Cum-duty price principle applies in rectification, but penalty cannot be reduced through review-like correction.

Excess realisations were required to be treated as cum-duty price when duty liability was re-quantified in rectification proceedings, because the earlier order had omitted to apply that settled principle. The Tribunal therefore allowed rectification on this limited issue and directed re-quantification on a cum-duty basis. However, reduction of penalty could not be pursued through rectification, as that would amount to a review of the earlier order, and no apparent mistake was shown in the penalty confirmation. The application succeeded only to the extent of duty re-quantification and failed on the penalty challenge.

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Issues: (i) Whether the excess realisations were required to be treated as cum-duty price while re-quantifying the duty liability in rectification proceedings; (ii) whether the penalty could be reduced by invoking rectification of mistake.

Issue (i): Whether the excess realisations were required to be treated as cum-duty price while re-quantifying the duty liability in rectification proceedings.

Analysis: The Tribunal noted that the earlier order had not extended the benefit of treating the total realisation as cum-duty price while quantifying the duty liability. Relying on the settled principle recognised in the Larger Bench decision referred to in the order, the Tribunal held that excess realisations had to be treated as cum-duty price for the purpose of re-quantification.

Conclusion: The rectification was allowed on this issue and the Commissioner was directed to treat the total realisation as cum-duty and re-quantify the duty liability accordingly.

Issue (ii): Whether the penalty could be reduced by invoking rectification of mistake.

Analysis: The Tribunal held that reduction of penalty could not be sought under the guise of rectification of mistake, since such a prayer would amount to a review of the earlier order. It further found no apparent mistake in the confirmation of penalty warranting interference.

Conclusion: The request for reduction of penalty was rejected.

Final Conclusion: The miscellaneous application succeeded only to the extent of duty re-quantification on a cum-duty basis and failed on the penalty challenge.

Ratio Decidendi: A rectification proceeding can correct an omission to apply the cum-duty price principle, but it cannot be used as a vehicle for reviewing or reducing a confirmed penalty.

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