2005 (5) TMI 572 - AT - Central Excise

Summary

Issues:
- Doctrine of merger in appellate proceedings
- Quantum of penalty imposed by the original authority
- Maintainability of the Revenue's appeal

Doctrine of Merger in Appellate Proceedings:
The case involved an appeal by the Revenue against an order passed by the Commissioner (Appeals) dismissing the department's appeal due to the doctrine of merger. The respondent argued that the Revenue's appeal was also affected by the doctrine of merger, citing a previous Final Order passed by the Bench. The original authority had initially imposed a penalty of Rs. 3.11 lakhs on the respondents under Rule 96ZP(3) of the Central Excise Rules, 1944, which was later reduced to Rs. 5,000 by the Commissioner (Appeals). The Revenue's appeal was dismissed on the grounds of merger as the respondent's appeal had already been disposed of, resulting in a reduction of penalty. The Tribunal held that there was no tenable ground against the impugned order, especially since the department's subsequent appeal had already been partly allowed, leading to an enhancement of the penalty to Rs. 12,000. Consequently, the Revenue's appeal for further enhancement of the penalty was deemed not maintainable due to the merger of orders.

Quantum of Penalty Imposed by the Original Authority:
The department contested the quantum of penalty imposed by the original authority, arguing that it should have been Rs. 3.74 lakhs instead of the reduced amount of Rs. 5,000 determined by the Commissioner (Appeals). However, by the time the department's appeal was considered, the respondent's appeal had already been decided, resulting in the dismissal of the Revenue's appeal based on the doctrine of merger. The Tribunal noted that the subsequent partial allowance of the department's appeal had already led to an enhancement of the penalty to Rs. 12,000. Therefore, the issue of the quantum of penalty imposed by the original authority became moot in light of the subsequent developments and the doctrine of merger.

Maintainability of the Revenue's Appeal:
The crux of the matter revolved around the maintainability of the Revenue's appeal in light of the doctrine of merger and subsequent developments in the appellate proceedings. The Tribunal emphasized that the Revenue's appeal for further enhancement of the penalty was not maintainable due to the merger of the impugned order with the subsequent Final Order that partially allowed the department's appeal, resulting in an increased penalty. The dismissal of the Revenue's appeal was grounded in the principle that once an order has merged with a subsequent order, further appeals seeking enhancement or modification become untenable. The Tribunal's decision hinged on the application of the doctrine of merger and the procedural implications thereof in the context of the appellate proceedings.