2015 (2) TMI 88 - HC - Central Excise

Whether the Tribunal is justified in allowing the assessee s appeal against the impugned O.I.A. on account of the doctrine of merger while the subject matters of the assessee s appeal and the department s appeal before the Commissioner appeal against the common order in original are entirely different - Held that - It is seen that the order of the Adjudicating Authority resulted in two appeals, one at the instance of the assessee and the other at the instance of the Revenue. In the earlier appeal filed by the assessee, namely Appeal No.63 of 2006 dated 12.7.2006, the Commissioner (Appeals) clearly held that the transportation charges should not be included in the assessable value for payment of duty. He further held that the work site could be a place of delivery and not place of removal and hence the cost of transportation from factory to the work site should not be included in the value for payment of duty. Hence, the entire show cause notice came to be dropped. In the light of such order, the plea of the Revenue is that there is no doctrine of merger in the present case cannot be countenanced. What the Revenue seeks to review in the further appeal against the adjudication order is that the demand was made in the show cause notice on the basis of sale price. When the Commissioner (Appeals) vide order dated 12.7.2006 in Appeal No.63 of 2006 has already held that the demand in the show cause notice is not maintainable, there is no scope for the Commissioner (Appeals) to review that order in the appeal filed by the Department. No reason to fall back upon this decision, as the facts in the present case, as stated above, are distinguishable. In the present case, the issue raised by the assessee and the Revenue is one and the same. When once the first Appellate Authority has set aside the order of the Adjudicating Authority setting aside the demand, thereby upholding the assessable value, it should be treated as the order passed by the Adjudicating Authority is merged with the Order-in-Appeal. Accordingly, we find no infirmity in the order of the Tribunal. - Decided against Revenue.

Summary

Issues:
1. Interpretation of the doctrine of merger in the context of appeals with different subject matters.
2. Assessment of assessable value for payment of duty based on transportation charges and sale price.
3. Application of Rule 8 of the Valuation Rules for determining duty payment.
4. Justification of filing further appeal on the same issue before another Commissioner (Appeals).

Analysis:

Issue 1: Interpretation of the doctrine of merger
The case involved an appeal by the Revenue against an order of the Commissioner (Appeals) regarding the inclusion of transportation charges in the assessable value for duty payment. The central question was whether the doctrine of merger applied when the subject matters of the assessee's appeal and the Revenue's appeal before the Commissioner (Appeals) were different. The Court examined the previous decisions and held that the doctrine of merger would apply in this case. The Commissioner (Appeals) had already decided on the inclusion of transportation charges in the assessable value, and the Revenue's attempt to challenge this decision in a separate appeal was deemed unjustified.

Issue 2: Assessment of assessable value based on transportation charges and sale price
The dispute revolved around the method of assessing duty payment, either based on the cost of production plus profit margin or the sale price of the goods. The Commissioner (Appeals) had ruled in favor of the assessee, stating that transportation charges should not be included in the assessable value. This decision was upheld, emphasizing that the work site was a "place of delivery" and not "place of removal," leading to the rejection of the demand made by the Adjudicating Authority. The Court found no grounds for the Revenue to challenge this decision in a subsequent appeal.

Issue 3: Application of Rule 8 of the Valuation Rules
The application of Rule 8 of the Valuation Rules for determining duty payment was a crucial aspect of the case. The Commissioner (Appeals) had already decided on the correct method of valuation, which was based on the cost of production plus profit margin. As this decision had been made in a prior appeal by the assessee and not challenged further, the Court held that there was no need for re-evaluation of the same issue in the subsequent appeal by the Revenue.

Issue 4: Justification of filing further appeal
The Court addressed the Revenue's argument that the doctrine of merger did not apply due to the different subject matters of the appeals. However, based on the specific issues raised and decided in the previous appeal, the Court concluded that the Revenue's attempt to file a further appeal on the same issue was unwarranted. The decision of the Tribunal to allow the appeal filed by the assessee and apply the doctrine of merger was upheld, dismissing the Revenue's appeal.

Overall, the Court's judgment favored the assessee, upholding the decisions made by the Commissioner (Appeals) and the Tribunal, and dismissing the Revenue's appeal due to the application of the doctrine of merger and the lack of justification for challenging the previous decisions.