2019 (2) TMI 1174 - AT - Central Excise

Rectification granted for mistake in Final Order; Tribunal rules in favor of Appellants on Rule 6(2)

The Tribunal allowed the Appellants' application for rectification of a mistake in the Final Order related to non-payment of an amount equivalent to 6% of ... Rectification of Mistake - Section 35(2) of Central Excise Act read with Rule 41 of the CESTAT Procedure Rules, 1982 - CENVAT Credit - maintenance of separate records - sub-rule(2) of Rule 6 of the Cenvat Credit Rules, 2004 - Held that:- The Appellants have only reverted or changed to compliance as per Rule 6(2) of Cenvat Credit Rules, 2004 by maintaining separate accounts. Explanation I under sub-Rule 3 restricts opting out of one of the options availed, out of the options, and availing the other option, within sub-Rule 3 of Rule 6 - Further, it has been clarified by the Hon'ble Supreme Court in S. Sundaram Pillai’s case [1985 (1) TMI 306 - SUPREME COURT OF INDIA], that an Explanation cannot override the main provision, and is for a limited purpose to clarify, or fill in any gap, or provide additional support to the dominant object of Rule/Section. There have been a mistake of law in the final order dated 18.04.2018, leading to miscarriage of justice - ROM application allowed. Issues:Rectification of mistake in the Final Order regarding non-payment of an amount equivalent to 6% of the value of exempted goods cleared during a specific period.Analysis:The Appellants filed a miscellaneous application for rectification of a mistake in the Final Order related to the non-payment of an amount equivalent to 6% of the value of exempted goods cleared during a specific period. The Appellants argued that they had maintained separate records from a certain date and had duly informed the Department about this change. They contended that the Tribunal's decision was based on an incorrect interpretation of Rule 6(3) of the Cenvat Credit Rules, 2004, which forbids changes during a financial year. The Appellants asserted that they should be allowed to maintain separate records as per Rule 6(2) and not be restricted by the Explanation I under Rule 6(3) which limits the options once exercised by the assessee.The Appellants relied on the judgment in the case of Mercedes Benz India(P) Limited Vs CCE, Pune, to support their argument that the assessee has the liberty to choose the option under Rule 6(3) and that the Revenue cannot insist on a particular option. They also cited the decision of the Hon'ble Supreme Court in S. Sundaram Pillai Vs. Pattabiraman to emphasize that an Explanation cannot interfere with or change the enactment itself. The Appellants contended that the Explanation did not specify that a change could only be effective at the beginning of the financial year.On the other hand, the Department's representative supported the final order and argued that the Appellants were essentially seeking a review of the decision. After hearing both sides, the Tribunal found that the Appellants had reverted to compliance as per Rule 6(2) by maintaining separate accounts, which was permissible. The Tribunal clarified that the Explanation I under Rule 6(3) does not restrict opting out of one option and availing another within the same rule. Referring to the Supreme Court's decision in S. Sundaram Pillai's case, the Tribunal reiterated that an Explanation cannot override the main provision and is meant to clarify or fill gaps in the law.Consequently, the Tribunal held that there was a mistake of law in the final order, leading to a miscarriage of justice. The Tribunal allowed the Appellants' application, modified the final order, and held that the Appellants had rightly exercised the option under Rule 6(2) from a specific date. As a result, the appeal was allowed with consequential benefits.