Customs, Excise and Gold Tribunal - Delhi
Sri Shanmuga Bleaching Works vs Commissioner Of C. Ex. on 27 December, 2004
Equivalent citations: 2005(99)ECC790, 2005(181)ELT93(TRI-DEL)
ORDER V.K. Agrawal, Member (T)
1. The following question has been referred to the Larger Bench for consideration : -
"Whether, in the facts of this case, the appellants are entitled to file an application for rectification of mistake with reference to Final Order Nos. 258-260/2001, dated 9-2-2001 at any time within four years from the said date notwithstanding the amendment to Section 35C of the Central Excise Act, 1944 under Section 140 of the Finance Act, 2002?"
2. Shri K.R. Natrajan, learned Advocate for M/s. Sri Shanmuga Bleaching Works has sent written submissions with a request to decide the matter on merit. We, therefore, heard Shri Kumar Santosh, learned SDR, and perused the records and written submissions made by the Appellants. Sub-section (2) of Section 35C of Central Excise Act provided before this amendment by Section 140 of the Finance Act, 2002 that the Appellate Tribunal may at any time within 4 years from the date of the Order, with a view to rectify any mistake apparent from the record, amend any Order passed by it under Sub-section (1) and shall make such amendment, if the mistake is brought to its notice by the Commissioner or the other party to the appeal. This time limit of 4 years was substituted to 6 months by Section 140 of the Finance Act, 2002 with effect from 11-5-2002. The appeal filed by the Appellants was decided by the South Zonal Bench of the Tribunal at Bangalore vide Final Order Nos. 258-260/2001, dated 9-2-2001. The Appellants subsequently filed an application which was received by the Tribunal on 19-8-2003 for recalling the Final Order of the Tribunal. It is the contention of the Revenue that the Misc. application praying for recalling the Final Order had been submitted well beyond the period of 6 months from the date of amendment of Section 35C(2) as it came into effect on 11-5-2002. It has been contended by the Appellants that the right of filing the Misc. application is substantive right which cannot be destroyed except by enactment with specific mentioning; that in the amendment section there is nothing mentioned about the retrospective operation of the amendment. Reliance has been placed on the decision in the case of Shree Warana Sahakari Dudh Utpadak Prakriya Sangh Ltd. v. C.C.E. Pune - 2003 (155) E.L.T. 465 (Tribunal) wherein the Tribunal has held that ROM application filed in January, 2003 in respect of Final Order passed in April, 2001 is not time barred under the amended provisions of Section 35C(2) as the right to file the application within 4 years inhered in Appellants on the date of filing of appeal which could be taken away only by specific legislation to that effect. Reliance has also been placed on the decision in the case of Hoosein Kasam Dada (India) Ltd. v. State of Madhya Pradesh and Ors. - 1983 (13) E.L.T. 1277 (S.C.).
3. The learned SDR on the other hand submitted that the provisions of Section 35C(2) has been amended on 11-5-2002 reducing the period for filing application for rectification of mistake from 4 years to 6 months; that as the application has been filed in August, 2003 in relation to a Final Order passed in 2001, it is hit by the time limit specified in Section 35C(2) as it exceeded the time limit at the time of filing the application; that law of limitation is not a substantive law as held by the Bombay High Court in the case of Uttam Steel Ltd. v. U.O.I. - 2003 (158) E.L.T. 274 (Bom.); that the Bombay High Court has held that where amended statute alters the existing practice and procedure of enforcing the substantive right, then the amended procedure would apply for the enforcement of substantive right existed on the date when the amended provisions came into force. He has also relied upon the decision in the case of C.C.E. v. Cellulose Products of India Ltd. - 1993 (64) E.L.T. 65 (Tribunal) wherein the issue for consideration was the effect of reduction in the time limit for issuing direction to file appeal under Section 35E of the Central Excise Act from 2 years to one year. The Tribunal has observed therein that statute of limitation is regarded as procedural and the law of limitation which applies to a suit is the law in force at the date of the institution of the suit irrespective of the date of accrual of the cause of action. The Tribunal also observed that there are certain exceptions to such principles such as amendment cannot suddenly extinguished a vested right of action by providing for a shorter period of limitation; that after observing this the Tribunal found that, after the amendment in Section 35E came into force, the Collector had 35 days available under the amended section to exercise his powers under Section 35E as the Department had not shown that 35 days time available was unreasonable or impractical, the Tribunal rejected the appeal filed by the Revenue. The learned SDR contended that in the present matter the Appellants had filed the Misc. application for recalling the Order even after more than 6 months of the amendment coming into force; that thus they cannot claim that their right was suddenly extinguished. Finally the learned SDR relied upon the decision in the case of Osram Surya (P) Ltd. v. C.C.E., Indore - 2002 (142) E.L.T. 5 (S.C.). In this case an amendment was introduced in Rule 57G of Central Excise Rules, 1944 on 29-6-1995 by providing a limit of 6 months from the date of issue of duty paying documents after which the Modvat Credit of the duty cannot be availed of. The Appellants therein had taken the Modvat Credit on the strength of invoice issued prior to 26-9-1995. In respect of one of the Appellants therein, 6 months period expired on 30-6-1995 i.e. a day after the amendment of Rule 57G. The Supreme Court has held that by the amendment, the Credit in the account of manufacturer was not taken away but only the manner and the time within which the said credit was to be taken or utilized along was substituted. The Supreme Court, therefore, dismissed the appeals.
