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2013 (9) TMI 135 - HC - Central ExciseAppeal Barred or Not – Doctrine of Merger - Whether once the Commissioner rejects assessee’s appeal against penalty, the revenue’s appeal for enhancement would be barred since the order of adjudicating authority would have merged in the order of the Commissioner rejecting appeal of the assessee – Held that:- The questions raised in the present appeals were answered in favour of the revenue and against the asssessee and it was held that on dismissal of the appeal preferred by the assessee raising the issue with respect to the liability of the assessee for penal action - the appeal preferred by the revenue for enhancement of the penalty against the order passed by the adjudicating authority would not be barred on the ground of merger and consequently would be maintainable, meaning thereby the revenue cannot be said to be debarred from challenging the order passed by the adjudicating authority with respect to the quantum of penalty which was neither the subject matter of appeal before the Appellate Commissioner nor there was any lis between the parties in the said appeal preferred by the assessee nor the Appellate Commissioner had any occasion to consider the issue with respect to quantum of appeal. The doctrine of merger would come into play in a case where in an earlier appeal, the Appellate Authority had considered the issue on merits and/or there was a lis between the parties with respect to a particular issue - Where an OIO may be partly in favour and partly against the party in which event the part that goes in favour of the party can be separately assailed by them in appeal filed before the Appellate Court or authority, but dismissal on merits or otherwise of any such appeal against a part only of the order cannot foreclose the right of the party who was aggrieved by the other part of the order. As the issue with respect to quantum of appeal was not at large before the Commissioner (Appeals) and the appeal preferred by the assessee came to be dismissed with respect to another issue raised, by dismissing the appeal preferred by the assessee answering the issue raised in the appeal i.e. with respect to the liability of the assessee to pay the penalty, it cannot be said that with respect to the quantum of penalty also the order passed by the adjudicating authority was merged into the order of Appellate Commissioner - Question of merger would be applicable only when the issue raised subsequently was already answered directly by the higher appellate authority/revisional authority and/or there was a lis between the parties with respect to the said issue which is sought to be raised subsequently. Commissioner of Central Excise, Delhi Versus M/s Pearl Drinks Ltd. [2010 (7) TMI 10 - SUPREME COURT OF INDIA] - the Hon’ble Supreme Court has considered the doctrine of merger in detail and in extenso - In the said decision the Hon’ble Supreme Court has also considered its earlier decision in the case of Amritlal Bhogilal & Co. (Supra), which has been relied upon by the learned counsel appearing on behalf of the assessee - It was held that as the appeal preferred by the assessee was only against disallowance of the deduction under the two heads and the said appeal being dismissed on merit with respect to the aforesaid two heads only, the subsequent appeal filed by the revenue against the order of adjudicating authority in respect of remaining six heads, was maintainable - It was held that the order of adjudicating authority did not merge with the order in appeal preferred by the assessee as there was finality only with regard to the issues adjudicated in appeal. Whether the assessee was liable for penal action under erstwhile Rule 96ZP(3) of the Rules or not – Held that:- The question posed for consideration in these appeals was required to be held in favour of the revenue and against the assessee by holding that in aforesaid situation, the subsequent appeal and/or the appeal preferred by the Revenue for enhancement of the penalty cannot be said to be barred on the ground of merger - The revenue cannot be precluded from preferring the appeal for enhancement of penalty on the ground that the appeal preferred by the assessee with respect to altogether another issue i.e. with respect to the liability of the assessee for penal action being dismissed. Enhancement of Penalty - The contention on behalf of the assessee that it was open for the CIT(A) to suo moto enhance the amount of penalty while exercising the power u/s 35A of the Act and therefore, when such power was not exercised by the Appellate Commissioner and the appeal preferred by the assessee against the order passed by the adjudicating authority imposing the penalty was dismissed - the appeal preferred by the revenue on enhancement of the penalty would be barred on the ground of merger was concerned - the same cannot be accepted - Merely because such powers were vested with the Appellate Commissioner, the appeal by the revenue for enhancement of the penalty cannot be said to be barred.
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