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Entremonde Polycoaters Private Vs. Collector of Central Excise - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1984)(18)ELT310TriDel
AppellantEntremonde Polycoaters Private
RespondentCollector of Central Excise
1. this is an undated application for rectification by m/s entremonde polycoaters private limited, seeking certain amendments in the order of this tribunal no. 389/83-c dated 20-12-83 (appeal no. 369/78-c).considerable arguments were put forward by the learned counsel for m/s.entremonde to show that there had been errors on the face of the record which requird rectification. the main error which the learned counsel said had taken place in the tribunal's order was that a coloured sheet of plastic had been laminated to the sheet of paper to produce the coloured sheet of paper. this is not apparent from any fact in the proceedings that had gone before the lower authorities. the process of manufacture was that coloured plastic was applied as a coating to the paper and this gave an appearance.....
1. This is an undated application for rectification by M/s Entremonde Polycoaters Private Limited, seeking certain amendments in the order of this Tribunal No. 389/83-C dated 20-12-83 (Appeal No. 369/78-C).

Considerable arguments were put forward by the learned counsel for M/s.

Entremonde to show that there had been errors on the face of the record which requird rectification. The main error which the learned counsel said had taken place in the Tribunal's order was that a coloured sheet of plastic had been laminated to the sheet of paper to produce the coloured sheet of paper. This is not apparent from any fact in the proceedings that had gone before the lower authorities. The process of manufacture was that coloured plastic was applied as a coating to the paper and this gave an appearance of colour to the paper. It is, therefore, not correct to say that a sheet of coloured plastic had been stuck to the paper to give it a coloured appearance.

2. He disputed the statement that the base paper had paid duty under Item 17(1) under Central Excise Tariff. The Department's argument on this had not found favour. There was an order of 1977 which had gone in favour of the manufacturer in respect of similar goods. He argued that rectification can be made when a point of submission had not been covered or dealt with. He cited in support of his submission, [1970] 75 ITR Income-tax Officer, Lucknow v. Singar Singh and Sons decided by the Allahabad High Court on 5th August 1969. By this judgment, the High Court ruled that the Tribunal had inherent powers to review its order in order to correct a wrong done to a party. In that case, the Income-tax Tribunal did not give a decision on the question of adjustments of standard profits. By this omission the Tribunal did wrong to the party and, therefore, said the High Court, it was necessary for it to review its own order, when such an order caused prejudice to the party.

3. The review notice had been issued by the Govt. without application of mind. The letter of the Collector to the Govt, which led to issue of this review notice shows clearly that the Govt. had simply echoed the Collector's opinion and had not applied its own independent mind. The Government issued a review notice in a later case, but decided that there was no case for review. There was no logical reason for this complete reversal of opinion. The only conclusion possible, therefore, was that the official who issued the notice of review was guided and influenced only by the Collector's letter, which M/s. Entremonde had seen and inspected.

4. It is not true that the base paper had paid duty under Item No.17(1). M/s. Entremonde can produce gate passes to prove payment of duty under 17(2). If this is accepted their product would be covered by the decision of this Tribunal in M/s. Golden Paper Order No. 109/83-C dated 25th May, 1983.

5. He was unable to understand the finding of the Assistant Collector in which he said that the base paper was printing and writing paper whereas in the order he came to the conclusion that the product was assessable under 17(2).

6. The learned counsel for the Deptt. Mr. Jain began by saying no gate passes proving that the base paper was assessed under Item 17(2) can be accepted now, as no such evidence was produced at the beginning.

