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TMI Blog2013 (1) TMI 528X X X X Extracts X X X X X X X X Extracts X X X X ..... ies imposed by the adjudicating authority would be an order in which the impugned orders-in-original have merged and doctrine of merger will apply. Following the decision in case of Godrej & Boyce Mfg. Co. Ltd. (2008 (12) TMI 45 - BOMBAY HIGH COURT) that the doctrine of merger will not apply in the case as the Revenue is in appeal against non-imposition of equivalent amount of penalty, as provided in the Rules. Also following the decision in case of ULTRA TECH CEMENT CO. LTD. (2008 (9) TMI 246 - CESTAT AHMEDABAD) that doctrine of merger will not be applicable inasmuch as the subject matter of appeal by party was entirely different with the subject matter of appeal by the Revenue. Set- aside the order and the matters are to be remitted back to the Commissioner (Appeals) for reconsideration. Remand back - E/477-500/2006 - A/1170-1208/2012-WZB/AHD - Dated:- 16-8-2012 - Ms. Archana Wadhwa, Shri B.S.V. Murthy, Shri M.V. Ravindran, JJ. REPRESENTED BY : Shri S.K. Mall, SDR, for the Appellant. Shri Anand Nainawati, Advocate, for the Respondent. [Order per : Archana Wadhwa, Member (J)]. - All the appeals filed by Revenue against the order of Commissioner (Appeals) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e whole of the amount of duty payable for any month by 10th day of such month, he shall be liable to pay the outstanding amount of duty along with interest thereon at the rate of eighteen per cent per annum calculated for the period from 11th day of such month till the date of actual payment of the outstanding amount; The Commissioner (Appeals) rejected the appeals filed by the Revenue on the ground that the impugned order of the Assistant Commissioner, under challenge in the Revenue s appeals was no longer alive, since the very same order-in-original have merged into the order-in-appeal passed by Commissioner (Appeals) on 17-1-2005 and 17-2-2005. As such, by relying upon the decision in the case of S.S. Rathore v. State of M.P. - 1989 (43) E.L.T. 790 (S.C.) and by applying the doctrine of merger, he rejected the appeals of Revenue. The only issue which survives in the present appeals is, as to whether the doctrine of merger would apply or not and as to whether appellate authority was justified in rejecting the appeals filed by Revenue on the ground that the impugned order-in-original is no longer available for contest having been merged in order-in-appeal. 5. It is seen that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Ultra Tech Cement Co. Limited - 2009 (236) E.L.T. 480 (Tri.-Ahmd.) = 2010 (20) S.T.R. 244 (Tri.-Ahmd.), wherein the Larger Bench decision of the Tribunal was discussed and it was held that doctrine of merger will not be applicable inasmuch as the subject matter of appeal by party was entirely different with the subject matter of appeal by the Revenue. By drawing our attention to the observations made in Para 31 of the order authored by the then Hon ble President, Learned SDR Shri S.K. Mall submits that only if the assessee s appeal would have been allowed by Commissioner (Appeals) by setting aside the quantum of penalty imposed on them, the doctrine of merger can be said to have been applicable and the Revenue s appeals for enhancement of penalty could have been rejected. 7. For appreciating the contention of the Learned SDR, we reproduce the relevant paragraphs from the above decision :- 27. While following the decision in the State of Tamil Nadu v. Tvl. Jeevanlal Limited case, the Larger Bench observed that jurisdiction exercised by the Appellate Tribunal under the Central Excise Act is similar to the jurisdiction of the Sales Tax Appellate Tribunal under the Tamil Nadu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preme Court decision in the case of State of Tamil Nadu v. Tvl. Jeevanlal Limited was followed by the Larger Bench, who overlooked the fact that under Section 36 of the Tamil Nadu General Sales Tax Appellate Tribunal has the powers to enhance the penalty whereas similar jurisdiction is not vested in the appellate Tribunal under the Central Excise Act. We note that the Larger Bench decision of the Tribunal was affirmed by the Hon ble Supreme Court and the appeal filed by the Revenue was rejected as time barred. It will not be out of place to observe here that disputed issues are referred to the Larger Bench so as to settle the same and where different opinions are available on the said disputed issue, the final verdict is given by the Larger Bench. Judicial discipline requires us to follow the Larger Bench decision and it is not open to the Benches of lower constitution to hold that Larger Bench judgment was not given correctly, irrespective of individual opinions on the same. As such, the law declared by the Larger Bench in the case of LM.L Limited is required to be followed. Apart from that, we also note that the decision of third Member [The Hon ble President] in the case of Ultr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peals asking for enhancement-penalty automatically fails. Much importance laid down on expression with success by the learned DR is of no help to him, especially when Commissioner (Appeals) had the powers to enhance the penalty which he has not done. The issue in the assessee s appeal as well as Revenue s appeal was identical i.e. relating to penalty only, we are of the view that doctrine of merger stands rightly applied by Commissioner (Appeals). 