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TMI Blog2008 (12) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... sus M/s. Philips India Ltd. Mr. R.B. Raghuvanshi, Additional Solicitor General with Mr. P.S. Jetly, Ms. Heena P. Shah and Mr. H.P. Chaturvedi, for the Appellant. Mr. Prakash Shah with Mr. Jitu Motwani i/b. P.D.S. Legal, for the Respondent [Judgment per F.I. Rebello, J.]. - Before we frame the question of law for consideration, a few relevant facts in each of the cases need to be set out. 2. Central Excise Appeal No.175 of 2006 is by the Revenue against the order dated 26th October, 2005 passed by the CESTAT dismissing the Appeal preferred by the Revenue. In this case seven show cause notices were issued by the Department claiming differential duty, penalty and interest under Section 11AB between 2nd November,1090 to 11th April, 2000. By order of 9th March, 2001 the Deputy Commissioner confirmed the duty and penalty as claimed by the Department. No finding was given on interest as claimed in the show cause notice. The Company preferred an Appeal before the Commissioner (Appeals) against the demand for duty and penalty. That Appeal came to be allowed on 16th July, 2001. The issue of interest was not in issue before the Commissioner (Appeals). An order then came to be passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merger will apply and in the light of that allowed the appeal filed by the company and set aside the order passed in Review dated 20th March, 2003. The learned Tribunal referred to the decision of the larger Bench in L.M.L. Ltd. (supra). Five show cause notices were served on the company. By order dated 29th September, 2000 the Additional Commissioner held that the show cause notice dated 30th April, 1996 was time barred. The additional Commissioner, however, confirmed the demands in respect of the other show cause notices demanding duty, but did not impose any penalty. The company preferred an appeal. The Commissioner (Appeals) allowed the appeal and remanded the matter to the original authority for verifying the facts and to decide and to conduct an enquiry whether the disputed product "capping cement" is actually marketable and as such excludable by order dated 20th February, 2001. On 24th August, 2001 the Commissioner of Central Excise under powers conferred by Section 35E(2) directed that an appeal be filed against the order in original dated 29th September, 2000 whereby the show cause notice dated 30th April, 1996 had been held to be time barred. Accordingly an appeal w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal, a party against whom the appeal has been preferred (respondent) may notwithstanding that he may not have appealed against such order or any part thereof can file, within forty-five days of the receipt of the notice, a memorandum of cross-objections verified in the prescribed manner against any part of the order appealed against and such memorandum shall be disposed of by the Appellate Tribunal as if it were an appeal. The relevant provision of Section 35B(4) reads as under:- "35B(4). On receipt of notice that an appeal has been preferred under this section, the party against whom the appeal has been preferred may, notwithstanding that he may not have appealed against such order or any part thereof, file, within forty-five days of the receipt of the notice, a memorandum of cross-objections verified in the prescribed manner against any part of the order appealed against and such memorandum shall be disposed of by the Appellate Tribunal as if it were an appeal presented within the time specified in sub-section (3)." 9. Section 35E confers suo motu power on the Board to examine an order passed by Commissioner of Central Excise as an adjudicating authority and to apply to the App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or any Central Excise Officer subordinate to him to apply to the Commissioner (Appeals) for the determination of such points arising out of the decision or order as may be specified by the Commissioner of Central Excise, in his order." 10. From these provisions some distinctions can be noted in respect of the procedure for appeals before the Appellate Forums. In so far as the Commissioner (Appeals) is concerned, there is no provision under Section 35A for filing cross objections from decisions or orders passed by an Officer of Central Excise lower in rank than a Commissioner of Central Excise Officer in an Appeal provided under Section 35. On the other hand if an appeal is preferred under Section 35B(1) on receiving notice of the appeal, a party against whom an appeal has been preferred may notwithstanding that he may not have appealed against such order or any part thereof file within time prescribed cross objections. These cross objections shall be disposed off by the Appellate Tribunal as if it were an appeal. 11. Apart from this jurisdiction under Section 35EA there is a suo motto power of revision conferred on the Board or the Commissioner as the case may be. Similarly Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d binding, nevertheless its finality is put in jeopardy. Once the superior court has disposed of the lis before it either way - whether the decree or order under appeal is set aside or modified or simply confirmed, it is the decree or order of the superior court, tribunal or authority which is the final, binding and operative decree or order wherein merges the decree or order passed by the court, tribunal or the authority below. However, the doctrine is not of universal or unlimited application. The nature of jurisdiction exercised by the superior forum and the content or subject-matter of challenge laid or which could have been laid shall have to be kept in view." See Kunhayammed Vs. State of Kerala, 2001 (129) E.L.T. 11 (S.C.). (emphasis supplied). 