In the High Court of Judicature at Madras
Dated: 08/11/2005
Coram
The Hon'ble Mr. JUSTICE P.D.DINAKARAN
and
The Hon'ble Mr. JUSTICE T.V.MASILAMANI
CMA.(NPD) No.3465 of 2005
and
C.M.P.No.17638 of 2005
M/s. Sri Shanmuga Bleaching Works
Ananthan Kadu, Thanner Pandalpalayam
P.N.Pudur (PO) , Erode 5. .... Appellant
-Vs-
1. The Registrar,
Customs Excise & Service Tax
Appellate Tribunal
West Block No.2, R.K.Puram,
New Delhi 110 066.
2. The Registrar,
Customs Excise and Gold (Control)
Appellate Tribunal
South Zonal Bench
Shastri Bhavan Annexe,
1st Floor, 26, Haddows Road,
Chennai 600 034.
3. Commissioner of Central Excise,
6/7 A.T.D. Street,
Race Course Road,
Coimbatore 641 018. .... Respondents
Civil Miscellaneous Appeal filed under Section 35-G of Central Excise
Act, 1944 against the final order No.E/ROA/52/03-MAS dated 27.12.20 04 in
E/Appeal No.1426/96-MAS on the file of the 1st respondent.
!For Appellant : Mr. K.R.Natarajan
^For Respondent : ---
:J U D G M E N T
(Judgment of the Court was delivered by P.D.DINAKARAN,J)
The above appeal is directed against the order No.E/ROA/52/03-MAS
dated 27.12.2004 in E/Appeal No.1426/96-MAS of the first respondent.
2. The appellant is engaged in the work of processing cotton fabrics.
The Central Excise Officers attached to the Preventive Group of Erode Division
searched the appellant company on 07.06.1995 and found that some process of
mercerising was going on manufacturing excisable goods. The enquiry revealed
that there was neither a Central Excise Registration Certificate nor any
records maintained for the fabrics which were mercerised and cleared.
3. A show cause notice was issued on 18.10.1995 to the appellant
company calling upon the appellant to explain as to why payment of duty on the
clearances made should not be demanded and as to why the goods seized should
not be confiscated and penalty imposed under Rules 9(2), 52A, 173Q and 226 of
Central Excise Rules,1944. The appellant company submitted its explanation
indicating that the process which it was indulged in was neither coming under
mercerisation nor under any process mentioned under the heading 5206 and that
the product is rightly classifiable under the heading 5205. Not satisfied
with the explanation, the Adjudicating Officer, namely, the Commissioner,
Central Excise, Coimbatore confirmed the demand of Rs.32,284/- under Rule 9
(2) of Central Excise Rule 1944, read with Section 11A(1) of Central Excise
and Salt Act 1944 being the duty involved in cotton fabrics mercerised with
the aid of power and cleared and also imposed penalty of Rs.3,000/- under Rule
9(2), 52A, 173Q and 226 of Central Excise Rule 1944 by his order dated
19.7.1996.
4. Aggrieved against the order dated 19.7.1996, the appellant company
filed an appeal before the Customs, Excise and Gold Control Appellate
Tribunal, second respondent herein.
5. On 9.2.2001, the second respondent dismissed the appeal along with
other two appeals by a common order holding that there are enormous evidence
in the form of documents and oral admissions available on record including the
statements from persons who had supplied the grey fabrics stating that the
said fabrics were supplied for mercerising work.
6. Against the order of the second respondent dated 09.02.2001, the
appellant filed a rectification petition before the Customs, Excise and
Service Tax Appellate Tribunal, South Zonal Bench, Chennai to recall the order
of the second respondent contending that the process adopted by the appellant
herein and the appellants in other cases was not one and the same and the
plant and machinery installed were also different. It was also contended that
the said rectification petition was filed within the time limit of four years
from the date of order as per Section 35C(2) of Central Excise Act 1944 and
though this Section has been amended restricting the time limit of filing of
miscellaneous petition, the pre-existing right of appeal could not be
destroyed by amendment unless the amendment was retrospective in operation and
the right of appeal is a substantive right which could not be disturbed except
by express enactment.
7. However, the second respondent found that the said rectification
petition is time barred. Since the decision rendered by the West Zonal Bench
in the case of Shree Warana Sahakari Dudh Utpadak Pradriya Sangh Ltd.
reported in 2003 (155) ELT 465 is contrary to the findings of the second
respondent, the said miscellaneous petition was referred to a larger bench.
Subsequently, the petition was transferred to the Customs Excise & Service Tax
Appellate Tribunal, New Delhi, the first respondent herein. The appellant
company filed their written submissions before the Customs, Excise and Service
Tax Appellate Tribunal, New Delhi stating that the right of filing the
miscellaneous petition is a substantive right which could not be disturbed
except by an enactment with specific mentioning and in the amended section
there is nothing about the retrospective operation of the said amendment.
8. A Larger Bench of the first respondent, after considering the
submissions of both sides and after analysing the materials placed, rejected
the miscellaneous petition by an order dated 27.12.2004 following the decision
of Supreme Court in the case of Osram Surya (P) Ltd. V. CCE, Indore reported
in 2002(142) ELT 5 and holding that though the final order was passed by the
Tribunal on 9.2.2001, the petition for rectification of mistake was filed on
19.8.2003 and by the time the application was filed, the provisions of Section
35C(2) had been amended by Section 140 of the Finance Act, 2002 with effect
from 11.5.20 02, by which time, the period of four years was reduced to 6
months.
