of the Department was that exemption Notification No. 40 of 1985 would not apply to ammonia as it had resulted into the final product melamine which was not a fertilizer and the intermediate product of molten urea was utilised in a continuous process 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 Tribunal's final order dated 28.02.1997 praying that the final order may be recalled and the benefit of Notification No. 40/85 be held to be available to the assessees by setting aside the impugned order of the Collector of Central Excise (Appeals) and allowing the appeal of the assessees.
7. The ROM application was heard by a Two Member Bench of the Tribunal. The Member (Judl.) expressed the view that the final order was required to be rectified by allowing the ROM application in view of the Supreme Court judgment in the assessees' own case, relying upon the judgments of various High Courts and the judgment of the Hon'ble Supreme Court in the case of Sal Narayan Rao CYT v. Model Mills Nagpur - (1967) 64 ITR 67.
8. The learned Vice President however, was of the view that although in the Income-tax and Wealth-tax cases, High Courts have allowed rectification of mistake by assuming retrospective effect to subsequent judgments, insofar as the Customs and Central Excise is concerned, it is still a grey area and some objective guidelines are required to be evolved and a line distinguishing a case of rectification of mistake from that of review was recalled is required to be drawn. He therefore, felt that it would be appropriate to refer the matter to the Larger Bench so that the issue is settled finally.
9. The Third Member to whom difference of opinion between the original members hearing the ROM was referred, agreed with the learned Vice President that the issue should be resolved by a Larger Bench. This is how the matter has come up before us.
10. We have heard Shri Willingdon Christian, learned Counsel who submits that a subsequent decision of the Supreme Court is a ground for recalling the Tribunal's final order for rectification of mistake apparent from record. In support of this contention, he cites the following decisions:
1. B.V.K. Seshavataram v. OT [1994 (210) ITR 633 (AP)]
2. Kil Kotagiri Tea and Coffee Estates Co. Ltd. v. Income-tax Appellate Tribunal [1988 (174) ITR 579 (Kerala)]
3. Parshuram Pottery Works Co. Ltd. v. D.R. Trivedi [1975 (100) ITR 651 (Guj.)]
4. S.A.L. Narayan Rao CIT v. Model Mills Nagpur [1967 (64) ITR 67 (S.C.)]
5. Ram Dass Rice and General Mills v. State of Punjab [1996 (100) STC 211 (P&H)]
6. Hero Cycles Ltd. v. State of Punjab and Ors. [1995 (99) STC 611 (P&H)]
7. M.K. Venkatachalam ITO v. Bombay Dyeing and 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 of the final order. He submits that the applicants are seeking to review the Tribunal's order in the guise of ROM application and the Tribunal has no powers to review its own orders. He relies upon the decision of the Apex Court in the case of Dokka Samuel v. Dr. Jacob Lazarus Chelly reported in 1997 (4) SCC 478 wherein the Supreme Court has held that an 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 record, since the Counsel has committed an error in not bringing to the notice of the Court, the relevant precedent. He also cites the decision of the Hon'ble Delhi High Court in the case of Deeksha Suri v. Income-tax Appellate Tribunal reported in 1998 (102) E.L.T. 524 in support of his contention that the power to rectify any mistake apparent on record does not contemplate a rehearing which would have an effect of re-writing an order affecting the merits of the case and what is not permitted by the Statute, having deliberately omitted to confer review jurisdiction on the Tribunal, cannot indirectly be achieved by recourse to Section 254(2) of the Income-tax Act 1961 corresponding to Section 35-C(2) of the Central Excise Act. He also cites the decision of the Apex Court in the case of Kuntesh Gupta v. Management of Hindu Kanya Mahavidyalaya and Ors. reported in 1987 (32) E.L.T. 8 (S.C.).
12. The learned DR relies upon the decision of M.C. Desai v. Commissioner of Customs [1991 (56) E.L.T. 425] to support his argument that a subsequent decision of the Tribunal is no ground for rectification of a mistake. He urges that his submissions may be accepted and that the issue referred to the Larger Bench be answered in the negative.
13. We have carefully considered the rival submissions. We find that in cases arising under the Income-tax Act and Wealth Tax Act, an application for rectification has been held to lie on the basis of a decision of the High Court or the Supreme Court although rendered subsequent to the decision of the Tribunal, if there was no further investigation on facts involved and 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. In case of S.A.L. Narayana Rao, cited supra, the facts were that, by order dated 27.07.55, the Income-tax officer levied an additional tax on excess dividend declared by the respondent company. Thereafter, the Bombay High Court, in the case of Khatau Makanji Spinning and 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 02.11.1957 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 the Constitution of India for revising the order dated 02.11.1957 passed by the Income-tax officer. The order of the High Court was upheld by the Supreme Court.
