2016 (10) TMI 336 - AT - Central Excise

Dis-allowance of Modvat credit under Section 57Q of Central Excise Rule, 1944 - allowance of part of credit and dis-allowance of part of credit by adjudicating authority - matter on appeal before Commissioner (Appeals), who gave a different view - appeal filed by Revenue on Review order - Held that - the appeal is hit by the doctrine of merger. Vide the first Order-in-Appeal passed by the Commissioner (Appeals) dated 22/12/2016, the Order-in-Original merged with the same. In Revenue matters, the power of the first appellate authority is co-extensive with that of the adjudicating authority. Thus, the filing of the appeal subsequently by the Revenue before the Commissioner (Appeals) disputing the amount of ₹ 16,08,586/- was also hit by doctrine of merger - appeal dismissed as hit by doctrine of merger - cross-objections dismissed.

Summary

Issues:
1. Disallowance of Modvat credit on capital goods.
2. Doctrine of merger in appellate proceedings.

Analysis:
1. The case involved the appellant, a manufacturer of Tele Communication Equipment, availing Modvat/Cenvat facility under Central Excise Rule, 1944. A Show Cause Notice was issued for irregular availment of credit on goods during the Financial Year 1996-97. The Adjudicating Authority allowed a credit of &8377; 16,08,586/- and confirmed a demand of &8377; 11,27,555/-. The appellant appealed before the Commissioner (Appeals) who allowed the appeal, granting credit of &8377; 11,27,555/-. A Review Order was passed by the Revenue against the credit allowed. The Commissioner (Appeals) upheld the credit of &8377; 16,08,586/- and rejected the Revenue's appeal. The present appeal was filed by the Revenue against the rejection of the appeal for the amount of &8377; 16,08,586/-.

2. The Tribunal, after hearing the parties, found that the present appeal was hit by the doctrine of merger. The first Order-in-Appeal merged with the Order-in-Original. In Revenue matters, the power of the first appellate authority is co-extensive with that of the adjudicating authority. Therefore, the subsequent appeal filed by the Revenue disputing the amount of &8377; 16,08,586/- was also affected by the doctrine of merger. Consequently, the Tribunal dismissed the appeal, holding it as hit by the doctrine of merger. The Cross Objection was also disposed of accordingly.

This judgment clarifies the application of the doctrine of merger in appellate proceedings, emphasizing that the power of the first appellate authority in Revenue matters is co-extensive with that of the adjudicating authority. The Tribunal's decision highlights the importance of understanding the legal principles governing appeals and the consequences of the doctrine of merger on subsequent appeals.