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. 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  

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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.

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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  

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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  

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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.

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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  

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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  

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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”  

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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.  

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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  

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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  

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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  

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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 Delhi August 9,   2011.  

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