In the case of Parshuram Pottery Works Co. Ltd. v. D.R. Trivedi, Wealth-tax officer reported in 1975 (100) ITR 651, the Hon'ble Gujarat High Court held that the provisions of Section 35 of the Wealth-tax Act (Application for Rectification) were attracted in cases where assessment orders, though proper and valid when they were made but were later found to be erroneous, in view of subsequent judicial pronouncements. In that case, the petitioner claimed to deduct in the computation of net wealth on the valuation date, a certain amount each year in respect of provision for taxation but the claim was disallowed on the ground that the amount provided for tax liability did not constitute 'debt owed' from the petitioner on the relevant valuation date within the meaning of Section 2(m) of the Wealth-tax Act, 1957 and accordingly, the Wealth-tax officer added that amount claimed by way of deduction and computed the net wealth of the petitioner on that basis. No appeals were preferred against the order of assessment. Subsequently, the petitioner came to know a decision by the Income-tax Appellate Tribunal that the amounts claimed by it in respect of provision for taxation were deductible in computing net wealth. The petitioner applied to Wealth-tax officer for rectification of order of assessment under Section 35 of the Wealth-tax Act, 1957 on the ground that there was an error apparent on the face of the record. The applications were rejected by the Wealth-tax officer. Revision applications filed before the Commissioner of Wealth-tax were also dismissed. Thereupon, the petitioner moved the High Court, seeking issue of a Writ of Certiorari to quash the order passed by the Wealth-tax officer and the order of the Commissioner, as well as Writ of Mandamus, directing the Wealth-tax officer and Commissioner of Wealth-tax to rectify the assessment orders by allowing deductions of the amounts by way of provision for taxation. The argument of the learned Advocate on behalf of the Revenue was that in order to attract the provisions of Section 35, what must be shown is that the mistake was committed at the time of making of the order and not that the order was ultimately found to suffer from an infirmity or a mistake 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 that these decisions were not before the Wealth-tax officer when he made the orders of assessment in the petitioner's cases has, therefore, no material bearing on the question whether the said orders disclose any mistake apparent from the record. If that be the correct legal position, and we hold that it is, the only conclusion possible is that the assessment orders, insofar as they disallowed the claim of the petitioner for deduction in respect of the amount of provision for taxation, proceeded on a wrong view of the law and the said orders were bad at their very inception, on the date on which they were made. The orders of assessment thus disclosed a mistake apparent from the record and were liable to be rectified in exercise of the powers conferred under Section 35 of the Act. In our opinion, therefore, the Wealth-tax officer committed an apparent error of law in rejecting the petitioner's application for rectification of the mistake and the Commissioner of Wealth-tax likewise committed an error of law apparent on the fact of the record in rejecting the petitioner's revision application."
The Court further held that the assessment order continued to be liable to be modified under Section 35 of the Wealth-tax Act until the condition precedent under that Section was satisfied, notwithstanding the fact that no appeal was preferred from the order of assessment. The Court allowed the Writ petition filed by the assessees and the Wealth-tax officer was directed to pass appropriate orders on the applications filed under Section 35 for different assessment years in accordance with law and in the light of the observations made in that judgment. The Court held that in our opinion, the order of assessment passed by the Wealth-tax officer cannot be said to be final in the literal sense of the order. The order so conducted to be liable to be modified under Section 35 of the Act if the condition precedent for the exercise of the power under that Section was satisfied.
8. In the case of Kil Kotagiri Tea and Coffee Estates Co. Ltd. v. Income-tax Appellate Tribunal and Ors. reported in 1988 (174) ITR 579, the Hon'ble Kerala High Court held that an assessment order based upon interpretation or application of law ultimately found to be wrong in the light of later judicial pronouncements, discloses a mistake apparent from the record and requires to be 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 under that Section must be of a mistake which is mistake in the light of the law in force at the time when the order sought to be rectified was passed and that the subsequent decision of the High Court has no retrospective operation as in the case of subsequent legislation or the decisions of the Supreme Court. The petitioners filed a Writ petition in the Hon'ble Kerala High Court which held as under :
"An order of assessment, based upon an interpretation or application of law which is ultimately found to be wrong in the light of judicial pronouncements rendered subsequently, discloses a mistake apparent from the record. When the court decides a matter; it does not make the law in any sense but all it does is that it interprets the law and states what the law has always been and must be understood to have been. Where an order is made by an authority, on the basis of a particular decision, the reversal of such decision in further proceedings will justify a rectification of the order based on that decision (See Bhagwandas Kevaldas v. Mehrotra N.D. - (1959) 36 ITR 538 Bom.); Parshuram Pottery Works Co. Ltd. v. Trivedi D.R. - (1975) 100 ITR 651 Guj. and Bhauram Jawahirmal v. CIT - (1980)121 ITR 487, 490 All."