9. The answer to the learned DR s objection also lies in the Apex Court decision in the case of Mumbai Mills Co. Limited and Kunhayammed v. State of Kerala - 2001 (129) E.L.T. 11 (S.C.), laying down that doctrine of merger is a common law doctrine founded on the principle of propriety in the hierarchy of justice delivery system. In the case of Commissioner of Income tax, Bombay v. M/s. Amritlal Bhogilal and Co. - AIR 1958 SC 868, it was held as under :- There can be no doubt that, if an appeal is provided against an order passed by a Tribunal, the decision of the appellate authority is the operative decision in law. If the appellate authority modifies or reverses the decision of the Tribunal, it is obvious that it is the appellate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... served in Paras 41 to 44 as under :- Once a special leave petition has been granted, the doors for the exercise of appellate jurisdiction of this Court have been let open. The order impugned before the Supreme Court becomes an order appealed against. Any order passed thereafter would be an appellate order and would attract the applicability of doctrine of merger. It would also not make any difference whether the order is one of reversal or of modification or of dismissal affirming the order appealed against. It would also not make any difference if the order is speaking or non-speaking one. Whenever this Court has felt inclined to apply its mind to the merits of the order put in issue before it though it may be inclined to affirm the same, it is customary with this Court to grant leave to appeal and thereafter dismiss the appeal itself (and not merely the petition for special leave) though at times the orders granting leave to appeal and dismissing the appeal are contained in the same order and at times the orders are quite brief. Nevertheless, the order shows the exercise of appellate jurisdiction and therein the merits of the order impugned having been subjected to judicial sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal. The doctrine of merger can therefore be applied to the former and not to the latter. The above law declared by the Hon ble Supreme Court will be applicable to the facts of the case inasmuch as the same very issue of penalty stands confirmed by Commissioner (Appeals), in which case, as held by Hon ble Supreme Court, doctrine of merger would apply. 10. We further note that the Tribunal s decision in the case of CCE, Jalandhar v. Allwin Forgings - 2008 (228) E.L.T. 612 (Tri.-Del.), relied upon by learned DR, wherein under similar facts and circumstances the doctrine of merger was held to be not applicable. On going through the above order, we find that it stands observed in Para 11 of the decision that while rejecting the assessee s appeal against penalty of Rs. 5,000/- Commissioner (Appeals) could not have enhanced the penalty in the said appeal of the assessee. However, we have, already observed that in terms of proviso to Section 35A(2), Commissioner (Appeals) has the powers to enhance the penalty, which fact seems to have escaped the attention of the Tribunal in the above case of Allwin Forgings. We also note that the said Single Member judgment, though takes note of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not exercise this power. According to Section 35A, the Commissioner shall, after making such further enquiry as may be necessary, pass such order, as he thinks just and proper confirming, modifying or annulling any decision or order appealed against. Thereafter the proviso has been incorporated wherein it has been stated that an order enhancing penalty or fine in lieu of confiscation or confiscating the goods of greater value or reducing the amount of refund, shall not be passed unless the appellant has been given a reasonable opportunity of showing cause against the proposed order. This proviso not only empowers the Commissioner to enhance the penalty or fine etc, even where the appeal has been filed by the appellant, but also requires him to issue a notice to the appellant before taking such a decision. The proviso does not empower the Commissioner to reduce the penalty or reduce the demand of duty when the assessee has not filed appeal but the department has filed an appeal. It is also to be noted that before he proposes to apply the proviso which may be because of further enquiries initiated by him, he is required to issue notice to the appellant. This virtually means that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e there is no provision to file cross objections. Therefore, consideration as to whether penalty is to be enhanced arises only if the Department files an appeal and this would be a new issue altogether. 