M/s Mangalam Cement Ltd. Morak, Distt, Kota. Through it’s Senior General Manager Shri Vinay Kumar Jain V. Union of India through Commissioner Central Excises, Jaipur- 1, NCRB, Statue Circle, Jaipur and Customs Excise & Service Tax Appellate Tribunal West Block No.2, R. K. Puram, New Delhi

EXCIA/116/2017

AI Insights

In this case, M/s Mangalam Cement Ltd. appealed against an order of the Customs Excise & Service Tax Appellate Tribunal (CESTAT) which had dismissed their rectification application. The High Court of Rajasthan examined whether the appeal was maintainable against the rectification order. The court referenced several precedents and statutory provisions, particularly focusing on the nature of orders under Section 254(2) of the Income Tax Act, 1961, which allows for rectification of mistakes apparent from the record but does not provide for an appeal against the order rejecting such rectification. The court concluded that the appropriate remedy for the appellant was to file a writ petition under Articles 226 and 227 of the Constitution of India, rather than an appeal.

• Counselvise Citation: [2018] 140 COUNSELVISE.COM (IT) 802997 (HC-RAJASTHAN)
• Appeal Type: Others
• Pronouncement Date: 21-03-2018
• Assessment Year: misc
• Other Referred Cases: Shri Shrivatas Rathi Versus Commissioner of Central Excise and Service Tax, Jaipur-I, R. A. M. Movers Pvt. Ltd., Hanumangarh Town Versus Asst. Commissioner of Income Tax, Sri Ganganagar, Safari Mercantile Pvt. Ltd. vs. ITAT, Commissioner of Income Tax Vs. Saroop Tanneries Ltd., CIT vs. Sahara India Ltd., Lachman Dass Bhatia vs. ACIT, Union of India Vs. Jain Irrigation Systems Ltd., Madhav Marbles and Granites Vs. Income Tax Appellate Tribunal, Saroj Ceramics Industries Vs. Income-tax Officer
• Laws Referred To: Order 47 Rule 7, Section 254(2) of the Income Tax Act, 1961, Section 35G of the Central Excise Act, Section 35C(2) of the Central Excise Act, 1944
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: SIDDHARTH RANKA
• Assessee Lawyers: P K KASLIWAL
• Keywords: Central Excise Appeal; Error apparent on record; Maintainability of appeal; Rectification Application
• Section: 254(2); 35C(2); 35G

Judgement Text

"HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Central Excise Appeal No. 116/2017 M/s Mangalam Cement Ltd. Morak, Distt, Kota. Through it’s Senior General Manager Shri Vinay Kumar Jain ----Appellant Versus 1. Union of India through Commissioner Central Excises, Jaipur- 1, NCRB, Statue Circle, Jaipur. 2. Customs Excise & Service Tax Appellate Tribunal West Block No.2, R. K. Puram, New Delhi ----Respondents For Appellant(s) : Mr. P. K. Kasliwal For Respondent(s) : Mr. Siddharth Ranka HON'BLE MR. JUSTICE K.S.JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS Judgment 21/03/2018 1. Counsel for the assessee has relied upon the decision of this Court in Shri Shrivatas Rathi Versus Commissioner of Central Excise and Service Tax, Jaipur-I and other connected matter decided on 07.03.2018 which reads as under:- “Defect(s) are waived. Application No. 7675/18 in appeal no. 151/2017 and 7674/18 in appeal no. 152/2017 are disposed of. It is very clear that against the order of rectification under Order 47 Rule 7, the appeal is not maintainable. In that view of the matter, the appropriate remedy for the appellant is to file appeal before the appropriate forum. Both the appeals stand disposed of.” 2. He further relied upon the decision of this Court in R. A. M. Movers Pvt. Ltd., Hanumangarh Town Versus Asst. Commissioner of Income Tax, Sri Ganganagar decided on 25.01.2018 which reads as under:- (2 of 11) [CEA-116/2017] “1. By way of this appeal, the appellant has challenged the judgment and order of the Tribunal whereby the Tribunal has dismissed the appeal of the assessee. 2. While admitting the appeal, this Court framed following substantial question of law :- \"(i) Whether in the facts and circumstances of the case, the impugned order dated 27.03.2002, passed by the Tribunal is erroneous wherein the Tribunal has held that investment allowance is not available to the assessee, as it is engaged in mining raising, loading and transporting of gypsum from mines owned by RSMM Ltd. and no manufacture or production of any article or things takes place? (ii) Whether in the facts and circumstances of the case, subsequent judgment of Hon'ble Supreme Court rendered in case of CIT Vs. Sesa Goa Ltd. (2004) 271 TTR 331 does amount to an error apparent on the face of record and the learned Tribunal was required to amend/ correct its order in light of final verdict of Hon'ble Supreme Court by way of rectification?