The Court further held that:
"We would state, that the view of the Appellate Tribunal that rectification contemplated by Section 254(2) or Section 154 of the Income-tax Act must be of a mistake which is a mistake in the light of the law in force at the time when the order sought to be rectified was passed, is a clear error. A binding decision rendered by a court is always retrospective and the decision which is overruled was never the law. The overruling decision should be deemed to have been in force even on the day when the order sought to be rectified was passed. We are further of the view that the Appellate Tribunal was in error in holding that the subsequent decision of the High Court has no retrospective operation as in the case of subsequent legislation or the decision of the Supreme Court. A subsequent binding decision of the Supreme Court or the High Court has retrospective operation and overruling is always retrospective."
The Court allowed the Writ petition and directed the ITAT to restore the petition for rectification and dispose of the same in accordance with law and in the light of the observations contained in the High Court 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 ah 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. C1T -(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 before the Tribunal for reference of question of law to the High Court for decision under Section 256(1) of the Income-tax Act. One of the questions for reference was whether the Income-tax Appellate Tribunal was justified in disallowing depreciation allowance of the assessees under the provisions of the Income-tax Act, 1961 as a mistake apparent from the record falling for rectification under Section 154 of the Income-tax Act. The Tribunal disallowed the Reference application on the ground that what was decided by it was on the basis of binding precedent in the form of Supreme Court decision. The assessees then moved the Andhra Pradesh High Court which upheld the Tribunal's order of disallowance of reference Application holding that the Tribunal was right in rejecting the plea of the assessees to refer the question of law to the High Court under Section 256(1).
15. In the case of Hero Cycles Ltd. v. State of Punjab (supra), the Hon'ble Punjab and Haryana High Court was dealing with an application of Hero Cycles filed under Section 21A of the Punjab Sales-tax Act, 1948 seeking rectification of the order of the Sales-tax Appellate Tribunal which was rejected mainly on the ground that there did not seem to be any mistake apparent on record. It was the case before the High Court that in view of subsequent Supreme Court judgment reported in 1992 (85) STC 105 regarding charging of additional tax on Inter-state sales, the order passed earlier by the Tribunal required to be rectified. The Tribunal held that the subsequent judgment of the Supreme Court formed a ground for rectification. The Punjab and Haryana High Court held that the Sales-tax Tribunal was under a legal obligation to take into account the subsequent judgment cited supra for deciding the application for rectification, relying upon the Supreme Court judgment in the case of State of Kerala v. P.K. Syed Akbar Sahib [1988 173 ITR] in which the Apex Court held that its subsequent judgment, if not taken note of, would be deemed to be a mistake apparent from the record. The Punjab and Haryana High Court remanded the case back to the Sales-tax Appellate Tribunal for passing proper orders in accordance with the provisions of law and directions of the Supreme Court. The decision in the Hero Cycles case was followed by the Punjab and Haryana High Court in the case of Ramdas Rice and General Mills v. State of Punjab and 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 Company Ltd. (supra). The Supreme Court held that if any error had at all been committed by the Agricultural officer, it was not an error apparent on the record since the judgment of the Supreme Court extending the provisions of Section 24 of the Indian Income-tax Act, 1922 cannot be applied straightaway to Section 12 of the Kerala Agriculture Income-tax Act. However, the Court held that if the Supreme Court has construed the meaning of Constitution, then by any other authority, must be held to be erroneous and such error must be treated as an error apparent on the record.
17. On an analysis of the above decisions, we find that the underlying reason for holding that a subsequent High Court or Supreme Court decision can form the basis of an application for rectification provided it did not involve any further investigation on facts and provided that the principle of the decision of the High Court or Supreme Court could be straightaway applied, is that a binding decision rendered by a Court is always retrospective and the decision which is over-ruled was never the law and the over-ruling decision should be deemed to be in force even on the day when the order sought to be rectified, was passed. In this connection, it is worth reproducing the following extract from Salmond of Jurisdiction 12 above "As we have seen, the theory of case as is that each officer make law; he merely declares it; and the over-ruling of previous decision is a declaration that the supposed Rule was never law. Hence any interim transaction made on the strength on the supposed Rule are governed by the law, shall be in the over-ruling decision. The over-ruling is retrospective except as regards matters that are res judicata or amounts that have been several in the main time."