14. Revenue has placed reliance on the judgment in Mauria Udyog Ltd. vs. Commissioner of Central Excise, Delhi II (2003) 9 SCC 139. The ratio of that judgment can now be considered. Pursuant to a show cause notice, the demand was confirmed and penalty was imposed. Interest was also held to be liable. In Appeal before the Commissioner (Appeals) the order of adjudication was maintained but the amount of penalty was reduced. Two Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d been dismissed it was on the ground of non-deposit, but an application for restoration was pending. In other words if the two appeals filed are in respect of different parts of the same order merely because an appeal preferred by one of the parties is dismissed on the ground of non-deposit, the doctrine of merger would not apply and the other appeal will have to be decided on its own merits. The Supreme Court in Smt.S.Kalawati vs. Durga Prasad & Anr., AIR 1975 SC 1272 observed that:- "The principle behind the majority of the decisions is thus to the effect that where an appeal is dismissed on the preliminary ground that it was not competent or for non-prosecution or for any other reason the appeal is not entertained, the decision cannot be said to be a decision on appeal nor of affirmance. It is only where the appeal is heard and the judgment delivered thereafter the judgment can be said to be a judgment of affirmance." This was reiterated in Chandi Prasad and Ors. v. Jagdish Prasad and Ors., (2004) 8 SCC 724,as under:- "When an appeal is dismissed on the ground that delay in filing the same is not condoned, the doctrine of merger shall not apply." The applicability of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the Tribunal. The S.L.P. preferred was dismissed on the ground of delay. From the above facts, what follows is that the Tribunal there held that after the Tribunal had disposed of an Appeal though that Appeal was restricted to the relief of penalty under Rule 173Q, the Appeal preferred pursuant to the directions of the Board under Section 35E would not be maintainable, even though it was in respect of a challenge to a different part of the order as in the meantime the appeal preferred by the Company (Assessee) had been disposed of considering the doctrine of merger. 16. The Tribunal in deciding the appeal in L.M.L. (supra) relied upon judgments of the Supreme Court. In Kunhayammed Vs. State of Kerala, 2001 (supra). The issue before the Supreme Court in Kunhayammed (supra) related to application of doctrine of merger in relation to orders passed in petition for special leave under Article 136 of the Constitution. The Tribunal relied on the following three conclusions:- "44. To sum up our conclusions are: (i) Where an appeal or revision is provided against an order passed by a court, Tribunal or any other authority before superior forum and such superior forum modifies, rever ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xercise jurisdiction in respect of the very same order. The Supreme Court held that where the challenge in appeal was distinct from what was being considered by the revisional authority, the exercise of revisional power by the revisional authority even if an appeal had been filed could not be faulted. The learned Tribunal also referred to the judgment of the Supreme Court in State of Madras vs. Madurai Mills Co. Ltd., AIR 1967 S.C.681 where the Supreme Court held that there will be no merger when the challenge is only against part of the order. 17. From a consideration of the judgment of the Special Bench what emerges is that if an appeal had been preferred before the Appellate Tribunal against part of the order and that appeal had been dismissed, it was not open to the Commissioner or the Board to exercise their revisional powers to direct filing of an appeal if Revenue could have filed cross objections against that part of the order from which no appeal had been preferred. The matter was taken to the Supreme Court. The Special Leave Petitions was dismissed on the ground of delay. The subsequent observations considering the principles of ratio decendi, cannot be said to be layin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eme Court observed that :- "The consequence of the amendment made with retrospective effect is that the powers under section 263 of the Commissioner shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in an appeal. Accordingly, in respect of the aforesaid three items, the powers of the Commissioner under Section 263 shall extend and shall be deemed always to have extended to them because the same had not been considered and decided in the appeal filed by the assessee. Therefore, the order of assessment passed by the Income-tax Officer on march 31, 1978, had not merged with that of the Commissioner (Appeals), dated December 15, 1979, in respect of the three items in dispute so as to exclude the jurisdiction of the Commissioner of Income-tax under Section 263." 