Furthermore, there is no way we can be certain that the paper in the finished goods under dispute were of the same category as those cleared under the gate passes that the learned counsel for M/s. Entremonde wishes to produce. And we cannot forget that the factory may have been buying all kinds of paper, some cleared under 17(1) and others cleared under 17(2), and so on. It is not possible at this stage to go by gate passes that M/s. Entremonde can produce. It is enough for our purpose that the Assistant Collector gave a definite finding in his order that the base paper was printing and writing paper and this fact went unchallenged by M/s. Entremonde till now. The so-called application for rectification by M/s. Entremonde is nothing but an attempt to update its appeal and so create fresh evidence and grounds which it had failed to do earlier. The proceedings before this Tribunal is the appeal under Section 35P of Central Excises and Salt Act, 1944 and not the Collector's letter which the learned counsel for M/s. Entremonde makes so much of. A reply was received after the notice and there is nothing in it that would satisfy anyone that M/s. Entremonde thought the notice to be anything other than what it purports to be. It is well-known that such proceedings are preceded by references from Collectorates. But it does not mean that any notice as a result of such references is invalid or suffers from any deficiency or cannot be the basis for proceedings of this nature. If the party is dissatisfied with the nature or the content of the notice it can always attack it and demonstrate its weaknesses and its insufficiencies. To say that the notice was issued as a result of the Collector's letter, is not an argument and there is no law that says a notice cannot be issued after such a letter. The party made no demand for any other documents nor asked for reasons why the show-cause-notice was issued.

7. The mistake apparent on the face of the record is not a mistake of judgment. The records relied upon in the proceedings were only those which were well-known to the party. Nothing had been hidden from it and nothing relied to its deteriment and prejudice. It is still not clear claim what was the mistake that M/s. Entremonde says was apparent on the face of the record.

8. The learned counsel for the Deptt. referred to the Allahabad High Court judgment in Singar Singh & Sons, which had been relied upon by M/s. Entremonde. He said that judgment was about a wrong done by the Tribunal and which required to be rectified by it to atone for any prejudice that may have been caused to the party. No wrong have been committed here by anybody. All the decisions were based on proper findings. Even if the findings were not acceptable to M/s. Entremonde, these were still findings arrived at in due process and cannot be said to be wrongs of the kind dealt with by the High Court. The learned counsel cited a judgment of the Orissa High Court in Commissioner Income-tax v. Jagabandhu Roul, which was decided in November, 1982. In this judgment the High Court ruled that the Appellate Tribunal does not have the power to review. What had been given under Section 254 of the Income-tax Act, 1961 was the right of rectification of mistakes. The power to review had to be statutorily conferred. The learned counsel said that Section 254 of the Income-tax Act, 1961 was similar to Section 35-C of the Central Excise Act. The learned counsel argued to say that for such rectification to be permissible, the mistake must be apparent on the face of the record. It is not one that needs elaborate arguments, it must be demonstrable without detailed submissions.

9. The appellants have failed to point out the mistake apparent on the face of the records.

10. Writing or printing paper which has been coated with plastic ceases to be a printing or writing paper and in fact is no longer capable of taking writing or printing on its surface. Such a paper automatically moves out of Item 17(1) to Item 17 (2).

11. We are in agreement with the learned counsel for the deptt. that a mistake apparent from the record should not take the detailed arguments that the learned counsel for M/s. Entremonde placed before us. This is how Section 35 C(2) of the Central Excises and Salt Act goes- 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 if the mistake is brought out to its notice by Collector of Central Excise or the other party to the appeal.

12. The relevant Sub-section speaks of mistake apparent from the record. In other words, it should be a mistake that becomes obvious from reading the record of proceedings. A simple instance would be where the record of the proceedings says : a sum of Rs. 10,000/- was added to a sum of Rs. 20,000/-and the total arrived at was Rs. 50,000/-. Now it will be apparent to any body that the total Rs. 50,000/- was a mistake because Rs. 10,000/- and Rs. 20,000/- can never add up to Rs. 50,000/-. The total should be Rs. 30,000/-. However, what M/s. Entremonde asks us is to correct the finding and say that the paper was coloured not by means of a plastic attached or glued to the paper but by coating the paper with coloured plastic.

13. When one reads the Assistant Collector's order one finds this sentence "In the instant case there is only coating of plastic materials on the paper and the printing activity is totally absent." A little further before this, this clause appears-"...the said plastic laminated paper is devoid of any printing of colour on the one side of it...".