18. Although the decision cited by the learned Counsel have been rendered in the context of the provisions of the Income-tax Act and Wealth-tax Act, the ratio would be directly applicable even to cases under the Customs Act and the Central Excise Act in view of the fact that the provisions for rectification of mistake apparent from the record contained in Section 35C(2) of the Central Excise Act and Section 129-B(2) of the Customs Act are pari materia with the provisions of Section 35 of the Wealth-tax Act, 1957 and Sections 154 and 254 of the Income-tax Act, 1961.
19. In the judgments discussed above, the Courts have 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 that rectification of an earlier order of the Tribunal cannot be made on the basis of a later order interpreting relevant provisions differently. We, therefore, hold that a subsequent decision of the Tribunal cannot form the basis of rectification of a mistake in terms of Section 35(2) of the Central Excise Act.
20. Now let us examine the case laws cited by the learned SDR. The Apex Court judgment in the case of Dokka Samuel (supra) was rendered in the context of Section 114 of the Civil Procedure Code 1908 order 47 R.l. The judgment is reproduced below :
"This appeal by special leave arises from the judgment of the learned Single Judge, made on 29.02.1996 in RSA No. 90 of 1983 by the Karnataka High Court. The respondents had filed a suit in the trial court for declaration that he had purchased two plots bearing Nos. 307 and 308 measuring 40' x 31' in Hubli town and for recovery of possession on the plea that the appellant has no manner of right whatsoever to interfere with his possession. The trial court dismissed the suit. On appeal, it was decreed. In the second appeal, the learned Judge confirmed the same. But in the Review application, the Single Judge reheard the matter and reversed the decree of the Appellate Court and confirmed that of the trial court. Thus this appeal by Special leave.
It is seen that by an order passed by this Court on 24-11-1995, liberty was given to the appellant in the event of the High Court reviewing the order on merits against him to agitate his rights in this Court. The question is whether the High Court was justified in reviewing the earlier order and reversing the finding recorded by the Appellate Court. It is not in dispute that the sale deed is for a small sum of Rs. 300 and odd and that the property sold commands good market value. The question arises whether the document was a sale deed or is only a document for collateral purpose. The respondent himself in an earlier suit had pleaded that it was an agreement of sale. In view of such an admission, the High Court has wrongly reversed the decree of the Appellate Court holding the transaction to be a real sale. In the second appeal, the High Court confirmed, in the first instance, the decree of the Appellate Court. Subsequently, the High Court has reviewed the judgment and reconsidered the matter holding that relevant precedents were not cited. Since this Court 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 law.
The appeal is accordingly allowed. The impugend order of the High Court stands set aside and the decree of the Appellate Court, as confirmed by the High Court in the first instance, is upheld. In other words, the suit stands decreed. No costs."
21. This decision does not relate to an application for rectification but relates to review and the Supreme Court was not called upon to decide the issue before us namely as to whether a subsequent judgment of High Court or the Supreme Court would constitute the basis of an application for rectification of mistake apparent from the record. Hence this decision is distinguishable.
22. The second citation namely the Delhi High Court judgment in the case of Deeksha Suri v. Income-tax Appellate Tribunal (supra) is also distinguishable and is based upon a totally different set of facts. In that case, the appeals were disposed of by the Tribunal on 03.01.97, the appellants filed an ROM application on the ground that the application filed under Rule 29 of the Income-tax Rules for application for additional evidence before the ITAT was not considered by the Tribunal while passing its final order dated 03.01.87. The ITAT rejected the ROM application on the ground that appellants Counsel did not address any arguments on the 'Rule 29 application during the final hearing of the main appeal. The ITAT therefore, held that the appellants have not opted not to highlight or argue on the said petition for abatement of additional evidence; it cannot be said to be a case of mistake apparent on the record.
23. The High Court held that the petitioners had acquiesed in the appeal being decided on merits without insisting on decision on Rule 29 application. The High Court went on to hold that the foundation for exercising the jurisdiction conferred by Section 254(2) of the Income-tax Act is "with a view to rectify any mistake apparent on the record" the object is achieved by "amending any order passed by it". The Court held that the power so conferred does not contemplate a rehearing which would have the effect of re-writing an order affecting the merits of the case. Else there would be no distinction between a power to review and a power to rectify a mistake. What is not permitted to be done by the Statute having deliberately omitted to confer review jurisdiction on the Tribunal cannot be indirectly achieved by recourse to Section 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 every angle. One can conceivably have two options on these issues . Thus, the mistake (assuming it was committed) ceased to be an obvious and patent mistake. Section 254(2) of the Act was not therefore, attracted."