9. Against the order of the Appellate Tribunal dated 27.12.2004, the
appellant has filed the present Civil Miscellaneous Appeal raising the
following substantial questions of law:
i) Whether the Hon’ble CESTAT, Chennai Bench is right in hearing the
above three appeals when the facts were not the same and passing a common
order in those appeals?
(ii) Whether the Hon’ble Larger Bench of the Tribunal is right in
holding that it is not open to the applicants to file an application for
rectification of mistake with reference to final order dated 9.2.20 01 at any
time within 4 years after the amendment of the provisions of Section 35C(2) of
the Central Excise Act, 1944?
10. Heard Mr.K.R.Natarajan, learned counsel appearing for the
appellant arguing for admission.
11. Mr.K.R.Natarajan, learned counsel appearing for the appellant
after taking us through the order of the second respondent dated 9.2.2 001 and
the order of the first respondent dated 27.12.2004 would submit that the
second respondent by an order dated 9.2.2001 disposed of three appeals, even
though the facts of each case were different. He also submits that the
provisions of Section 140 of the Finance Act, 2002 are prospective in
operation and the said amendment does not take away the substantive right to
file an 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. He has also cited a decision reported in AIR 1957
S.C. 540 ( Garikapati V. Subbiah Choudhry)
12. It is apt to refer Section 35C(2) of the Central Excise Act, as
amended by Section 140 of Finance Act 2002, which reads as follows:
“Section 35C- Orders of Appellate Tribunal-
(1)*****
(1A)******
(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 mistake is brought to the notice by the Commissioner of
Central Excise or the other party to the appeal:
Provided that an amendment which has the effect of enhancing an
assessment or reducing a refund or otherwise increasing the liability of the
other party, shall not be made under this sub-section, unless the Appellate
Tribunal has given notice to him of its intention to do so and has allowed him
a reasonable opportunity of being heard.
***** ”
In the above Section, the period of six months was substituted with
effect from 11.5.2002 by Section 140 of the Finance Act 2002.
13.1. Concededly, the second respondent passed the final order on 0
9.02.2001 and the appellant filed the rectification petition on 19.8.2003.
But the amendment of Section 35C(2) was implemented with effect from
11.5.2002. Hence, the rectification petition filed was well beyond the time
of six months.
13.2. We are also of the considered opinion that the first respondent
rightly followed the Supreme Court decision reported in 2002 (142) ELT 5
(Osram Surya (P) Ltd. Vs. CCE, Indore), wherein the Supreme Court held as
follows:
“….. we think that by introducing the limitation in the said
proviso to the rule, the statute has not taken away any of the vested rights
which had accrued to the manufacturers 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 support of their argument, they have placed reliance on
a judgment of this Court in Eicher Motors Ltd. V. Union of India (1999 (106)
E.L.T. 3 (S.C.)} wherein this Court had held that a right accrued to an
assessee on the date when it paid the tax on the raw-materials or the inputs
would continue until the facility available thereto gets worked out or until
those goods existed. In that background, this Court held that by Section 37
of the Act, the authorities concerned cannot make a rule which could take away
the said right on goods manufactured prior to the date specified in the
concerned rule. In the facts of Eicher’s case ( supra), it is seen that by
introduction of Rule 57F(4A) to the Rules, a credit which was lying unutilized
on 16.3.1995 with the manufacturer was held to have lapsed. Therefore, that
was a case wherein by introduction of the rule a credit which was in the
account of the manufacturer was held not to be available on the coming into
force of that rule, by that the right to credit itself was taken away, whereas
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.”
(Emphasis supplied)
14.1. In the decision cited by the learned counsel for the appellant
in Garikapati V. Subbiah Choudhry (AIR 1957 SC 540) it has been held that the
right of appeal is a vested right and such a right to enter the superior court
accrues to the litigant and exists as on and from the date the lis commences
and although it may be actually exercised when the adverse judgment is
pronounced such right is to be governed by the law prevailing at the date of
the institution of the suit or proceeding and not by the law that prevails at
the date of its decision or at the date of the filing of the appeal. This
vested right of appeal can be taken away only by a subsequent enactment, if it
so provides expressly or by necessary intendment and not otherwise.
14.2. In our considered opinion, the decision reported in AIR 1957 SC
540 (Garikapati V. Subbiah Choudhry) is not applicable to the facts and
circumstances of the case for the simple reason, in Garikapati case, referred
supra deals with a right of appeal to the superior Court accrued to the
litigant on the date of the lis commenced, but not with reference to the right
to seek rectification of any mistake apparent on the record in the order
already passed by the authority and seek an amendment on bringing to the
notice of the mistake to the authorities concerned as in the instant case.
The amendment proposed to Section 35 C(2) of the Central Excise Act as brought
in by Section 14 0 of the Finance Act 2002 is intended to introduce certain
procedural restrictions but not to take away any substantial right, such as
filing of the appeal vested on the litigant.
15. Hence, finding no merits, this Civil Miscellaneous Appeal stands
dismissed. Consequently, C.M.P.No.17638 of 2005 is also dismissed.
Index :Yes
Internet:Yes
sl
To
1. The Registrar,
Customs Excise & Service Tax
Appellate Tribunal
West Block No.2, R.K.Puram,
New Delhi 110 066.
2. The Registrar,
Customs Excise and Gold (Control)
Appellate Tribunal
South Zonal Bench
Shastri Bhavan Annexe,
1st Floor, 26, Haddows Road,
Chennai 600 034.
3. Commissioner of Central Excise,
6/7 A.T.D. Street,
Race Course Road,
Coimbatore 641 018.