TMI Blog2008 (12) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... spondent Central Excise Appeal No. 262 of 2006 Commissioner of Central Excise Versus M/s. Castrol 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. Anupam Dighe with Ms. Raji Radhakrishnan Nair Mr. Pratik Pawar i/b. India Law Alliance, for respondent. Central Excise Appeal No. 269 of 2006 Commissioner of Central Excise, Belapur Versus 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 26 th 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 2 nd November,1090 to 11 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me was raised before finalisation of the provisional assessment and as such there was no justification for imposing penalty upon the appellants. By order dated 2 nd November, 2004, an order was passed by C.B.E.C. directing the Commissioner to apply to CESTAT for correct determination of the points as set out in the order. 4. Central Excise Appeal No.269 of 2006 is preferred by the Revenue against the order of the CESTAT dated 28 th October, 2005, where CESTAT held that the doctrine of 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 20 th 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 29 th September, 2000 the Additional Commissioner held that the show cause notice dated 30 th 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Tribunal as defined under Section 2(aa) to mean, the Customs, excise and Service Tax Appellate Tribunal constituted under Section 127 of the Customs Act. Under Section 35A, the Commissioner (Appeals) at the hearing of the Appeal allow the Appellant to go into any ground of appeal even if not raised if the Commissioner is satisfied that the omission was not wilful or unreasonable. Under Section 35B(4) on the respondent receiving a notice that an appeal has been preferred under that Section before the Appellate Tribunal, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or any other Commissioner to apply to the Appellate Tribunal for the determination of such points arising out of the decision or order, as may be specified in its order." "35E(2).The Commissioner of Central Excise may, of his own motion, call for and examine the record of any proceeding in which an adjudicating authority subordinate to him has passed any decision or order under this Act for the purpose of satisfying himself as to the legality or propriety of any such decision or order and may, by order, direct such authority 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 h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or a doctrine statutorily recognised. It is a common law doctrine founded on the principles of propriety in the hierarchy of justice delivery system. The logic underlying the doctrine of merger is that there cannot be more than one decree or operative orders governing the same subject-matter at a given point of time. When a decree or order passed by inferior court, tribunal or authority was subjected to a remedy available under the law before a superior forum, then though the decree or order under challenge continues to be effective and 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... htly did not support the order on the ground of the applicability of the principle of merger." From this judgment, the ratiodecendi, would be that even if an Appeal preferred by one of the parties against an order of Commissioner (Appeals) before the CESTAT is dismissed, the doctrine of merger would not apply in respect of the appeal preferred by the other party as what has to be considered is the scope of the two appeals, the reliefs claimed and the jurisdiction to grant relief by the Appellate Forum. It may be noted that though the company's Appeal had 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) on 24 th April, 2001. The issue for consideration was whether after the Tribunal had disposed of the Appeal, could the appeal filed on the direction of the Board under sub-section (1) of Section 35E before the Tribunal be maintainable. The larger Bench after considering the controversy held that the Appeal filed by the Revenue is not maintainable as the order impugned had already merged with the final order passed by the Tribunal dated 29 th June, 2000 much before any order was passed by the Board of Revenue under Section 35E(1) and any application filed pursuant thereto before 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Jeevanlal Ltd. etc., 1997 (91) E.L.T. 268 = A.I.R.1996 S.C. 2699. The Supreme Court there affirmed the view taken by the High Court that where the appeal had been preferred only in respect of part of the order by which the Appellant was aggrieved, Revenue could invoke the revisional jurisdiction to consider the legality of the other part of the order which was not in issue before the Tribunal. The Supreme Court considering the relevant provisions held that no exception could be taken to the view expressed by the High Court. The issue discussed there was in the context to whether two authorities could exercise 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation to Section 263(1) which was substituted by the Finance Act, 1988, with effect from June 1, 1988, which was again amended by the Finance Act, 1989, with retrospective effect from June 1, 1988. The effect of the amendment was that, where any order referred to in the sub-section and passed by the Assessing Officer had been the subject matter of any appeal (filed on or before or after the 1 st day of June, 1988), the powers of the Commissioner under sub-section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal. Considering this the learned Supreme 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of the trial Court but the order of the appeal Court." 22. In Commissioner of Income-tax vs. P. Muncherji and Company, (1987) 167 ITR 671 the learned Division Bench referred to the following observations in C.I.T., vs. Amritlal Bhogilal Co., (1958) 34 ITR 130:- "As a result of the confirmation or affirmance of the decision of the tribunal by the appellate authority, the original decision merges in the appellate decision and it is the appellate decision alone which subsists and is operative and capable of enforcement;....." The learned Division Bench then held that the judgment in C.I.T. v. Tajaji Farasram Kharawala (supra) continues 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 Assist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Computers Indian Manufacture Ltd. 187 ITR 580 the learned Division Bench held that the Tribunal was right in law in holding that the passing of an order by the Commissioner of Income Tax (Appeals) resulted in the merger of the order of Commissioner (Appeals) thereby ousting the jurisdiction of the Commissioner of Income Tax from exercising his powers under Section 263 of the Income Tax Act, 1961 in respect of the order appealed against. 29. We have also considered the judgment in State of Kerala Anr. Vs. Kondotty Paramban Moosa Ors. 2008 AIR SCW 5677. The case law on the doctrine of merger was considered including the ratio of the judgment in Kunhayammed when the principles laid down 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 cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed on the principle of merger. The law as settled and explained by the Supreme Court in the various judgments referred to would not support such proposition. The Appellate Tribunal in the absence of that part of the order not being challenged, cannot examine the legality or otherwise considering the statutory power conferred on the Tribunal under Section 35C. 32. Even if Revenue is respondent in the proceedings before the Tribunal, that would not exclude the jurisdiction under Section 35E merely because Revenue could have filed cross objections. Section 35C(4) enables a Respondent to prefer cross objection. The Section does not prohibit a Respondent if it has not filed cross objection from preferring an appeal. The 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 h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , provided the other appeal is pending. 4. Even if the Appeal preferred under Section 35B has been disposed off, an appeal can still be preferred pursuant to direction issued under Section 35E, if in the appeal disposed off, the entire order was not the subject matter of the Appeal. 36. In the light of the above the question raised in each of the Appeals can be disposed off as under:- (i) In Central Excise Appeal No.175 of 2006 the Revenue had no occasion to raise the issue against the order impugned before the Commissioner (Appeals) in respect of that part of the order which they were aggrieved. There is also no provision for filing cross objections. Disposal of the Appeal, therefore, by the Commissioner (Appeals) would not 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 accord ..... X X X X Extracts X X X X X X X X Extracts X X X X
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