25. The above judgment is on a totally different set of facts and hence does not advance the case of the Revenue particularly in the face of direct judgments on the point in issue before us.
26. In the light of the above, we hold that a subsequent decision of a High Court or the Supreme Court can form the basis of an application for rectification of mistake subject to the following conditions :
(1) that no further investigation on facts is involved ;
(2) that the principle of the High Court or Supreme Court decision can be straightaway applied to show that the decision already issued, was a mistake. The issue referred to the Larger Bench is answered in the above terms.
27. Applying the above ratio to the present case, since the Tribunal's decision in the case of the same assessees on the same issue reported in 1991 (56) E.L.T. 257 which has been entirely relied on in the final order giving rise to the ROM application, has been reversed by the Apex Court by its order dated 28.02.1987 in Civil Appeal Nos. 3041-46/91 wherein it has been held that exemption to ammonia used in the manufacture of melamine through molten urea is available in terms of Notification 40/85-C.E. and since no further investigation on facts is involved and the Supreme Court judgment is straightaway applicable, we are of the view that a mistake apparent from the record arises in the present case in denying the benefit of exemption under Notification No. 40/85. We therefore, rectify the error and hold that the assessees are eligible to the benefit of Notification No. 40/85 in respect of ammonia used in the manufacture of molten urea which is further used in the manufacture of melamine. As a result, the benefit of Notification No. 217/86 which is claimed as an alternative plea, is not available to the assessees since the two notifications cannot co-exist and the learned Counsel also conceded this position.
28. The ROM Application is hereby allowed.
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(Jyoti Balasundaram) Member (J) V.K. Agrawal, Member (T)
29. I have the benefit to pursue the order as recorded by Id. Member (Judicial). With due respect I do not agree that 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 Appellate Tribunal denied the exemption under Notification No. 40/85 to M/s. Gujarat State Fertilizers and Chemicals Ltd. in respect of ammonia used in the manufacture of molten urea holding that only that ammonia which is utilised for the production of Mineral or Chemical Fertilizers will be eligible for the benefit of the Notification. The Tribunal followed its earlier order in the case of the Appellants only as reported in 1991 (56) E.L.T. 257. It is also not in dispute that in respect of said earlier decision, the Appellants have filed an appeal in the Supreme Court. As the Tribunal had followed its earlier decision and the Appellants were aggrieved with the decision of the Tribunal the right course open to them was to file an appeal in the Supreme Court under the provisions of Section 35L of the Central Excise Act. The Appellants are infact seeking, by moving an application for rectification of mistake, recall of the impugned Order under Section 35C(2) on the basis of Supreme Court's subsequent decision. In their case an appeal for allowing the benefit of Notification 40/85 required to be filed and as such wherein appeal is to be filed, an application for rectification of mistake apparent of record cannot lie. Heavy reliance has been placed by the Id. Advocate on the decision of the Apex Court in the case of S.A.L. Narayan Rao CIT v. Model Mills Nagpur, 1967 (64) ITR 67 (SC). In this case the issue involved was whether the additional tax levied on the excess dividend is liable to be refunded in view of the fact that the levy of tax on the excess dividend was declared to be illegal subsequently by the Bombay High Court in the case of Khatau Makanji Spinning and Weaving Co. Ltd. v. Commissioner of Income-tax. A refund application was being dealt with in Modern Mills case and as the refund was in respect of tax which was collected without authority of law the refund was held to be available to the assessee. In this case no application for rectification of mistake was filed the request for refund in to be request for rectification. A view has therefore, been taken by the Hon'ble High Courts that the Supreme Courts in this decision laid down the law that a subsequent decision can validly form the basis for rectifying an order of assessment under Section 154 of the Income Tax Act. The Id. Advocates for the appellants has not cited any other decision of 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 cannot be a ground for reviewing the judgment. If, a judgment which is already in existence and non-citing of the judgment cannot be a ground for reviewing the order, it is incomprehensible that a subsequent decision, which was not their on the day order was passed, can be a ground for rectifying the Order. The Id. Member (Judicial), has distinguised this judgments of the Apex Court by observing that it was related to review and not to an application for rectification. I again re-specfully differ with the view as observed by me earlier in the Supreme Court's decision in Model Mills case the issue therein was not rectification but the sanction of the refund claim. Further, in Dokka Samuel case the ground was referring to the rectification only as it is held that non-citing an Authority of Law is not an error apparent on the face of the record. I am of the view that this decision of the Supreme Court's lays down the law in clear and specific terms and accordingly a subsequent decision of the Supreme Court will not make ground for saying that there is an error apparent on the record.
