TMI Blog2008 (9) TMI 246X X X X Extracts X X X X X X X X Extracts X X X X ..... er, 2005. The issue involved is the eligibility of duty paid on capital goods and inputs as Modvat credit involving an amount more than Rs. 5.5 crores. The Commissioner has passed the order on 28-2-2005 which was issued on 24-3-2005. 2. In the appeal, the Revenue has pointed out that there are several disputed items in respect of which no order has been passed by the adjudicating authority. In respect of the same items it has been held as admissible in one paragraph and held as inadmissible another para. Further, in the case of refractories also, the Commissioner has wrongly allowed the credit. The Revenue also prayed for reconsideration of quantum of penalty. 3. When the matter was taken up, learned Advocate for the respondents pointed out that this Tribunal had already passed an order vide No. A/944/WZB/2005/CIII/E3 dated 2-9-05. Since the order is short, it is reproduced below for ready reference: "Heard both sides. There is a duty demand of Rs. 82,92,600/- being the MODVAT credit on capital goods. The appellants have paid Rs. 3,11,0771/- out of the said amount as recorded in the impugned order itself. The period of dispute is from December 1995 to December 1996. The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b) C.C.E., Belapur v. Mahalakshmi Dyg. Ptg. (I) Pvt. Ltd. - 2006 (203) E.L.T. 412 (Tri.-Mumbai) = 2008 (9) S.T.R. 587 (T). Since the three judgments cited by the learned Advocate for the respondents other than L.M.L. Ltd. case relied upon the judgment of the Larger Bench in L.M.L. Ltd. case, it would be sufficient if the matter is considered in the light of the Larger Bench decision in L.M.L. Ltd. case. (i) In L.M.L. Ltd. case, the Commissioner had dropped the demand of Rs. 8,45,84,484/- for the period from 1-12-86 to 31-3-91 apparently holding that extended period was not applicable. The Commissioner had also imposed penalty of Rs. 25,000/- on the assessee under Rule 173Q for violation of provisions of Rule 173C of Central Excise Rules. The appeal filed by the assessee was allowed by the Tribunal holding that when there is no duty demand, there could be no penalty. Central Board of Excise Customs, in exercise of powers under sub-section (1) of Section 35E of Central Excise Act, 1944 passed art order dated 24-4-2001 directing the Commissioner to apply to the Tribunal for correct determination of the question whether order passed by the Commissioner not confirming th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen there is a conflict between two sections, efforts should be made to give them harmonious interpretation and it is not open to the Tribunal to give an interpretation rendering one of the provisions a dead letter. In support of the above contention, the Revenue had relied on the decision of the Supreme Court in Sri Venkataraman Devaru Ors. v. State of Mysore Ors. - AIR 1958 SC 255, Krishan Kumar v. State of Rajasthan Ors. - AIR 1992 SC 1789 and Sultana Begum v. Prem Chand Jain - AIR 1997 SC 1006, after referring to number of decisions on the issue, the Supreme Court laid down the principles to be adopted on the rule of construction when there is inconsistency between two sections. The principles are as follows: "(1) It is the duty of the Courts to avoid a head on clash between two Sections of the Act and to construe the provisions which appear to be in conflict with each other in such a manner as to harmonize them. (2) The provisions of one Section of a statute cannot be used to de feat the other provisions unless the Court, in spite of its efforts, finds it impossible to effect reconciliation between them. (3) It has to be borne in mind by all the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal filed by an assessee the Revenue gets a right to file a cross appeal which will be treated as a regular appeal under Section 35B. The contention raised by the respondent-assessee is that the Revenue having not chosen to file a cross appeal under sub-section (4) of Section 35B, cannot be permitted to come under Section 35E which would be prejudicial to the interest of the assessee who has already filed an appeal and obtained an order from the appellate forum. 