20. We may now refer to some of the judgments relied upon on behalf of the Respondents. A Full Bench of the Punjab and Haryana High Court in Punjab State Civil Supplies Corporation Ltd. vs. Commissioner of Income Tax, 2000 ITR (P. & H) (FB) 536 was considering the issue of merger. The Full Bench firstly relied upon the Supreme Court judgment in State of Madras ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nues to hold the field. 23. In J.K. Synthetics Ltd. vs. Additional Commissioner of Income-tax U.P. & Anr., 105 ITR (Allahabad) 344 the learned Bench there observed that on a finding given by the I.T.O. if such finding could have been canvassed before the Appellate Assistant Commissioner in the appeal filed by the assesses on other points, if the department chose to do so. In view of the scope and nature of the appellate power, the entire subject-matter of the assessment order was within the jurisdiction of the Appellate Assistant Commissioner. That being so, the entire assessment order merged in the appellate order, irrespective of the points urged by the parties or decided by the appellate authorities. 24. Sheodan Sigh vs. Daryao Kuwait, AIR 1966 S.C. 1332 is really not an authority on the doctrine of merger, but on the principles of res judicata. 25. We may next refer to the Judgment of the Full Bench of the Karnataka High Court in Commissioner of Income Tax vs. Hindustan Aeronautics Ltd., (1986) 157 IR 315 (Karnataka). The assessee there filed an appeal against part of the order of A.A.C. by which the assesses was aggrieved, however, withdrew the appeal and filed Revision bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... own in Shankar Ramchandra Abhtyankar vs. Krishnaji Dattatraya Bapat (1969) 2 SCC 74 were approved. The ratio of the judgment in Kunhayammed (supra) is in applying the doctrine of merger, what the Court must consider is the nature of the jurisdiction exercised by the superior forum and the contract or subject matter of challenge laid or which could have been laid. In that case the earlier revision petition was not rejected on merits but only on the ground of delay and as such could not be said to be an order of affirmance and as such the doctrine of merger would not apply. 30. Section 35B(4) enables the respondents to file cross objections against that part of the order from which no appeal has been preferred. Can the Tribunal in the absence of cross objections have jurisdiction to confirm, modify or reverse that part of the order from which no appeal has been preferred? The language of the Section makes it clear that on filing of cross objections against any part of the order, the cross objections be treated as an Appeal against that part of the order only. The Respondent 'may' file cross objection and not "shall". It is, therefore, the choice of the Appellants. Under Section 35C, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scheme of the Section does not expressly or impliedly bar filing of an Appeal. The power under Section 35B is to the person aggrieved to prefer an appeal. The power under Section 35E is conferred on the Board on its own motion to call for and examine the record and proceedings. If forms an opinion that the appeal has to be preferred then it can direct filing of such an appeal. Clearly considering the provisions of the Central Excise Act, 1944 in terms of what we have discussed, the doctrine of merger would not apply in the absence of the entire order being the subject matter of the Appeal and the Appeal being heard and finally decided on merits. 33. It may be further clarified that in so far as an appeal filed under Section 35, the procedure is governed by Section 35A. There is no provision for filing cross objections against the order in original. The doctrine of merger in such case would not apply. The final order considering the 'principle or doctrine of merger' must result in a challenge to the entire order becoming final. 34. The applicability of the doctrine thus depends on the nature of the Appellate or revisional jurisdiction. The scope of the statutory provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prelude the Commissioner from directing that an Appeal be filed on points not in issue in the Appeal filed by company and in respect of that part of the order by which revenue was aggrieved. Accordingly, the question of law raised in the Appeal will have to be answered in the negative and in favour of the Appellants. The impugned order is set aside and the matter is remanded to the Appellate Tribunal for redetermination of the questions on merits according to law. (ii) In so far as Central Excise Appeal No.262 of 2006 is concerned, the appeal had been preferred by the Company only in respect of that part of the order by which they were aggrieved. The entire order there was not the subject matter of Appeal. In these circumstances the doctrine of merger would not apply. In the light of that the question of law will have to be answered in the negative and in favour of the Revenue. Order is accordingly set aside and the matter is remanded to the Tribunal for deciding the appeal on merits. (iii) In so far as Central Excise Appeal No.269 of 2006 is concerned, the Company preferred an Appeal before the Commissioner (Appeals) which was remanded to the original Authority. An Appeal there ..... X X X X Extracts X X X X X X X X Extracts X X X X
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