2008 (11) TMI 249 - SC - Customs

Recall power required to revisit merits despite s.129B(2) time-bar label; labels not decisive, matter remitted

SC held that the Tribunal erred by refusing to consider merits and by treating the application as time-barred under s.129B(2) of the Customs Act without ... Power of Court's for extraordinary jurisdiction - Rectification of mistake - time-barred - effect of provisions of limitation specified in sub-section (2) of Section 129B of the Customs Act - Held that:- It is true that the period of limitation specified in terms of Sub-Section (2) of Section 129(B) of the Customs Act is required to be observed but the Tribunal failed to notice that it has inherent power of recalling its own order if sufficient cause is shown therefor. The principles of natural justice, which in a case of this nature, in our opinion, envisage that a mistake committed by the Tribunal in not noticing the facts involved in the appeal which would attract the ancillary and/or incidental power of the Tribunal necessary to discharge its functions effectively for the purpose of doing justice between the parties, were required to be complied with. While the judges' records are considered to be final, it is now a trite law that when certain questions are raised before the Court of law or Tribunal but not considered by it, and when it is brought to its notice, it is the only appropriate authority to consider the question as to whether the said contentions are correct or not. We may place on record that for all intent and purport, this Court had granted liberty to the appellants to take recourse to the remedies suggested by its counsel as the word 'accordingly' has been used before the words 'the appeal is dismissed as withdrawn'. The Tribunal did not consider the matter on merit. The Tribunal failed to take into consideration that, ipso facto, in a case of this nature provisions of Section 129B of the Customs Act as such has no effect. Label of an application is not decisive for consideration by the Tribunal as to whether a case has been made out to hear the application on merit, particularly, having regard to the grounds set out therein. Appeal allowed in favour of assessee. Issues: Whether the Tribunal erred in dismissing an application labelled as one for rectification of mistake on the ground of limitation without exercising its inherent power to recall or re-open its order and whether the matter should be heard afresh on merits.Analysis: The issue required examination of whether an application that effectively sought review/recall of the Tribunal's order filed within a reasonable time and after the appellant had pursued remedies before higher fora could be entertained despite the limitation bar in Section 129B. The reasoning applied the principle that tribunals possess ancillary inherent powers to recall or set aside their own orders where a mistake or failure to consider contentions is shown and where justice so requires. It was noted that judges' records are final but where material contentions were not considered, the appropriate authority must be permitted to consider them. Authorities recognising inherent jurisdiction to set aside ex parte or final orders within a limited timeframe and the primacy of natural justice in ensuring disputes are decided on merits were treated as applicable. The label of the application was held not to be decisive; the Tribunal was required to look at substance and to hear the applicant on merits if the application was filed within reasonable time and prima facie made out.Conclusion: The Tribunal acted incorrectly in treating the application as barred by limitation without exercising its inherent power to recall or re-open its order and without considering the merits; the matter is to be remitted to the Tribunal to be heard afresh on the application.Ratio Decidendi: A tribunal has inherent power to recall or re-open its own order and must, in the interest of justice, consider an application filed within a reasonable time that prima facie shows that material contentions were not considered, notwithstanding the limitation bar in the statute, and the substantive label of the application is subordinate to its substance.