10. Sub-section (4) of Section 35B and Section 35E give two remedies to the Revenue. What are the circumstances under which one of the remedies can be denied to a party has been considered by the Supreme Court in Bihar State Co-operative Marketing Union Ltd. v. Uma Shankar Sharan Another - (1992) 4 SCC 196. It was held that if two remedies are provided under the statute they would continue to operate, even if inconsistent, until one is elected for application. The question that came up for consideration was whether a case which comes within the scope of Section 40 of Bihar and Orissa Cooperative Societies Act, 1935 has to be excluded from the purview of Section 48 of the Act. It was found that the society had not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o penalty was imposable since no duty was demandable in one case and in the other case, the challenge of the assessee against the demand of duty for six months was allowed by the Tribunal whereas the department filed appeal against the relief given by the Commissioner in respect to demand. Therefore, in both these cases, the subject matter of appeal was same. 6. The learned DR also pointed out that in the case of Mauria Udyog Ltd. v. C.C.E., Delhi-II - 2002 (146) E.L.T. 37 (S.C.), the Apex Court observed as follows: "4. It is evident from the facts noticed above that the principle of merger has no applicability. The appeal of the Revenue was restricted to the reduction of the penalty amount by the Commissioner (Appeals). In the appeal of the appellant, the challenge was not only to the penalty but to the entire order including the order of the Commissioner confirming the demand and holding that the freight expenses of the appellant's factory to the buyers factory are includible in the assessable value. The restricted question which was the subject matter of the appeal of the Revenue, under these circumstances, cannot result in the dismissal of appellant's appeal by applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontradiction in different para graphs of the order would remain unanswered. (f) In the interest of justice, equity and good conscience and also in view of the observations of the Hon'ble Supreme Court that doctrine of merger is not to be applied universally, we reject the preliminary objections raised by the learned Advocate for the respondents that doctrine of merger would apply in this case and the Tribunal cannot adjudicate upon the matter. (Pronounced in the open Court on............ 2008) Sd/- (B.S.V. Murthy) Member (Technical) 8. [Order per : Archana Wadhwa, Member (J)]. - I have gone through the order proposed by my ld. brother, with which I beg to differ. As the facts have already been narrated in the order proposed, the same are not being repeated. 9. As per admitted facts on records, the order passed by Commissioner on 28-2-2005 and issued on 24-3-2005 was reviewed by the Committee of Chief Commissioners vide their order dt. 28-10-2005, in pursuance to which the present appeal stands filed. Admittedly by the time review order was passed, the appeal filed by the assessee against the same order was disposed by Tribunal on 2-9-2005, setting aside the impugn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble Supreme Court held that principle of merger has no applicability and inasmuch as both the appeals were on two different issues, they have to be decided separately. It was not a case where Revenue's appeal was filed after the decision on the assessee's appeal. As such, in my view, the ratio of the above decision is not applicable at all to the facts of the instant case. Similarly reference to the Tribunal's decision in the case of CCE, Belapur v. Mahalakshmi Dyg. Ptg. (I) Pvt. Ltd. [2006 (203) E.L.T. 412 (Tri. - Mum.)], in the order proposed by my ld. brother, is not applicable inasmuch as the said decision, though takes note of the Larger Bench decision of the Tribunal in the case of CCE v. LML Ltd. (Scooter Division) [2002 (143) E.L.T. 431 (Tri.-LB)], relies upon the Hon'ble Supreme Court's decision in the case of M/s. Mauria Udyog Ltd., which I have already held is not applicable to the disputed issue. 12. In view of forgoing discussions, I am of the view that the law declared by the Larger Bench in the case of M/s. LML Ltd. (Scooter Division) is required to be followed. Accordingly, appeal filed by the Revenue is required to be dismissed as non-maintain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether the order-in-original of the Commissioner merged in the order of the Tribunal dated 2-9-2005 (supra) and consequently the Revenue's appeal, filed later, is it maintainable. Learned Member (Technical) - who wrote the main order - took the view, inter alia, that the points which arise for consideration in the Revenue's appeal are entirely different vis-a-vis the subject-matter of the respondent's appeal, and if the doctrine of merger is applied in the case, the points raised by the Revenue would remain unanswered without any finding on many items in respect of which show cause notice was issued. Learned Member (Technical) observed that the doctrine of merger is not a rule of universal application. Learned Member (Judicial) - relying on a decision of the Larger Bench of the Tribunal in CCE, New Delhi v. L.M.L. Ltd. (Scooter Division), 2002 (143) E.L.T. 431 (T-LB), took the view that when the order of review was passed by the Committee of Chief Commissioners on 28-10-2005, the appeal stood disposed of by the Tribunal on 2-9-2005, setting aside the order-in-original and remanding the matter to the original authority, as such, at the time of passing of the review order, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o challenge the order on points which are distinct from the subject matter of the assessee's appeal. 