By TIOL News Service

MUMBAI, OCT 24, 2017: THE appellants are manufacturer of sugar, molasses, etc.

In their workshop, they manufacture excisable goods for the maintenance of machines installed in their factory. These goods are exempted under Notification no. 65/95-CE dated 16.3.1995.

While manufacturing these excisable goods, scrap was generated and same was cleared under commercial bills without payment of duty. Upon pointing out by the CE officers, the applicant paid Rs.15,648/- as duty with interest of Rs.5424/-.

The appellants also dismantled old and used machinery and sold them as scrap without paying duty.

ASCN was issued demanding CE duty of Rs.3,16,271/-.

The adjudicating authority dropped the portion of demand relating to waste and scrap of old machinery and confirmed a demand of Rs.75,674/- which concerned the waste and scrap generated in the workshop along with interest. A penalty of Rs.7000/- was also imposed. Later on, the penalty was enhanced to Rs.60,026/- by a corrigendum.

The Commissioner(A) rejected the assessees appeal. The appeal of the department was, however, allowed by enhancing the penalty equivalent to the amount of duty.

Further appeal was rejected by the CESTAT by observing – "…, it is clear that the demand has been raised against the appellant only on the portion of waste and scrap arising out of the machinery/capital goods on which Cenvat credit was availed by the appellants. Accordingly, the appellant is liable to pay the duty on such waste and scrap ."

Invocation of the extended period of limitation was also upheld on the ground that clearances were made under private challans without mentioning the same in the returns filed.

We reported this case as 2010-TIOL-316-CESTAT-MUM .

The appellant is before the Bombay High Court.

The High Court observed that insofar as merits of the case and the ground of limitation is concerned, the same were based on factual statements and hence cannot be interfered with.

The appellantsubmitted that a specific plea was made before the Appellate Tribunal that the penalty was enhanced by the Adjudicating Authority by issuing a corrigendum which is not permissible under the law; that penalty is imposed u/r 25 of CER, 2002 without invoking the specific clause. Inasmuch the Tribunal had committed a gross error by not considering the submissions which go to the root of the matter, it was contended.

Noting that the two contentions raised by the appellant were not dealt with by the Tribunal and such omission vitiated the order, the High Court ordered thus –

(a) The impugned judgment and order dated 26th November 2009 is hereby set aside and the Appeal No.E/992 of 2008 is remanded to the Appellate Tribunal;

(b) Fresh adjudication shall be made by the Appellate Tribunal confined to the aforesaid two issues;

(c) Considering the fact that the Appeal before the Appellate Tribunal is of the year 2008, the Appellate Tribunal to give necessary priority to the disposal of the said Appeal;

The Appeal was partly allowed.

Incidentally, while reporting the CESTAT decision more than seven years ago we had, in passing, mentioned –

++ Corrigendum issued by adjudicating authority stating that due to typographical computer omission in original order , a penalty of Rs. 2,000/- was shown to have been imposed under Section 77 of Finance Act, 1994 instead of Rs. 81,400/- which is Rs. 100/- per day under provision of Section 76 tantamount to review of decision which is not provided under law – K.G.Etane & Associates vs. CCE, Pune-II - 2005-TIOL-232-CESTAT-MUM

++ Commissioner of Customs is no doubt a quasi-judicial body required to work within the provisions of law. Neither the powers of review nor correction to the order is available under the Customs Act to the Commissioner of Customs to exercise such powers. He becomes functous officio after signing the adjudication order and, therefore, he cannot lay his hands again on the order. The corrigendum is tantamount to review of the decision which is not provided under Law, and therefore, we are of the view that this impugned order is not legally sustainable notwithstanding Section 21 of the General Clauses Act – Law Ministry's opinion as communicated in Circular No. 502/68/99-CX, dated 16-12-1999

Father, forgive them for they know not what they do - Bible, Luke 23

(See 2017-TIOL-2213-HC-MUM-CX)