14. One might say, perhaps as M/s. Entremonde says, that there is no plastic laminate bonded to base paper, but the technique it has used looked uncommonly like it, and if the Tribunal came to the conclusion that there was such a bonding, there was the Assistant Collector's order. The finding that the Tribunal came to is, therefore, based on records and not devoid of grounds as M/s. Entremonde would have people believe.

15. We are not able to understand the learned counsel's argument that he was not able to follow the Assistant Collector's statement that printing paper formed the base paper and that the finished product was assessable under 17(2). We can see nothing that is so puzzling about this and indeed nothing could be clearer than this, even if M/s.

Entremonde does not agree with it. The learned counsel for the deptt.

said correctly that the gate passes offered to be produced cannot be relied upon for purposes of coming to a definite finding.

16. The judgment of the Allahabad High Court in the case of Singar Singh & Sons, related to a matter in which the Tribunal committed a mistake by not taking a submission made before it into account. The assessee had raised the question of adjustment of standard profits and the Tribunal did not give a decision on this question. The Honourable Court towards the end of its order quoted an observation in Syud Tuffuzzool Hossein Khan v. Raghoonath Pershad, which runs like this- so far as the practice of this court will allow him, to recall and cancel an invalid order is not simply permitted to, but is the duty of, a judge, who should always be vigilant not to allow the act of the court itself to do wrong to the suitor. It would be a serious injury to the suitor himself to suffer him to attempt to execute an inoperative order.

17. What weighed heavily on the Court's mind was that the Court or the Tribunal may have itself done wrong, or, by its order, caused a wrong to be done, to the suitor, the plaintiff, or the supplicant. The wrong must be done by the Court or Tribunal and not by somebody else. In such circumstances, it was the duty, said the Court, for the judge to right the wrong. It is easy to see that we are not dealing with such a case : this Tribunal has not done a wrong or caused a wrong to be done to M/s.

Entremonde by any action of its own. What the Tribunal did was to agree with the actions of Assistant Collector and to disagree with the decision of the Appellate Collector. Of course, M/s. Entremonde does not agree with many of the things said by the Tribunal and by the Assistant Collector but that is not to say that a wrong had been done by this Tribunal to the appellant.

18. The learned counsel for the deptt. quoted the judgment of the Orissa High Court ITR Vol. 145 Pt. 2, dated 9-1-84 in the case of Jagga Bundu Roul decided in November 1982. The Honourable Court decided very categorically that only a rectification of mistake could be done under Section 254 of Income-Tax Act and unless the power of review is statutorily conferred, the Tribunal cannot exercise it. What M/s.

Entremonde wants now is not a rectification of error but that the Tribunal should come to a finding different from what it arrived at. As correctly pointed out by the learned counsel for the deptt., the so-called mistake was not a mistake apparent on the face of the record.

In fact no mistake is apparent to us from the record. What the learned counsel for M/s. Entremonde did was to argue his case afresh. In the event, to accede to the request for rectification would lead to a review and this is forbidden. We should go by the ruling of the Honourable High Court of Orissa which is a later ruling than the one given by the Allahabad High Court. As a matter of fact, even the Allahabad High Court does not, in our opinion, support M/s.

Entremonde's demand for what it calls rectification.

19. M/s. Entremonde argued in its application that the Assistant Collector had no authority to revise an approved Classification List.

This is a total misunderstanding of the law. The Assistant Collector issued a show cause notice dated 9-2-77 asking the factory to show cause why its request for exemption under Notfn. No. 68/76-C.E. should not be rejected and the products charged to duty and why duty should not be demanded under Rule 10 read with Rule 173J on the plastic laminated paper cleared by it at nil rate of duty. It cannot be seriously proposed that the Assistant Collector was bound for all time by a list which he found was contrary to law. He issued a demand under Rule 10 for past clearances and no one can deny him this power. And he asked M/s. Entremonde to show cause why the exemption should not be withheld. The answer was self-evident and the procedure cannot be faulted. Whenever a wrong assessment is made, the Assistant Collector can always right it by issuing demands. That the demands may be barred by limitation is a different aspect altogether. We cannot appreciate the emphasis on saying that the Assistant Collector had no power to amend an approved classification list and we think the argument is a misconception because if it is suggested that the Assistant Collector becomes a prisoner of a Classification List once he approves it, then we shall vehemently reject such a suggestion. It nullifies the power to issue demands for wrong assessment and perpetuates an injury to the public revenue which we cannot permit. It may be perhaps that M/s.

