2011 (1) TMI 725 - HC - Central Excise

Demand - legality of levy of Central Excise Duty - Galleries attached with the Hot Air Stenter under the rules known as Hot Air Independent Textile Processors Annual Capacity Determination Rules, 1998 - Rule 3(1) of the Rules of 1998 - notice is only a demand notice for recovery of the amount mentioned as well as notice to show cause why said amount cannot be recovered during pendency of writ petition - Since in the facts of this case, demand-cum-show cause notice dated 3-11-2000 was not the initiation of any new proceedings nor the proceedings wherein there could have been any challenge to the order dated 5-10-1999 culmination to which could have resulted into merger of order dated 5-10-1999 in the proceedings initiated by demand-cum-show cause notice dated 3-11-2000 It is settled law that in execution proceedings, the executing court/authority cannot go behind the order and has no jurisdiction to reopen the issues already decided in final order and pass any order - It is settled law that a decision given between the parties and which attained finality, remains final even if in another case, different view is taken by the court on question of law and, therefore, the respondent no. 3-the Dy. Commissioner, Central Excise Division, Chittorgarh had no jurisdiction to reopen the issue decided in final order while executing the final order - Appeal is dismissed

Issues Involved:
1. Legality of levy of Central Excise Duty on "Galleries" attached with the "Hot Air Stenter".
2. Whether the order dated 5-10-1999 merged into the order dated 30-7-2003.
3. Whether the appellant was required to challenge the order dated 5-10-1999.
4. Applicability of the doctrine of merger in the context of execution proceedings under Section 11A of the Central Excise Act, 1944.
5. Validity of the appellate and Tribunal orders reversing the adjudicating authority's decision.

Detailed Analysis:

1. Legality of Levy of Central Excise Duty on "Galleries":
The controversy centered on whether "Galleries" attached to the "Hot Air Stenter" should be included in determining the annual capacity of production for excise duty purposes under the Hot Air Independent Textile Processors Annual Capacity Determination Rules, 1998. The initial order dated 5-10-1999 by the Commissioner, Central Excise, Jaipur-II included galleries in the calculation, leading to a duty liability of Rs. 22,20,000/- per month. This was contested by the appellant, who cited a larger bench decision in the case of Sangam Processors Ltd., which held that galleries should not be included. The adjudicating authority accepted this plea and dropped the proceedings on 30-7-2003.

2. Merger of Order Dated 5-10-1999 into Order Dated 30-7-2003:
The appellant argued that the order dated 5-10-1999 merged into the order dated 30-7-2003, thus making the latter the original order. However, the court held that the order dated 5-10-1999 was the final order creating liability and was not provisional or interim. The demand-cum-show cause notice dated 3-11-2000 was merely an execution proceeding and not a re-opening of the case, thus the order dated 5-10-1999 did not merge into the order dated 30-7-2003.

3. Requirement to Challenge the Order Dated 5-10-1999:
The appellant did not challenge the order dated 5-10-1999 before the CEGAT despite being given liberty to do so by the High Court. The court emphasized that the order dated 5-10-1999 attained finality and the appellant's failure to challenge it timely was critical. The appellant's reliance on subsequent decisions, including the Supreme Court's decision in CCE, Jaipur-II v. SPBL Ltd., was deemed irrelevant as the order had already become final.

4. Applicability of the Doctrine of Merger:
The court referred to the Supreme Court's decision in Kunhayammed & Ors v. State of Kerala & Anr., clarifying that the doctrine of merger depends on the nature of jurisdiction exercised by the superior forum. In this case, the proceedings under Section 11A were execution proceedings and not capable of modifying or reversing the original order dated 5-10-1999. Therefore, the doctrine of merger was not applicable.

5. Validity of Appellate and Tribunal Orders:
The appellate authority and the Tribunal reversed the adjudicating authority's decision to drop the proceedings, holding that the order dated 5-10-1999 had attained finality and could not be nullified in execution proceedings. The court upheld these decisions, stating that execution proceedings cannot go behind the final order and reopen decided issues. The appellant's reliance on the Supreme Court's decision in SPBL was also dismissed as it was delivered after the withdrawal of the appellant's writ petition.

Conclusion:
The court dismissed the appeal, affirming that the order dated 5-10-1999 was the original and final order, and the proceedings initiated by the demand-cum-show cause notice dated 3-11-2000 were merely execution proceedings. The appellate authority and Tribunal's decisions to set aside the order dated 30-7-2003 were upheld, and the appeal was found to be devoid of merit.

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