Rectification

CESTAT, Bangalore Bench

Commissioner of Central Excise, Mangalore

v.

V.M. Tourist Home

DR. S.L. PEERAN, JUDICIAL MEMBER

FINAL ORDER NO. 603 OF 2007

APPEAL NO. ST/30 OF 2006

May 23, 2007

Section 74 of the Finance Act, 1994 - Rectification of mistake - Assistant Commissioner by his order-in-original confirmed demand of service tax along with penalty on assessee - Revenue instead of filing review petition or an appeal before Commissioner (Appeals) had filed an application for rectification of said order before same authority for enhancement of penalty - Assistant Commissioner allowed that application and enhanced penalty amount - On appeal, Commissioner (Appeals) relying on decision of Supreme Court in case of CCE v. ASCU Ltd. 2003 (151) ELT 481 where it was held that mistake apparent on face of record must be an obvious and patent mistake and that mistake should be clerical, arithmetical and/or grammatical, set aside said rectification order - Whether Commissioner (Appeals) was justified in setting aside said rectification order as that was beyond scope of power for rectification under provision of section 74 - Held, yes [Para 2]

FACTS

By order-in-original the Assistant Commissioner confirmed demand of service tax along with penalty on the assessee. Aggrieved with said order the revenue filed an application for rectification of order in original and sought the Assistant Commissioner to review his order and to impose higher penalty on the assessee. The Assistant Commissioner reviewed his order and imposed higher penalty on the assessee. However, on appeal the Commissioner (Appeals) took note of provision of section 74 and held that the authority could only rectify the mistake apparent on the face of record and could not review his order and set aside the rectification order of the Assistant Commissioner.

On appeal:-

HELD

The Supreme court in the case of CCE vs. A.S.C.U. Ltd. 2003 (151) E.L.T. 481 had held that mistake apparent on the face of the record must be an obvious and patent mistake and that mistake should be clerical, arithmetical and/or grammatical. In the instant case, the Assistant Commissioner had chosen to impose lesser penalty. But the revenue instead of filing the review petition or an appeal before the Commissioner (Appeals), had filed an application for rectification of this order before the same authority praying for enhancing the penalty which was done by rectification order which had been challenged before the Commissioner (Appeals). The Commissioner (Appeals), in the light of the Apex Court judgments, had set aside the order-in-original passed by the Assistant Commissioner enhancing the penalty subsequently on rectification application as not correct in law. He had not been empowered to enhance the penalty. The Commissioner (Appeals) was justified in setting aside the rectification order as it was beyond the scope of power for rectification under the provisions of section 74. The Commissioner (Appeals) order was proper and correct. There was no merit in the instant appeal and the same was to be rejected. [Para 2]