Entremonde thinks that only a review of the proper authority was the only lawful remedy. Apart from this being time consuming and may defeat the object if immediate action is required, we must not forget that the power to issue demands for short levy is a very real power and it cannot be neutralized so easily. And that power is circumscribed by nothing but its own specific conditions. The Assistant Collector also proposed the denial of future concession and proceeded in accordance with the law to call upon the factory to show cause against it. Nothing can be more just and proper. The law does not forbid such an action nor can we find any fault with it. The so-called retrospective recovery was only the result of the above lawful actions. The Assistant Collector's order followed naturally from the show cause notice and was not an exercise of any arbitrary or uninvested powers. There was no retrospective action of the kind M/s. Entremonde has in mind. All demands of duty are retrospective. They are not impermissible for being so. We are surprised that M/s. Entremonde who understands Central Excise should make this proposition. We see no merit in it.

21. While I am in general agreement with the order proposed to be made in this application for rectification in terms of Section 35 (C) (2) of the Central Excises and Salt Act, 1944 (hereinafter referred to as the Act), I would like to restate the scope of rectification in terms of the aforesaid provision and record my dissent from the observations in the penultimate para of the order proposed by my learned Brothers.

22. Section 35 (C) (2) of the Act, is an exact reproduction of Section 254 (2) of the Income-tax Act, 1961, which, itself, corresponds to Section 35 of the Income-tax Act, 1922. The scope and effect of the aforesaid provisions in the two Income-tax Acts had been considered in a number of decisions and the principles enunciated therein have been collated in the decision of the Orissa High Court in (1984) 145 I.T.R.{Commissioner of Income-tax v. Jagabandhu Roul). Briefly, the principles enunciated are- (a) "a mistake apparent from the record" is something very obvious or manifest. It cannot, therefore, be one that- (i) cannot be discovered except after an elaborate or controversial reasoning, (ii) was the result of an error of law or a wrong procedure adopted in assessment [Balakrishna Ayyar, J. in (1958) 34 I.T.R. 583-N.V.N. Nagappa Chettiar v. I.T.O.] ; or (iii) cannot be demonstrably established without additional evidence [C.I.T. v. Sheolal Ramlal(1958) 33 I.T.R. 47]; (b) a provision enabling rectification of such a mistake cannot be construed so as to enable a review of the earlier decision; [(1948) 16 I.T.R. 59-C.I.T. v. Sevugan ; (1952) 21 I.T.R. 333- Sidhramappa v. C.I.T. ; (1955) 28 I.T.R. 885-A:. Parameswaran Pillai v. Addl. I.T.O.I and (c) in terms of the decision of the Orissa High Court, itself, the power of review has to be statutorily conferred. The Tribunal has no such power. Section 254(2) (of the Income-tax Act, 1961) speaks of rectification rather than of review.Maharana Mills (Pvt.) Ltd. v. I.T.O. Porbandar] laid down that the mistake that could be rectified under Section 35 of the Income-tax Act, 1922, is not one which could be discovered as a result of an argument. It is open, however, to the income-tax Officer to examine the record and if he discovers any mistake he is entitled to rectify the error, provided that if it results in enhancement of the assessment or reduction of the refund, notice has to be given to the assessee and he should be allowed a reasonable opportunity of being heard.

24. It would thus appear that rectification, in terms of Section 35 of the Act, can be only of a "mistake apparent from the record" and cannot extend to a modification or alteration that may result from a review of the order made earlier. A power of review, it is axiomatic, has to be statutorily conferred either expressly or by necessary implication and is nothing short of a rehearing of a decided case by the same officer who pronounced the judgment or order earlier. It is sufficient for our present purpose merely to notice the following dictum of Seshagiri Iyer J in AIR 1919 Madras 244 (Anantaraju Shetty v. Appu Hegade)- "It is settled law that a case is not open to appeal unless the statute gives such a right. The power to review must also be given by the statute. Prima facie, a party who has obtained a decision is entitled to keep it unassailed, unless the legislature had indicated the mode by which it can be set aside. A review is practically the rehearing of the appeal by the same officer who decided the case.