33. The Id. CDR has relied upon the decision in the case of Delhi High Court, in the case of Deeksha Suri v. Income Tax Appellate Tribunal - 1998 (102) E.L.T. 524, Delhi, wherein in the High Court held "ITAT... has not been vested with the review jurisdiction by the statue creating it. The Tribunal does not held any power of Review its own judgments or orders. The High Court further observed that "as held by their Lordships of the Supreme Courts in A.R. Antuley v. R.S. Naik, AIR 1988 (SC) 1531, motions to set aside the judgments are permitted where for instance, (i) a judgment was rendered in ignorance of the fact that all necessary party had not been served at all and was wrongly shown as served or in ignorance of the fact that a necessary party had died and the estate was in represented (ii) a judgment obtained by fraud tending to prejudice a non-party. "It was also held by the Delhi High Court, after refering to Corpous Juris Secundum (Vol. IXIX), "A motion to vacate will not be entered when the proper remedy is by some other proceedings, such as by appeal." Refering to Section 254(2) of the Income Tax Act" court held "the language of the provisions is clear. The foundation for exercising the jurisdiction is "with a view to rectify any mistake apparent on the record and the object 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) has held that "The principle of restrospective Legislation is not applicable to the decision of the Supreme Court declaring the law or interpreting a provision in a statute. The law is laid down or a provision in a statute is interpreted by the Supreme Court only when there is a debate or doubt on the interpretation of any provision of a statute requiring interpretation by the Supreme Court or when there is a conflict of judicial opinion on the provision of a statute among the different High Courts of India which is required to be resolved and settled by the Supreme Court. The law laid down by the Supreme Court cannot be said to have retrospective operation in the sense that although a debate, doubt or conflict of judicial opinion is resolved and settled by the Supreme Court it does not obliterate the existence of such debate, doubt or conflict prior to such decision." In this case the Calcutta High Court held that it cannot be said that on a plain reading of a provision of para 'F of Part I of Schedule 1 to the Finance Act, 1965, no two views were possible on the question whether the development rebate had to be deducted in computing the profit and gains of qualifying nature, and that, therefore, there could not be said to be a mistake which could be corrected under Section 154 of the Income Tax Act.
36. Similarly a Larger Bench of the Appellate Tribunal in the case of Dinkar Khindria v. CCE, New Delhi, 2000 (38) RLT 442 has held that "rectification of mistake is by no means an appeal in disguise whereby an order even if it is not valid, is re-heard and re-decided. Rectification of mistake application lies only for patent mistake. Only in a case where the mistake stares one in the face and there could reasonably be no two opinions entertained about it, a case for rectification of mistake could be made out." Larger Bench also held in that case that "the decision on a debatable point of law or facts is not a mistake apparent from the record and the debatable issue could not be the subject of an order of rectification. Rectification of mistake does not envisage the rectification of an alleged error of judgment".
37. I am, thus, of the view that a subsequent decision of the Supreme Court cannot form the basis of an application for rectification of mistake in the interest of finality of the decisions. If a subsequent 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 reasoning has been very aptly given by the Calcutta High Court, supra, by holding that the Supreme Court lays down law or interpret provisions of a statute only when there is a debate or doubt on the interpretation of any provision of a statute. The decision by the Supreme Court, therefore, presumes a doubt on the interpretation of a provision of the law. Accordingly, I reject the application for rectification of mistake filed by the applicants.
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(V.K. Agrawal) Member (T) P.G. Chacko, Member (J)
39. The referred issue is whether a subsequent decision of the Tribunal or a High Court or the Supreme Court can form the basis for rectification of mistake in an earlier order of the Tribunal under Section 35C(2) of the Central Excise Act. I have carefully examined the arguments on the issue. I have, also, the advantage of having perused the orders recorded by learned Member (Judicial), Ms. Jyoti Balasundaram and learned Member (Technical), Shri V.K. Agrawal. Having evaluated the merits of the rival arguments in the light of the relevant provisions of law, I must disagree with the view taken by learned Member (Judicial), which I do with great respect.
