2026 (1) TMI 650 - AT - Central Excise

Rectification of mistake and excise duty limitation: knowledge date fixes show-cause window; revenue applications for rectification rejected

Rectification applications were examined in the context of central excise demand and limitation. The decision applies the knowledge doctrine: departmental ... Rectification of mistake - error apparent on the face of the record or not - non consideration of the submission of the department and judgement relied upon - Non-consideration of the decision of the Higher Court - HELD THAT:- The Department was made aware that PPJ (petitioner) had not paid the central excise duty on the manufacturing and sales made by them and had also not filed the central excise returns. In fact, both Shri R.R. Singla and Shri Pawan Gupta accepted that they would deposit the central excise duty as early as possible, also a sum of Rs 2 crores was also deposited as per the statement of Shri Pawan Gupta on 20.11.2016. Under the circumstances, it cannot be said that the Department did not have any knowledge as early as on 19/20.11.2016. For that reason, there cannot be any quarrel with the proposition laid down by the Apex Court that the demand can be raised from the date of the knowledge. Considering the argument that as per the decision of the Tribunal in Satya Power and Ispat Limited [2024 (11) TMI 200 - CESTAT NEW DELHI], “once accepted, need not be proved”, from the statements made by Shri R.R. Singla and Shri Pawan Gupta on 19.11.2016 and 20.11.2016 respectively, there is no reason for the Revenue not to issue the show cause notice within the normal period of two years. Distinction is also made out by reason of the fact that the said decision related to clandestine removal. For all justification, it is a settled principle of law that so far as the aspect of limitation is concerned, it is a mixed question of law and facts and is mainly based upon the facts of individual cases. From the facts of the present case, it is evident that in so far as the knowledge was concerned, the Department was aware that the appellant was clearing the articles of jewellery manufactured by them without payment of excise duty as early as in November, 2016 and it was incumbent upon them to have issued the show cause notice within the normal period of two years, more particularly when all the documents and the transaction details were made available by the appellant and duty was paid by 28.11.2017. The Apex Court in Master Construction Co. (P) Ltd. vs. State of Orissa [1965 (12) TMI 108 - SUPREME COURT] was pleased to observe that an error which is apparent from record should be one which is not an error which depends for its discovery on elaborate arguments on questions of fact or law. The scope of rectification of mistake application is very limited and certainly cannot call upon an appeal to be heard afresh - the rectification of an order does not result into obliteration of order originally passed and its substitution by a new order - the Rectification of Mistake applications filed by the Revenue are rejected. Issues: Whether the Revenue's applications for rectification of mistake (ROM) in the Tribunal's final order dated 28 March 2025 disclose a mistake apparent on the face of the record permitting correction of the order.Analysis: The Tribunal examined whether the Revenue established an obvious, patent error on the face of the record as opposed to points requiring elaborate argument or re-appreciation of evidence. The legal framework applied included the limited scope of Section 152 CPC on correction of clerical or accidental slips, the requirement that a mistake be manifest and incapable of debate, and the jurisprudence restricting ROM powers to matters not involving re-opening merits or mixed questions of law and fact. The Tribunal considered the factual matrix concerning when the Department acquired knowledge (statements recorded under Section 14 and deposits made by the appellant), the submissions and case law relied upon by the Revenue about invocation of the extended period of limitation (Section 11A(4) CEA), and precedent on invocation of ROM. The bench held that the matters advanced by the Revenue involved disputed factual and legal questions (including whether limitation could be reckoned from a later date or whether extended limitation applied), which cannot be corrected by ROM and would require appeal or review. The Tribunal further noted authorities that ROM cannot be used to substitute a fresh adjudication or to entertain long-drawn arguments on merits.Conclusion: The Revenue's rectification applications do not disclose a mistake apparent on the face of the record and are therefore rejected; this outcome is in favour of the assessee.