\" In view of the decisions in (2005) 272 ITR 397 (BOM) (Chem Amit vs. Asst. Commissioner of Income Tax) and (2011) 10 taxmann.com 193 (Allahabad) (CIT (Central), Kanpur vs. Ekta Flavours Pvt. Ltd.), the appeal is not appropriate remedy. Hence, the same is dismissed. It will be open for the appellant to prefer appropriate proceedings. The period taken from 2007 till today will be taken into consideration while deciding the question of limitation.” 3. Counsel for the department has relied upon the following decisions:- I. In Safari Mercantile Pvt. Ltd. vs. ITAT [2016] 386 ITR 4 (Bombay) wherein it has been held as under :- 7.We note that this court in its order dated July 31, 2007 has while setting aside the order dated March 7, 2007 of the Tribunal dismissing the petitioner's miscellaneous application had held that there was an error apparent from the (3 of 11) [CEA-116/2017] record in the order dated May 9, 2006. The direction of the court in its order dated July 31, 2007 to the Tribunal to dispose of the miscellaneous application on the merits as there is an error apparent on record in the order dated May 9, 2006. This disposing of miscellaneous application could only be after recalling the conclusion in its order dated May 9, 2006 allowing the Revenue's appeal and hearing the petitioner on the issue of penalty being imposable even in the absence of a demand notice being served upon the assessee. This was for the reason that its conclusion was reached without having considered the petitioner's contention that no penalty can be imposed in the absence of receipt of a demand notice by the petitioner. However, the Tribunal in the impugned order has dealt with the issue of imposition of penalty under section 221 of the Act even without service of demand notice under section 156 of the Act upon an assessee. This the Tribunal could have only done while passing an order in appeal. The consequent order which would have been passed in appeal would enable the parties to challenge the same before this court in an appeal under section 260A of the Act. The procedure adopted by the Revenue in this case has deprived the right of statutory appeal to the petitioner. No appeal is entertained by this court from an order dismissing the miscellaneous application for rectification under section 254(2) of the Act (see Chem Amit (supra)). Thus in the process of atoning for a mistake, one should take utmost care to ensure no further prejudice is caused. The rejection on the merits of the contentions of the parties by the Tribunal on a substantial question of law is subject to the statutory right of appeal under section 260A of the Act. This right cannot be by-passed by dealing with the merits in an miscellaneous application for rectification. 8. In the above view, we set aside the impugned order dated March 14, 2008 of the Tribunal. We direct the Tribunal to recall its order dated May 9, 2006 to the extent it upheld the order of the Assessing Officer imposing penalty under section 221 of the Act and post the appeal for hearing at a date convenient to it. Needless to state the petitioner's appeal in respect of only the above issue would be decided after hearing the parties. The other issues would not be re-decided as they stand concluded by the order dated May 9, 2006. (4 of 11) [CEA-116/2017] 2. In Commissioner of Income Tax Vs. Saroop Tanneries Ltd. [2015]374ITR20(P&H) wherein it has been held as under:- 2. The Tribunal had passed an order dated June 30, 2010, in M.A. No. 46 (ASR) of 2009. The Tribunal corrected a mistake on account of not having noticed the judgment of the Supreme Court in CIT v. Amalgamations P. Ltd. MANU/SC/2138/1997 : [1997] 226 ITR 188 (SC). The Tribunal expressly recorded that the applicability of the decision cannot be adjudicated under the provisions of section 254(2), as the same is covered under section 254(1) of the Act. The respondent agrees that as and when an order is ultimately passed under section 254(1) in accordance with the order dated June 30, 2010, under section 254(2), the same would be appealable under section 260A. The appellant, therefore, is not without a remedy in the event of the order under section 254(1) being adverse to it. 3.. The appellant filed M.A. No. 12 (ASR) of 2011 under section 254(2) of the Act against the order dated June 30, 2010, which was dismissed by the impugned order and judgment dated November 19, 2012. In view of what we have mentioned earlier, the appellant is in any event not without a remedv. However, this order in an application under section 254(2) is not appealable. 