2010 (10) TMI 874 - HC - Central Excise

Principle of doctrine of merger Held that - Principle underlying doctrine of merger can not be made applicable. The Revenue was aggrieved by part of the Order, which was detrimental to their interest, Revenue was entitled to file an independent proceeding in the shape of Appeal before the appropriate Authorities and Tribunal. Accordingly, the Revenue preferred Appeal to the Commissioner (Appeals). We direct the CESTAT to consider the Appeal filed by respondent-assessee on merits along with Appeal filed by the Revenue and dispose of the same by a common Judgment and order, after hearing concerned parties, Appeal is allowed accordingly.

Summary

Issues:
- Application of the principle of doctrine of merger to deny the right of appeal to revenue.

Analysis:
The case involved the respondent-assessee, engaged in manufacturing excisable goods, where the Preventive Officer seized finished goods under suspicion of clandestine removal. Subsequently, a show cause notice was issued, and the Adjudicating Authority made various decisions, including dropping certain demands, ordering confiscation of seized goods, and imposing penalties under the Central Excise Act. The respondent-assessee appealed to the Commissioner (Appeals), who set aside the original order. However, the Revenue also filed an appeal against the original order, which was allowed by the Commissioner (Appeals) on different claims. The respondent-assessee then appealed to CESTAT, which allowed the appeal based on the doctrine of merger. The Revenue, aggrieved by this decision, approached the High Court.

The High Court, after considering the submissions and relevant orders, found that the principle of doctrine of merger was incorrectly applied by CESTAT. The court held that the Revenue was entitled to file an independent appeal, and the Appeal filed by the Revenue before the Commissioner (Appeals) was maintainable. Therefore, the CESTAT's decision was deemed erroneous, and the matter was remanded back to CESTAT for consideration on merits. The High Court quashed the CESTAT's order and directed it to consider both appeals, filed by the respondent-assessee and the Revenue, together and dispose of them by a common judgment after hearing all concerned parties. The High Court kept all issues on merits open and allowed the appeal, with no order as to costs.