There is at least a good reason for saying that such power should not be exercised unless the statute gives it, as for saying that another Tribunal should not hear an appeal from the trial court unless such power is given to it by statute." 25. Accordingly, a Review differs from rectification and is much larger in scope than rectification. It is a rehearing of a decided case where evidence, not within the knowledge of the applicant despite due deligence, and having a material effect on the decision reached earlier, is discovered after the pronouncement of the judgment. It may also be resorted to for rectification of an error or mistake apparent on the face of the record. Usually, as in the C.P.C., there is no right of review where a right of appeal exists and is availed of, whereas rectification can be even in such a case.

26. Restitution in integrum on account of an erroneous act of the Court or Tribunal by which prejudice is caused to a litigant differs from both review and rectification. It is not merely an inherent power but a bounden duty of a Court or Tribunal to undo, rectify and act in restitution if by an erroneous act of the Court, prejudice is caused to a litigant. "Actus curiae neminem gravabit." "There is no higher principle for the guidance of the court than the one that no act of courts should harm a litigant and it is the bounden duty of courts to see that if a person is harmed by a mistake of the court, he should be restored to the position he would have occupied but for that mistake."S.C.R. US-Jang Singh v. Brijlal To the same effect is the decision of the Privy Council in 14 M.I.A. 41 (Syed Tuffuzzool Hussain v. Raghunath Pershad), relied upon in 75 ITR 646 (I.T.O. v. S.B. Singar Singh and Ors.) cited for the Applicant. In the case before the Privy Council, an invalid order would appear to have been made per incuriam-an order that would have never been made if the officer was duly informed. We do not have the facts of that case before us but it is usually in the correction of the ministerial and non-appealable, as opposed to judicial acts (which can be corrected by appeal or review) that the principle comes into play. The error need not necessarily be one apparent from the record nor one that comes to light when new evidence, not within the knowledge of the applicant despite due deligence, is discovered.

27. When the statute, therefore, speaks of a rectification of a mistake apparent from the record, we cannot read into it a review or restitution on account of an error of court, for even though they may overlap, they are still distinct from each other.

28. In 75 ITR 646 (cited for the Applicant) itself, a clear distinction between a review-a creature of statute - and restitution on account of an error of court causing prejudice to the assessee had been drawn.

Apart from the inapplicability of the said decision in the facts of the case before us, it does not appear, with respect, if it were not a clear case for reference under Section 256 of the Act in the view that a question of law arises even on those aspects of the case not touched upon by the Tribunal. Alternatively, in an application, possibly for the issue of a writ of mandamus or certiorari, the omission of the Tribunal was an error apparent on the face of the record, enabling the High Court, in the exercise of its extraordinary jurisdiction under Article 226 of the Constitution, to quash the order of the Tribunal and direct the Tribunal to go into the issue it omitted to consider, rather than look for the jurisdiction of the Tribunal to do so and resorting, in the process, to the principle of "Actus Curiem neminem gravabit".

29. It does not appear that the decision of the Orissa High Court in (1985) 145 ITR was cited before the Tribunal in (1984) E.L.T. 482 (Smt.

