2022 (11) TMI 708 - HC - Customs

Applicability of Doctrine of Merger - Rejection of petitioner s application to recall its order - correctness of classification and consequent rate of duty adopted by the Assessing Officer - HELD THAT - The order dated 4th October 2016 is a common order and if the application of three other applicants/appellants is allowed on the ground that certain documents placed on record have not been considered and those are not party specific documents, certainly that benefit, should also be extended to petitioner in this case. Another point is CESTAT, after hearing those appeals and considering the Government of India notification, has allowed those appeals in favour of other three parties. CESTAT took up the appeal filed by Fortune Marketing Pvt. Ltd. for final hearing (post the recall of the order dated 4th October 2016) and passed final order dated 4th April 2017 allowing the appeals and deciding the issue in favour of Fortune Marketing Pvt. Ltd. - the reason for allowing the rectification application to those appellants is because CESTAT accepted that it had not considered the clarification issued by the Department of Electronics and Information Technology, Government of India though it was produced before CESTAT. The doctrine of merger would not apply in this case. This is because the Apex Court while permitting leave to withdraw the appeal has not passed any order on merits. The appeal had not even been admitted. The order of the Apex Court is also not an order rejecting the appeal and, therefore, the said order cannot be said to be an order of affirmance of the order of CESTAT. That being the position, in our view, the doctrine of merger cannot be applied to the facts and circumstances of this case. The impugned order dated 26th August 2019 is set aside - petition disposed off.

Summary

Issues:
Challenge to order of Customs, Excise and Service Tax Appellate Tribunal
Rectification application before CESTAT dismissed
Doctrine of merger in statutory appeal

Analysis:
1. The petitioner challenged an order by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) rejecting their application to recall a previous order. The original order was related to the classification and rate of duty by the Assessing Officer. The petitioner's appeal was initially filed in the Apex Court, but three other parties filed rectification applications before CESTAT, which were allowed, leading to a fresh hearing for them but not for the petitioner.

2. The CESTAT dismissed the petitioner's rectification application, stating that by filing an appeal in the Apex Court, the petitioner exhausted their remedy, and withdrawing the appeal without express leave was impermissible. However, the High Court noted that if the benefit was extended to other parties, it should also be extended to the petitioner.

3. The High Court considered the doctrine of merger in statutory appeals, with conflicting arguments presented by counsels. While one party argued that withdrawal of the appeal meant the order merged with CESTAT's order, the other party cited relevant judgments to support their stance. The High Court analyzed these arguments and found that the doctrine of merger did not apply in this case due to the specific circumstances.

4. Ultimately, in the interest of justice, the High Court allowed the petition and directed CESTAT to reconsider the petitioner's rectification application. The Court highlighted various reasons for this decision, including the common nature of the original order, the acceptance of rectification applications for other parties, and the absence of a specific order on merits by the Apex Court. The High Court emphasized that gross injustice would result if the petition was not allowed, and instructed CESTAT to hear and dispose of the appeal promptly.