2018 (6) TMI 986 - AT - Central Excise

Tribunal rectifies order: demand sustainable, penalty upheld, correction made on Rule 173Q error.

The Tribunal rectified the mistake in its order by clarifying that only the demand of duty is sustainable, as interest was not chargeable under Section ... Rectification of apparent error on record - chargeability of interest under Section 11AA of the Central Excise Act - demand of duty - penalty under Rule 173Q of the Central Excise Rules, 1944 - bona fide belief defense to penaltyChargeability of interest under Section 11AA of the Central Excise Act - demand of duty - Whether the Tribunal's statement that duty and interest are sustainable was an apparent error and whether interest is chargeable in the present case - HELD THAT: - The Tribunal found that no interest was proposed in the show-cause notice nor demanded in the adjudication order. Applying the temporal chargeability rule under Section 11AA, interest was chargeable only after three months from the date of determination of duty; the appellant had paid the determined duty within that three-month period. Consequently, interest was not payable and the last line of para 5 of the earlier order stating that duty and interest were sustainable is an apparent error requiring correction. The Tribunal therefore rectified the passage to record that the demand of duty (and not interest) is sustainable. [Paras 4]The order is rectified to record that the demand of duty is sustainable; interest is not chargeable.Penalty under Rule 173Q of the Central Excise Rules, 1944 - bona fide belief defense to penalty - Whether the penalty under Rule 173Q should be set aside on the ground of bona fide belief in entitlement to exemption - HELD THAT: - The Tribunal examined its earlier findings and the factual matrix and held that it had given detailed reasons rejecting the appellant's plea of bona fide belief. Distinguishing an earlier period where a demand was set aside on time-bar grounds, the Tribunal noted that the present demand related to the normal period and that despite confirmation of demand for the past period the appellant continued to claim the exemption. On that basis the Tribunal concluded that bona fide belief could not be entertained and that the earlier detailed finding cannot be treated as an apparent error on record. Hence the penalty sustained under Rule 173Q remains unaltered. [Paras 4]The plea of bona fide belief is rejected and the penalty under Rule 173Q is sustained.Rectification of apparent error on record - penalty under Rule 173Q of the Central Excise Rules, 1944 - Whether the reference to 'Section 173Q' in the order is an apparent clerical error requiring correction to 'Rule 173Q of the Central Excise Rules, 1944' - HELD THAT: - The Tribunal found that the mention of 'Section 173Q' in para 6 of the order was an apparent error on the face of the record. This was purely a clerical/terminological mistake and required correction to accurately reflect the applicable provision of the Central Excise Rules. The Tribunal ordered that 'Section 173Q' be read as 'Rule 173Q of the Central Excise Rules, 1944'. [Paras 4]Clerical error corrected: 'Section 173Q' shall read as 'Rule 173Q of the Central Excise Rules, 1944'.Final Conclusion: The ROM application is disposed of by rectifying the order to record that demand of duty (but not interest) is sustainable; the penalty under Rule 173Q is sustained on merits; and the reference to 'Section 173Q' is corrected to 'Rule 173Q of the Central Excise Rules, 1944'. Issues:Rectification of mistake in the Tribunal's order regarding demand duty and interest, penalty imposed under Rule 173Q, mention of Section 173Q instead of Rule 173Q in the order.Rectification of Mistake - Demand Duty and Interest:The applicant sought rectification of a mistake in the Tribunal's order stating that 'demand duty and interest thereon is sustainable.' The applicant argued that no interest was proposed in the show-cause notice or the order. They contended that interest under Section 11AA of the Central Excise Act is chargeable only after three months from the determination of duty, which was paid within the stipulated time period in this case. The Tribunal agreed that interest was not chargeable and rectified the order to state that only the demand of duty is sustainable.Penalty Imposed under Rule 173Q:The applicant challenged the penalty imposed under Rule 173Q, claiming a bona fide belief in claiming an exemption notification. They cited a previous Tribunal order acknowledging their bona fide belief. However, the Tribunal found that in the present case, the applicant continued to avail the exemption despite the confirmation of demand for the past period, leading to a detailed finding rebutting the claim of bona fide belief. The Tribunal held that no rectification of mistake was warranted regarding the penalty sustained under Rule 173Q.Mention of Section 173Q in the Order:The Tribunal noted an apparent error in the order where Section 173Q was mentioned instead of Rule 173Q. The Tribunal corrected this error, stating that 'Section 173Q' should be read as 'Rule 173Q of the Central Excise Rules, 1944.'In conclusion, the Tribunal disposed of the rectification of mistake application based on the above discussions, with the pronouncement made in court on 25/5/2018.