Pratiba Rani Samanta v. Collector of Central Excise, Calcutta), so that the scopa and meaning of a "Mistake apparent from the record" could have been considered. A decision on a question of locus standi of the Appellant before the Tribunal cannot be assailed merely on the ground of a joint submission by both the counsel appearing for the parties that it was not argued. Such a submission after judgment even if made jointly, cannot be a mistake apparent from the record, when there is nothing in it to show whether it was argued or not. This apart, a court or Tribunal is not, necessarily, confined to the arguments actually advanced in rendering its decision. The decision may proceed on the facts ascertained from the record although not argued. The mere fact that a finding crucial for the determination of a case was not argued by either of the parties does not imply that there is an error apparent from the record. Nor does it appear from the report of the decision of the Tribunal that, in actual fact, the Appellant had the locus standi to file an appeal contrary to the finding of the Tribunal. It is not as if the Tribunal is precluded from deciding a case on a preliminary issue. It appears to be a case for reference to the High Court as a question of law rather than for the Tribunal itself to recall the order made earlier pursuant to an application under Section 35 (C) (2) of the Act. In any case, the said decision may require to be reconsidered on an appropriate occasion.

30. One cannot be heard, in the premises, to say that the observation of this Tribunal to the effect that the base paper fell within Item 17 (I) of the Schedule to the Act,- (a) is a mistake apparent from the record that requires rectification in the light of gate passes not produced at any time although available all along, notwithstanding that the said observation is derived from the adjudication order and remained unchallenged in the Appeal or Revision heard by us as an appeal ; or (ii) the evidence relied upon was not newly discovered but all along in the possession of the Applicant and not produced ; and (iii) there is a right of Appeal against the Tribunal's order which had already been availed of: or (c) requires rectification by way of restitution on account of a mistake of the Tribunal that caused prejudice to the applicant. If the observation was erroneous, the applicant had already availed of an opportunity of an appeal where it could be canvassed. Nor can it be that a decision against the Applicant in a proceeding, judicial or quasi-judicial, although, may be due to an error, is one that requires rectification by way of restitution. A decision in any such proceeding cannot be said to have caused prejudice to one against whom it is rendered and no question of restitution arises, except by its reversal in appeal or in any other suitable proceeding against it. If this were not so, any adverse decision in judicial or quasi-judicial proceedings is prejudicial and can be reversed by the self same court or Tribunal and the right of appeal against such decision is otiose.

31. If, therefore, a right of review is to be conferred by statute and there is nothing in Section 35 (C) (2) of the Act from which such a right could be inferred, could we, while disposing of an application for rectification on the ground, advert to an aspect of the case omitted from consideration altogether earlier, notwithstanding that we were not invited to refer or deal with it in the course of the application for rectification In other words, do we get a second opportunity to make good our omission to consider an issue, not even adverted to earlier in the course of our judgment, when the application for rectification does not require us to supply the omission 32. The answer is obvious. When, therefore, as already observed in my dissent in the Appeal, the question relating to jurisdiction of the Asstt. Collector to review his own order in adjudication was left untouched by my learned Brothers, it should not be possible for any observations to be made in that regard in the course of this order pursuant to the application for rectification.

33. In the premises, I cannot but dissent from the observations made in the penultimate para of the order now proposed to be made by learned Brothers in regard to that aspect of the case. Even if my dissenting order in the Appeal on the said issue is disregarded, notwithstanding the discussion of the law and the citations in support of it therein, there are other decisions of the Tribunal itself which could not have been overlooked. Thus, in 1983 (2) ETR 783 -Nuchem Plastic v.Collector, Central Excise, Delhi) the 'D' Bench of this Tribunal had, after consideration of the case law on the subject, came to a conclusion not substantially different from my own, on the question of review of classification, once approved, by the same officer. While a review in terms of Rule 173B (5) of an approved classification list was ruled out by me in the course of my order of dissent, the Bench deciding the Nuchem Plastic's case ruled it out in all cases except where : (c) there has been subsequent pronouncement of High Court or Supreme Court judgment which necessitate reconsideration of the issue ; (d) fresh facts are brought on record or there is at least a suggestion that while arriving at conclusions earlier certain material facts and provisions have not been considered.

It may be observed that at least (b) supra falls within Rule 173B (iii) even otherwise and does not really constitute a review seeing that it requires a fresh classification list to be filed. Be that as it may, none of the criteria laid down in the said decsion has been fulfiilled in the instant case. There cannot, therefore, be a review of classification list, once approved, at least in the facts of this case.

34. I, however, agree that the application for rectification should be dismissed for the aforesaid reasons.

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