40. The appeal filed by the present applicants had been disposed of by the Tribunal as per Final Order dated 28.02.1997 (which is sought to be 'rectified' now) by following the Tribunal's earlier decision in the applicants' own case reported in 1991 (56) E.L.T. 257. The said earlier decision was set aside by the Supreme Court on 28.02.1997 in the Civil Appeal filed against the said decision. The present ROM application seeks to amend the Tribunal's order dated 28.02.1997 in the light of the Apex Court's decision. The applicants have virtually prayed for a review of the Tribunal's order on the basis of the Apex Court's decision. The basic question, in this context, is whether it is permissible to change the whole gamut of the decision of the Tribunal by an exercise of review in the pretext of "rectifying mistake apparent from the record". In my view, this is not permissible because this Tribunal has no inherent power of review, nor any power of review conferred by statute. The Tribunal is a creature of the statute and can exercise only those powers which are conferred on it by the parent statute as rightly observed by the Tribunal Larger Bench in the case of Dinkar 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 judgments of the High Court delivered on a reference made under Section 35G in any case certified by the High Court to be a fit case for such appeal, and also from orders passed by the Appellate Tribunal in appeals. According to Section 35C(4), the finality of an order passed by the Appellate Tribunal in any appeal is subject to the provisions of Sections 35G and 35L only. It follows that the order passed by the Tribunal in the applicants' own case reported in 1991 (56) E.L.T. 257 was final and binding till that order was set aside by the Apex Court. The judgment of the Apex Court setting aside the Tribunal's order did not extinguish the finality and binding effect of the Tribunal's order retrospectively. It was at a point of time when the Tribunal's order with its finality and binding effect was in full force that the Tribunal followed it for the purpose of deciding the issue (which was identical with the issue decided as per the said order) in the subsequent appeal of the party and passed order, dated 28.02.1997 against them. Therefore, there was no mistake apparent from the record in the order disposing of the subsequent appeal. Consequently, the present application for rectification of mistake cannot be maintained on the ground stated therein.
42. A mistake or error which can be rectified under Section 35C(2) of the Central Excise Act should be a mistake or error which must be apparent (manifest) on the face of the record. A 7-Member Bench of the Supreme Court in the case of Hari Vishnu Kamath v. Ahmed Ishaque and Ors. [AIR 1955 SC 233] had considered the scope of errors which could be corrected by a High Court under Article 226 of the Constitution. The Court, after stating the settled principle of law that a writ of certiorari could be issued to correct an error of law, held that it was essential that such error of law must be one which was mani fest on the face of the record. When does an error cease to be mere error and become an error apparent on the face of the record? The Supreme Court rendered its answer in the following paragraph :-
"23... Mr. Pathak for the first respondent contended on the strength of certain observations of Chagla, C.J. in 'Batuk K. Vyas v. Surat Borough Municipality", AIR 1953 Bom. 133 (R), that no error could be said to be apparent on the face of the record if it was not self-evident, and if it required 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, is the mandate of the Apex Court contained in the concluding part of the above paragraph - "it must be left to be determined judicially on the facts of each case".
44. The applicants' case involved interpretation of an Exemption Notification. The Tribunal had interpreted the same Notification and rendered its decision vide 1991 (56) E.L.T. 257 and that decision was followed by the Tribunal in the applicants' case for passing the order dated 28.02.1997. It is true that the Tribunal's interpretation of the Notification was disapproved by the Supreme Court as per judgment passed in the appeal filed against 1991 (56) E.L.T. 257. But the Apex Court's judgment was not part of the record of the case before the Tribunal when the latter passed its order dated 28.02.1997. If the ruling of the Apex Court's Bench of 7 Judges in H.V. Kamath's case is followed, one has to hold that there was no "error apparent on the face of the record" [no "mistake apparent from the record"] in the order of the Tribunal passed on 28.02.1997. The finality of the Tribunal's orders in appeals being subject to the provisions of Sections 35G and 35L of the Act, the applicants can have recourse to the appropriate provision for challenging the Tribunal's order dated 28.02.1997.
45. The legislature intent underlying Section 35C(2) has to be understood, keeping in view the pros and cons of widening the scope of the said Sub-section to include review of appellate orders on the basis of subsequent decisions of the Supreme Court, High Court or the Tribunal. The period of limitation provided under Section 35C(2) for an application for rectification of mistake in any appellate order of the Tribunal is four years from the date of the order. This period can possibly witness a series of judicial pronouncements touching the issue covered by the Tribunal's order, like order of Larger Bench of the Tribunal, judgment of any High Court on reference or otherwise and judgment of the Supreme Court in appeal or otherwise. If the appellate order passed by the Tribunal is held to be amenable to amendments under Section 35C(2) on the ground of such order having been found to be incorrect in the light of subsequent decisions of Tribunel Larger Bench/High Court/Supreme Court rendered during the aforesaid period of four years, there can be a spate of ROM applications in relation to such 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.