3. In CIT vs. Sahara India Ltd. [2013] 37 taxmann.com 91 (Allahabad) wherein it has been held as under:- “7. An appeal under Section 260-A of the Act lies to the High Court from every order passed in appeal by the Appellate Tribunal, if the High Court is satisfied that the case involves a substantial question of law. The order passed in the rectification application to rectify an order, which is the opinion of the third Member, to which the matter was referred by the bench of Tribunal of two Members, would not fall within the meaning of order passed by the Appellate Tribunal, in appeal. It is an opinion, and not a final order (5 of 11) [CEA-116/2017] of the Tribunal which was required to be framed on such opinion. 8. Since the final order of the Tribunal dated 31.5.2005, is under challenge in which the department may take the grounds, which have been taken in this appeal. This appeal as against the order dated 7.4.2000, rejecting the rectification application of the department is held to be not maintainable.” 4. Delhi High Court in the case of Lachman Dass Bhatia vs. ACIT, ITA No. 724/2010, Decided on 06.08.2010 wherein it has been held as under:- 23. In view of our foregoing analysis, we proceed to record our conclusions in seriatim: (i) An order passed under Section 254(2) recalling an order in entirety would not be amenable to appeal under Section 260A of the Act. (ii) An order rejecting the application under Section 254(2) is not appealable. (iii) If an order is passed under Section 254(2) amending the order passed in appeal, the same can be assailed in further appeal on substantial question of law. 24. At this juncture, Mr. Mehta submitted that if the assessee is not in a position to prefer an appeal, he will be left remediless. The said submission deserves to be dealt with. When the appeal is not maintainable, in our considered opinion, the same can be challenged by way of writ petition under Articles 226 and 227 of the Constitution of India. Mr. Mehta further submitted that if this Court is of the view that writ would lie, permission should be granted to convert the appeal to the writ petition. In this context, we may refer with profit to the decision rendered in Col. Anil Kak (Retd.) v. Municipal Corporation, Indore & Ors., AIR 2007 SC 1130 wherein the Apex Court has expressed thus: “All that the High Court has done is to treat the petition filed before it under Section 115 of the Code as a proceeding initiated under Article 227 of the Constitution of India. The respondents had filed the revision originally and during the pendency of that revision the High Court appears to have taken a view that an order in an appeal arising from a proceeding under Order 39, Rules 1 and 2 of the Code, could not be challenged under Section 115 of the Code since the order was in the nature of an (6 of 11) [CEA-116/2017] interlocutory order. In such a situation, in our view, the High Court rightly decided to permit the revision petitioners before it, to convert the same as a proceeding under Article 227 of the Constitution of India….” 25. In Nawab Shaqafath Ali Khan v. Nawab Imad Jah Bahadur, 2009 AIR SCW 2289, their Lordships have held thus: “….If the High Court had the jurisdiction to entertain either an appeal or a revision application or a writ petition under Articles 226 and 227 of the Constitution of India, in a given case it, subject to fulfillment of other conditions, could even convert a revision application or a writ petition into an appeal or vice- versa in exercise of its inherent power.” 26. As the appeals in the present case are not maintainable, we are disposed to think, the same can be converted by filing proper application for conversion and by further complying with the necessary formalities as required under the rules to prefer the writ petition. The reference is answered accordingly. 