2017 (7) TMI 849 - AT - Service Tax

Penalty - Doctrine of merger - CENVAT credit - Department entertained the view that the CTSD, Jaipur is not permitted to transfer the cenvat credit to the SSA, Udaipur on the ground that it is not registered with the Service Tax/Central Excise Department - Held that - the penalty imposed in the adjudication order dated 27.09.2007 was set aside by the ld. Commissioner (Appeals) vide order dated 22.08.2008. Since, the adjudication order has merged with the Order-in-Appeal passed by the Commissioner (Appeals), the said adjudication order is not in existence for its review by the Administrative Commissioner in terms of Section 84 ibid. Thus, review of the adjudication order (non-existence) and passing of the impugned order are against the principle of doctrine of merger and the same cannot be sustained against the appellant - reliance placed in the case of UNION OF INDIA Versus INANI CARRIERS 2008 (11) TMI 79 - RAJASTHAN HIGH COURT , where it was held that since order in appeal has been passed against impugned original order, penalty enhanced in revision order is not justified - appeal allowed - decided in favor of appellant.

Summary

Issues:
Review of adjudication order after merger with Order-in-Appeal. Doctrine of merger and its application in the present case.

Analysis:
The appeal was against a Revision order passed by the Commissioner of Central Excise, Jaipur under Section 84 of the Finance Act, 1994. The appellant provided taxable services, including telephone services, and procured capital goods through Central Telecom Store Depot (CTSD) at Jaipur. The Department disputed the transfer of cenvat credit from CTSD to SSA office at Udaipur due to registration issues. Show cause proceedings were initiated, resulting in penalties confirmed under Rule 15 of the Cenvat Credit Rules, 2004. The penalties were later set aside by the Commissioner (Appeals). Subsequently, a review under Section 84 led to an order disallowing cenvat credit against the appellant.

The appellant argued that the adjudication order had merged with the Order-in-Appeal and was not in existence for review by the Department. Citing a judgment of the Hon’ble High Court of Rajasthan, the appellant contended that the impugned order was not sustainable due to the principle of doctrine of merger. The Tribunal found merit in this argument, stating that the review of a non-existent adjudication order and the subsequent impugned order were against the doctrine of merger. Referring to the judgment in Inani Carriers case, the Tribunal highlighted that the doctrine of merger applies even when challenging a part of the Order-in-Appeal.

Based on the above analysis, the Tribunal concluded that the impugned order was not valid and set it aside. The appeal filed by the appellant was allowed, emphasizing the application of the doctrine of merger in the present case.