4.1 We have considered the submissions of both the sides. Final Order was passed by the Tribunal on 9-2-2001. No doubt at the time Final Order was passed by the Tribunal, the time limit for filing the application for rectification of mistake under Section 35C(2) of the Central Excise Act was 4 years from the date of the Order. The application for rectification of mistake was filed on 19-8-2003. By the time the application was filed the provisions of Section 35C(2) had been amended by Section 140 of the Finance Act, 2002 w.e.f. 11-5-2002 by which the period of 4 years was reduced to 6 months. The effect of the amendment is that the application for rectification of mistake now can be filed at any time within 6 months from the date of the order. This contention of the applicants that as the final order in question was passed by the Tribunal in 2001 when 4 years period was available for filing the application for rectification of mistake the said period cannot be curtained retrospectively by the amendment carried out in Section 35C(2) in 2002. We find that the amendment in Section 35C(2) of the Act reducing the period from 4 years to 6 months does not take away the substantive right to file application for rectification of mistake. The only effect of the amendment is to reduce the time limit within which the application has to be preferred by the applicant. In view of this it cannot be claimed by them that their substantive right has been affected adversely and that too retrospectively. The issue involved in this matter has been settled by the Supreme Court in the case of Osram Surya (P) Ltd. v. C.C.E., Indore - 2002 (142) E.L.T. 5 (S.C.). In the said matter also the issue involved was whether a time limit specified for availing the Modvat Credit of the duty paid on inputs will be applicable to the cases wherein the manufacturers who had received their inputs prior to the introduction of the time limit condition and are seeking to take credit in regard to the said inputs beyond the period of time limit introduced by amending Rule 57G of Central Excise Rules, 1944. The Hon'ble Supreme Court has held as under :-
"..........We think that by introducing the limitation in the said provisio to the Rule, the statute has not taken away any of the vested right which had accrued to the manufacturer under the Scheme of Modvat. That vested right continues to be in existence and what is restricted is the time within which the manufacturer has to enforce that right. The appellants, however, contended that imposition of a limitation is as good as taking away the vested right.....in the instant case by the introduction of the second proviso to Rule 57G, the credit in the account of a manufacturer was not taken away but only the manner and the time within which the said credit was to be taken or utilized alone was stipulated. It is to be noted at this juncture that the substantive right has not been taken away by the introduction of the proviso to the rule in question but a procedural restriction was introduced which, in our opinion, is permissible in law. Therefore, in our opinion, the law laid down by this Court in Eicher's case (supra) does not apply to the facts of these cases."
4.2 It was also observed by the Supreme Court that the amendment in Rule 57G does not operate retrospectively in the sense it does not cancel the credit nor does it in any manner affect the rights of those persons who have already taken the credit before commencing into force of the rule in question. It operates prospectively in regard to those manufacturers who seek to take credit after coming into force of this rule. The ratio of this decision applies squarely to the facts of the present matter. The change in the time limit for filing application - for rectification of mistake does not take away the substantive right of filing the application. The procedural restriction by reducing the time limit has been introduced by amendment which; as held by the Supreme Court in Osram Surya (P) Ltd., is permissible. The amendment operate prospectively in regard to those applicants who seek to file application for rectification of mistake after coming into force of the amendment. We, therefore, hold that the view taken by the Tribunal in the case of Shree Warana Sahakari Dudh Utpadak Prakriya Sangh Ltd. - 2003 (155) E.L.T. 465 is not correct law. The reference is answered accordingly that it is not open to the applicants to file an application for rectification of mistake with reference to Final Order, dated 9-2-2001 at any time within 4 years after the amendment of the provisions of Section 35C(2) of the Central Excise Act, 1944.
5. As the application in the present matter has been filed on 19-8-2003 which is much beyond the period of 6 months from the date of the Final Order the application filed by the Applicants is rejected.