5. In Union of India Vs. Jain Irrigation Systems Ltd. 2015(322)ELT662(Bom.) wherein it has been held as under:- 2. The Revenue seeks to challenge an order passed by the CESTAT on 22 February 2008 [ 2008 (227) E.L.T. 587 (Tribunal)] rejecting an application for rectification filed by the Revenue. The remedy of the Revenue against such an order does not lie in the form of an appeal, but in a writ proceeding under Article 226 of the Constitution. We accordingly dismiss the appeal as not being maintainable on that ground, leaving it open to the Revenue to pursue an appropriate proceeding in accordance with law. 6. In Madhav Marbles and Granites Vs. Income Tax Appellate Tribunal (2012)246CTR(Raj)243, [2014]362ITR647(Raj) wherein it has been held as under:- (7 of 11) [CEA-116/2017] 16. This legal position settled by the Hon'ble Supreme Court and in view of the amendment in law w.e.f. 01.04.1989, admittedly, applicable to assessment year 1999-2000 involved in the present case, appears to have escaped the attention of the learned ITAT while passing the original appellate order on 30.05.2008 and again in the impugned order Annex-1 dated 27.04.2010 under Section 254(2) of the Act even though CIT (Appeals) had dealt with the same. 17. The requirement on the part of the assessee to establish that debts in question had really turned bad is no longer there after 01.04.1989 and it is left to the business prudence of the assessee to claim such deduction by merely writing off such advances or debts as bad debts in the Books of Accounts and debiting the same in the P&L account of me assessee Otherwise, any advance would have been shown on the assets side of the Balance Sheet under the heading of 'Debtors' or 'Loan & Advances' under the heading Current Assets. So long as the outstanding debt is shown on the Assets side of the Balance Sheet, there is no question of claiming the same as deduction from profit and gains of the business computed under Section 28 of the Income Tax Act, It is only when such a debt or advance turns bad or irrecoverable, in the opinion the assessee, as per amendment in law after 01.04.1989, a simple book keeping entry to write off the same is enough to entitle the assessee to claim such a deduction. It is not in dispute from the side of the Revenue that such a write off entry was made in the present case by the assessee in its Books of Accounts In case even after such a writing off entry is made, if assessee recovers back any part of such bad debts, it will naturally be credited again in his books and will be taxed in the year of its receipt on recovery. Therefore, going into the requirement of the assessee not establishing the nexus of the advances with his business and computation of profit in the relevant year is of no consequence and position of law as obtaining prior to 01.04.1989 has simply changed after 01.04.1989 and the Hon'ble Supreme Court decision after the amendment in law in the case of TRF Ltd. (supra), now governs the field. 18. In the face of this legal position, the learned Tribunal apparently, fell into an error in not rectifying the said mistake apparent on the face (8 of 11) [CEA-116/2017] of record, which is nothing more than a mistake of fact and even if it is construed to be a mistake of law, it is apparent mistake of law, which would also fall within the scope of rectifiable mistake under Section 254(2) of the Act The Tribunal having failed to rectify the said error, the assessee was left with no other alternative remedy but to invoke writ jurisdiction of this Court as no appeal would have lied under Section 260A of the Act against such an order rejecting the application under Section 254(2) of the Act. 7. In Saroj Ceramics Industries Vs. Income-tax Officer [2014] 42 taxmann.com 372 (Gujarat) it has been held as under:- “16. Now, applying the aforesaid proposition of law laid down, the facts of the present case are required to be considered. It is required to be noted that before this Court Tax Appeal under Section 260A of the Act against the judgment and order passed by the learned Tribunal passed in ITA No. 675 of 2010, same grounds were submitted which are mentioned in the rectification application, more particularly, valuation accepted by the Assessing Officer while making addition of Rs.22,70,370/-. Dealing with the same in extenso, the Division Bench of this Court has dismissed the appeal and confirmed the order passed by the Tribunal confirming the addition of Rs.24,46,550/- and Rs.8,64,485/-. As stated above, at the time of hearing of the Tax Appeal, the assessee did not point out before this Court that they have already preferred rectification application before the Tribunal which is