Rectification of Mistake Application Granted, Time-Barred Duty Demand Dismissed

The Tribunal allowed the Rectification of Mistake (ROM) application, finding that the demand of duty was time-barred due to lack of intent to evade duty. The High Court upheld the Tribunal's decision, emphasizing the absence of misdeclaration or willful misstatement to avoid duty, leading to the dismissal of the Tax Appeal. The Tribunal's decision to set aside the penalty under Section 11AC was not disputed, and the demand for the extended period of limitation was deemed impermissible.

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Issues:
Rectification of mistake in Final Order regarding demand of duty being barred by limitation.

Analysis:
The Applicant filed for rectification of mistake in Final Order passed by the Tribunal, arguing that the demand of duty was contested on merit and limitation grounds. The Bench had overlooked the time bar issue during the order. The Revenue contended that since the time bar issue was not raised during the hearing, there was no mistake in the final order. However, the Appellant had clearly raised the limitation issue in their appeal and application. The Tribunal found that the Appellant had pleaded no suppression of facts to evade duty and upheld the order on merit but set aside the penalty under Rule 16(2) of CENVAT Credit Rules, 2004 read with Section 11AC of Central Excise Act, 1944. The Tribunal did not address the limitation issue in its order.

In a similar case, the Tribunal had allowed a ROM application stating that the demand was time-barred due to lack of intention to evade duty. The Revenue challenged this decision before the Gujarat High Court. The High Court observed that if a contention raised but not decided by the Tribunal, it could lead to rectification. The Tribunal's decision to set aside the penalty under Section 11AC was not disputed by the Revenue. The Tribunal's findings indicated no intent to evade duty, leading to the demand being time-barred under the Proviso to Section 11A of the Act. Therefore, the demand of duty for the extended period of limitation could not be sustained, and the ROM application was allowed.

The Gujarat High Court upheld the Tribunal's decision, emphasizing that there was no misdeclaration or willful misstatement to avoid duty. The invocation of extended limitation was rightly held impermissible. The Tax Appeal was dismissed, affirming the Tribunal's decision. The Final Order of the Tribunal stated that the demand of duty for the extended period of limitation could not be sustained, and the ROM application of the Applicant was allowed.

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