15. Further, the issue of doctrine of merger came up before Hon ble High Court of Bombay in the case of CCE, Mumbai v. Godrej Boyce Mfg. Co. Ltd. as reported in 2009 (233) E.L.T. 446 (Bom.) = 2010 (18) S.T.R. 682 (Bom.) and the decision supports the case of Revenue and he brought our attention to the Paragraphs 31 to 35 of the said judgment are reproduced below : 31. Section 35E is an independent power conferred on the Board or Commissioner, as the case may be, to direct filing of an Appeal in respect of the entire order or part of the order where the appeal has not been preferred. Considering the nature of jurisdiction exercised by the Tribunal under Section 35B if the appeal filed before the Tribunal is dismissed, is the Board precluded from directing filing an appeal or if an appeal is filed the same be dismissed on the ground of merger. For the principle of merger to apply the order must result in the challenge to the entire order becoming final. As observed by Supreme Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ional jurisdiction. The scope of the statutory provisions conferring the appellate or revisional jurisdiction must be first considered. As rightly argued by the Appellants the doctrine of merger is not a doctrine of rigid and universal application. Merely because there are two orders, one by the inferior authority and the other by a superior authority passed in an appeal or revision, it cannot be said that there is a merger of the two orders irrespective of the subject matter of the appellate or revisional order and this scope of the appeal or revision contemplated by the particular statute. A Court or Tribunal while applying the doctrine must consider the nature of the order and the scope of the statutory provisions conferring the appellate or revisional jurisdiction. 35. The following principles will have to be considered while applying the doctrine of merger in the context of the provisions of The Central Excise Act, 1944 . 1. In the proceedings from which the matter arises, the Court or Tribunal hearing the appeal or revision, should have jurisdiction to decide all issues arising from the said order of the inferior Court or Tribunal from whose order the proceedings arise. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n appeals filed by the respondents as held by learned Member (Judicial) or the doctrine of merger is not applicable and the Commissioner should have decided the appeals filed by the Revenue on merit as held by Member (Technical). 21. Whether in the facts and circumstances of the case, the impugned order is required to be set aside and matters remanded to Commissioner (Appeals) as held by Member (Technical) or the appeals filed by Revenue are to be rejected as held by learned Member (Judicial). Sd/- Sd/- Member (Judicial) Member (Technical) [Per : M.V. Ravindran, Member (J)]. - The following difference of opinion has been placed before me as per the directions of the Hon ble President. 22. The difference of opinion which has to be resolved by me is as under :- 1. In the facts and circumstances of the case, whether it can be said that the orders of adjudicating authority have merged with the orders of Commissioner (Appeals) on appeals filed by the respondents as held by learned Member (Judicial) or the doctrine of merger is not applicable and the Commissioner should have decided the appeals filed by the Revenue on merits as hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t decision of the Hon ble Member Judicial should be held as a correct view and should be held that there is doctrine of merger in all these matters. 26. I have considered the submissions made by both, sides and perused the record. 27. On perusal of record, I find that the issue involved in these cases is regarding doctrine of merger in the order passed by the first appellate authority on appeals filed by the assessees. 28. Undisputed facts are that the assessees respondents in these cases have been penalized under the provision of Rule 96ZP of Central Excise Rules, 1944, read with Section 3A of Central Excise Act, 1944 by an amount of Rs. 6,000/- by the adjudicating authority. The assessees preferred appeals before the first appellate authority who has sustained the said penalties imposed. Subsequently, as per the provisions of Central Excise Act, 1944, the Revenue had preferred appeals against non-imposition of equivalent amount of penalties on all the assessees. The first appellate authority dismissed the appeals of the Revenue only on the question of doctrine of merger. 29. I find that the appeals filed by the Revenue before the first appellate authority was for the enha ..... 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