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Dated : 11.08.2000 (P.G. Chacko)
Member (J)
K.K. Bhatia, Member (T)
48. I agree with the views in the Order recorded by Shri V.K. Agrawal, Id. Member (Technical) and that by Shri P.G. Chacko, Id. Member (Judicial).
I reject the ROM Application.
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Dated : 18.08.2000 (K.K. Bhatia)
Member (T)
S.S. Sekhon, Member (T)
49. 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. Chacko, Member (Judicial) and I agree with him, that Section 35C(2) 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 and also that the applicants can have recourse to the appropriate provisions of appeal for challenging the Tribunal's order. However, I cannot persuade myself to agree to his following findings :
"If the Appellate order passed by the Tribunal is held to be amendable to amendments under Section 35C(2) on the ground of such order having been found to be incorrect in the light of subsequent decisions of Tribunal Larger Bench/High Court/Supreme Court rendered during the aforesaid period of four years, there can be a spate of ROM applications in relation to such 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)."
Since the Tribunal does not consist of infallible members laying down the decisions, the power to rectify the mistakes has been granted and has to be exercised. If the alternate route of rectification of mistake is available, along with the route of appeal, then we cannot deny the benefit of the same when exercised within the time prescribed under law. It is not for the Tribunal to decide which route the parties want to adopt. The decision has to be left to the applicants. In this case, therefore, it is imperative to determine whether there is an apparent error of fact or/and law on record and if that be so, a rectification application will lie.
52. Learned brother Shri Chacko relies mainly on the decision of the Supreme Court in Hari Vishnu Kamat v. Ahmed Ishaque and Ors. - AIR 1955 SC 233. In fact, in the judgment relied by him he emphasised on the following sentence "The fact is that what is an error apparent on the face of the record cannot be defined precisely or exhaustively." Relying on this decision, however, one fact, which appeals to me, is that on 28.02.1997 when the final order in this case was pronounced, it was required to be examined, was there any orders of the Tribunal on record in existence? The earlier order relied in the case of the same assessee reported in 1991 (56) E.L.T. 257, was already on that date reversed by the Supreme Court. The order passed by the Tribunal on 28.02.1997 was on the 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 28.02.1997, 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 and the appellate jurisdiction of the Supreme Court provided under the provisions of law like, Section 35L of the Central Excise Act, 1944. The approach of the problem entirely should be viewed according to me only from the theory of merger and not from any other point because for the sake of repetition, the order made by us on 28.02.1977 is on the basis of an earlier decision in the assessee's own case. There is inject and in law, no order of Tribunal reported in 1991 (56) E.L.T. 257 existing, therefore, reliance on such an order would be an erroneous approach in law and fact requiring a rectification without any further enquiry.
53. The issue has to be looked into in an another perspective. Article 141 of the Constitution of India grants a constitutional status to the theory of precedence. In fact this incorporation in the constitution in respect of the law declared by the Supreme Court by their judgments, has a binding effect, much more than, that which can be propounded and/or interpreted under the theory of precedence. Law declared by the Supreme Court would be retrospective, unless the Supreme Court orders a prospective over ruling. Therefore, the Tribunal was bound to follow the decision of the Supreme Court which was pronounced on the same day, in this case, setting aside the earlier decision of the Tribunal and not the Tribunal's decision in 1991 (56) E.L.T. 257, which had been set aside. Ignorance of law cannot be an execuse in the facts of this case and any application made within the time stipulated to bring to notice such glaring mistake of law would have to be allowed under the provisions of Section 35C(2).
54. I find that Id. Brother Shri V.K. Agrawal, concluded in para 10 of the order prepared by him, findings support from decisions of Supreme Court and Madras and Calcutta High Court as follows :
"... I hold that a subsequent decision of the Supreme Court and/or the High Court cannot form the basis of an application for rectification of mistake. Only a glaring and obvious mistake can be corrected under the provisions 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...."
In view of my findings, I cannot persuade myself to come to a conclusion that when there was no decision of Tribunal existing which has been relied upon by the subsequent 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 Id. 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 Id. Member 0udi-cial) Ms. Jyoti Balasundaram, as arrived at and allow the ROM application.
Sd/-
Dated :5-9-20 (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.