2012 (5) TMI 35 - SC - Central Excise

Doctrine of merger - Disallowed the MODVAT credit availed by it and penalty under Rule 173Q - delay in filing the appeal - First Appellate authority having no powers to condone the delay beyond the prescribed period rejected the appeal - application for rectification of the judgment and orders requesting the Tribunal to first condone the delay and next to decide the appeal on merits Held that - If for any reason an appeal is dismissed on the ground of limitation and not on merits that order would not merge with the orders passed by the first appellate authority - High Court was justified in rejecting the request made by the assessee for directing the revenue to state the case and also the question of law for its consideration and decision against assessee.

Summary

Issues:
1. Disallowance of MODVAT credit and penalty under Central Excise Rules.
2. Delay in filing appeal and condonation of delay.
3. Doctrine of merger and consideration of appeal on merits.

Analysis:
1. The Civil Appeal challenged the High Court's judgment dismissing the reference application filed by the appellant against disallowance of MODVAT credit of Rs. 1,47,000 and penalty under Central Excise Rules. The appellant, a manufacturer of dutiable excisable goods, purchased capital goods and availed MODVAT credit. The adjudicating authority issued a show cause notice for not filing the declaration within the prescribed time, leading to disallowance of credit and penalty imposition. The appellant contended the actual delivery date was different from the declared date, but the authority confirmed the disallowance and penalty. The first appellate authority rejected the appeal due to a delay, which was challenged through subsequent appeals up to the High Court.

2. The delay in filing the appeal was a crucial issue. The appellant realized the appeal was filed before the wrong authority and later filed it before the Commissioner of Appeals with a delay. The first appellate authority rejected the appeal citing lack of power to condone the delay beyond the prescribed period. The Tribunal and subsequent rectification application upheld the rejection based on the delay. The appellant argued for condonation of delay, but the authorities maintained the rejection, leading to the High Court's judgment against the appellant.

3. The doctrine of merger and consideration of appeal on merits were debated. The appellant contended that the Tribunal should have considered the appeal on both limitation and merits, citing the doctrine of merger. However, the Tribunal and subsequent authorities rejected this argument, emphasizing that an appeal dismissed on the ground of limitation does not merge with the original orders. Citing relevant legal precedents, the Court upheld the decisions rejecting the appeal on merits and affirmed the High Court's judgment. The Court concluded that the Tribunal was justified in not considering the case on merits due to the dismissal based on limitation.