pending nor even at the time of deciding the rectification application (subsequently) by the Tribunal it was pointed out before the Tribunal that against the judgment and order passed by the learned Tribunal which is sought to be rectified, they preferred appeal, which has been dismissed by the Division Bench on merits. Shri Shah, learned counsel for the petitioner is not in a position to dispute the above. Under the circumstances, now it is not open for the petitioner to contend that despite the dismissal of appeal by this Court, rectification application would be maintainable, on issues/grounds, which came to be earlier considered by the Division Bench while deciding the Tax Appeal No.653 of 2012 under (9 of 11) [CEA-116/2017] the guise of the rectification, the petitioner- assessee cannot have the second round of litigation on the same ground/issue which earlier came to be considered by the Division Bench of this Court and Division Bench dismissed the appeal on merits confirming the judgment and order passed by the learned Tribunal passed in ITA No.675 of 2010.” 4. He has also taken us to the following provisions:- “IT ACT Section 260 A - 260A. (1) An appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal before the date of establishment of the National Tax Tribunal, if the High Court is satisfied that the case involves a substantial question of law. (2) The Principal Chief Commissioner or Chief Commissioner or the Principal Commissioner or Commissioner or an assessee aggrieved by any order passed by the Appellate Tribunal may file an appeal to the High Court and such appeal under this sub-section shall be— (a) filed within one hundred and twenty days from the date on which the order appealed against is received by the assessee or the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner; (b) [***] (c) in the form of a memorandum of appeal precisely stating therein the substantial question of law involved.” SECTION 254 (2) of the Income Tax Act, 1961 (2) The Appellate Tribunal may, at any time within 42[six months from the end of the month in which the order was passed], 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 amendment if the mistake is brought to its notice by the assessee or the Assessing Officer : Provided that an amendment which has the effect of enhancing an assessment or reducing a refund or otherwise increasing the liability of the assessee, shall not be made under this sub- (10 of 11) [CEA-116/2017] section unless the Appellate Tribunal has given notice to the assessee of its intention to do so and has allowed the assessee a reasonable opportunity of being heard : Section 35G. Of the Central Excise Act, Appeal to High Court. - (1) An appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal on or after the 1st day of July, 2003 (not being an order relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for purposes of assessment), if the High Court is satisfied that the case involves a substantial question of law. (2) The Commissioner of Central Excise or the other party aggrieved by any order passed by the Appellate Tribunal may file an appeal to the High Court and such appeal under this sub-Section shall be - (a) filed within one hundred and eighty days from the date on which the order appealed against is received by the Commissioner of Central Excise or the other party; (b) accompanied by a fee of two hundred rupees where such appeal is filed by the other party; (c) in the form of a memorandum of appeal precisely stating therein the substantial question of law involved. SECTION 35C (2) of the Central Excise Act, 1944 (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 its 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 (11 of 11) [CEA-116/2017] its intention to do so and has allowed him a reasonable opportunity of being heard. 5. So far as the appeals where the impugned order and the rectification order is challenged, we made it clear that appeals will be heard only for the original order and for rectification order, the appellant may move a writ petition within a period of two weeks. 8. In this appeal order passed in rectification application is under challenged. We are of the considered opinion that against such order, writ petition is to be preferred by the appellant. 9. Hence, the appeal stands disposed of. the appellant may move a writ petition within a period of two weeks. (VIJAY KUMAR VYAS),J (K.S.JHAVERI),J B.M.G/Gourav/51 "