Whether ROM application can be allowed when the larger bench decision is ignored by the bench?

PJ/Case Laws/2012-13/1229

Case:- ASSOCIATED CEMENT COMPANIES LIMITED VERSUS COMMR OF C.EX, BHOPAL

Citation: - 2012 (282) E.L.T. 553 (Tri-Del.)

Brief fact: -. The Appellant are manufacturers of cement chargeable to Central Excise duty. They availed Modvat credit of Central Excise duty paid on inputs and capital goods used in or in relation to manufacture of their final product. The period of dispute in this case is from 1st November 1994 to 28th February 1995. During this period, the appellant took Modvat credit on certain items of capital goods. The show cause notice dated 28-4-1995 was issued to them for recovery of allegedly wrongly taken Modvat credit of Rs. 41,82,161/- in respect of certain inadmissible items of capital goods. The original Adjudicating Authority vide order dated 28-5-2001 confirmed the demand to the tune of Rs. 41,81,811/- along with interest and imposed penalty of Rs. 50,000/-.

On appeal to Commissioner (Appeals), the Commissioner (Appeals) vide order-in-appeal dated 17-8-2004 partly allowed the appeal, but confirmed the major amount of demand. The Modvat credit demand upheld was in respect of items which were used for cutting, repairing, installation and maintenance of the plant and machinery and also in respect of certain items of capital goods, which were brought within the purview of the term 'capital goods' by adding Clauses (d) and (e) to the definition of 'capital goods' in Rule 57Q by Notification No. 11/1995-C.E. (N.T.), dated 16-3- 1995 i.e. Whytheat - C Special, Fire Crete, Air Compressor, Spare Parts for Compressor, Air Cylinder, Spare Impeller, Grate Bar, Grate Plate, Fork Lifter Truck, Lifting Chain.

The present appeal is filed against this order of the Commissioner (Appeals) before the Tribunal where it had been pleaded that all these items including those specifically brought within the purview of the capital goods by Notification No. 11/1995-C.E. (N.T.), dated 16-3-1995 were covered by the definition of 'capital goods' during the period of dispute in view of Larger Bench judgment of the Tribunal in the case of CCE, Indore v. Surya Roshni Ltd. reported in 2001 (128) E.L.T. 293 (Tri.-LB). As regards the items used for repair and maintenance of the plant and machinery it was pleaded that the capital goods Modvat credit was admissible in view of judgment of Apex Court in the case of CCE, Coimbatore v. Jawahar Mills Ltd. reported in 2001 (132) E.L.T. 3 (S.C.). The appeal was decided by this Tribunal vide Final Order No. 217/2010-EX, dated 30th April 2010 [2010 (256) E.L.T. 567 (Tribunal)] by which the appeal was dismissed and the order of the Commissioner (Appeals) was upheld. With regard to the items which were specifically brought within the purview of the term 'capital goods' by Notification No. 11/1995-C.E. (N.T.), dated 16-3-1995 by adding Clauses (d) & (e) to the definition of capital goods, the Tribunal in this order held that since the amendment to Rule 57Q by Notification No. 11/1995-C.E. (N.T.), dated 16-3-1995 was not retrospective, the Modvat credit in respect of these items would not be admissible. The present ROM has been filed in respect of this order on the ground that the Tribunal while arriving at the above finding, did not consider the Larger Bench judgment in the case of CCE, Indore v. Surya Roshni Ltd. (supra), as all these items were otherwise covered by the definition of capital goods as it existed during the period prior to 16-3- 1995 by Clauses (a), (b) & (c) of the definition of capital goods.

Appellant Contention :-The Appellant, pleaded that the items, in question, i.e. VVhytheat C Special, Fire Crete, Air Compressor, Spare Parts for Compressor, Air Cylinder, Spare Impeller, Grate Bar, Grate Plate, Fork Lifter Truck and Lifting Chain are the items of ma-chine/machinery or equipment used for producing or processing of any goods or for bringing about any change in any substance for manufacture of final product or the components, spare parts or accessories of such machineries, plants, equipments or apparatus and, hence, these items were covered by Clauses (a) & (b) of the definition of capital goods, as it stood during the period prior to 16-3- 1995, that just because the Chapter Headings covering these items were specifically mentioned in Clauses (d) & (e), added to the definition of capital goods by Notification No. 11/1995-C.E. (N.T.), dated 16-3-1995, it cannot be inferred that these items were not covered by the definition of capital goods during the period prior to 16-3-1995. In this regard, he relies upon the Larger Bench judgment in the case of CCE, Indore v. Surya Roshni Ltd. (supra), that this plea had been made at the time of hearing as is clear from the memorandum of appeal, but the same was not considered at all, and that there is, thus, an error apparent from record, which needs to be rectified in terms of the provisions of Section 35C(2) of the Central Excise Act, 1944.

Respondents contention:-The learned Senior Departmental Representative, opposed the rectification application pleading that there is no mistake apparent from records in the Final Order dated 30-4-2010 passed by this Tribunal.

Reasoning of judgement :- Tribunal find that such a plea had, indeed, been made, but the Modvat credit in respect of the above-mentioned items was disallowed on the ground that Clauses (d) & (e) to Rule 57Q were inserted for the first time by Notification No. 11/1995-C.E. (N.T.), dated 16-3-1995 and being so, the same cannot be applied to this case. There is, thus, a mistake apparent from is not considering the appellants plea regarding the ratio of Larger Bench Judgement in the case.

Decision: -Application allowed

Comments:-This is very important decision wherein a particular decision was put forward during hearing as well as in appeal memorandum before the tribunal but it was not considered and judgement. The rectification of mistake was moved before the tribunal and the bench accepted that this is a mistake apparent on record and larger bench decision was not considered. They modified the decision. Hence, this decision underlines that when a decision is not considered in appeal though the same was put forward before the bench then it is mistake apparent on record.

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PJ/Case Laws/2012-13/1229

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