19. It may be appropriate in this connection to extract the relevant part of the decision of the Committee of Chief Commissioners dated 28-10-2005 to indicate the scope of the Revenue's appeal: "Re Show Cause Notice dated 17-6-1998 (a) No specific order has been passed for products mentioned at different serial numbers of Annexure 'A' to the notice, as detailed below: ......... ........... ............ (b) Against serial numbers detailed in Annexure 'A' to the above notice, products have been ordered to be admissible, as referred in para 21 of the impugned order, as well as inadmissible, as referred in para 18 of the impugned order, for credit. Details are given below: .......... ........... ............ Re: Show Cause Notice dated 30-7-1998 (c) No specific order has been passed for the products mentioned at different serial numbers of Annexure 'B' to the above notice, as detailed below: ........... ........... ............. (d) Further, for the notice issued on 17-6-98, he has disallowed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - and the scope of Revenue's appeal specified in the minutes of the Committee of Chief Commissioner, it is evident that they pertain to altogether different issues and areas. The question as to whether the principle of merger can be applied is to be answered keeping in view the relative scope of the two appeals. 22. Where any decision or order of an inferior Court or Tribunal is challenged before the superior Court or Tribunal and superior Court or Tribunal passes a judgment, the decision or order of inferior Court or Tribunal would at first blush appear to have merged in the latter's judgment. However, the Apex Court in State of Madras v. Madurai Mills Co. Ltd., 1967 (19) STC 144, clarified: "But the doctrine of merger is not a of rigid and universal application and it cannot be said that wherever there are two orders, one by the inferior Tribunal and the other by a superior Tribunal, passed in an appeal or revision, there is a fusion or merger of two orders irrespective of the subject matter of the appellate or revisional order and the scope of the appeal or revision contemplated by the particular statute. In our opinion, the application of the doctrine depends on the n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evisional power against orders of the Appellate Assistant Commissioner which have been appealed against before the Tribunal or carried in revision to the High Court. Secondly, the Supreme Court also noticed that by virtue of the provisions of Section 36(3(a)(i), when an order of the Appellate Assistant Commissioner is challenged before the Appellate Tribunal, the 'entire' order becomes open for scrutiny by the Tribunal, and in that view of the matter held that the Board of Revenue cannot exercise suo motu revisional power. It was on these two grounds, and reasons, that the jurisdiction of the Board of Revenue was held to be ousted once an appeal - against any part of the order of the Appellate Assistant Commissioner - is brought before the Appellate Tribunal. 24. At this stage, the provisions of the Tamil Nadu General Sales Tax Act, so far as relevant, may be extracted to bring home the point, as under: "34. Special Powers of Board of Revenue. - (1) The Board of Revenue may, of its own motion, call for and examine an order passed or proceeding recorded by the appropriate authority under Section 4A, Section 12, Section 14, Section 15 or sub-section (1) or (2) of Section 16 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the Tribunal or revision before the High Court becomes live and is entertained for decision on merits. ........... ................. ...................... Section 36 sub-section (3)(a)(i) clearly indicates that in an appeal taken out by the assessee before the Tribunal, the Tribunal can even enhance the assessment or penalty or both. It is obvious that the assessee who is an appellant would never urge for enhancement of assessment or penalty. His appeal would be confined to the prayer of getting the assessment reduced or annulled. In the process of Tribunal may even confirm such assessment by dismissing the appeal wholly. Consequently, the contingency envisaged by Section 36 sub-section 3(a)(i) empowering the Appellate Tribunal to enhance the assessment or penalty in appeal by the assessee would obviously contemplate a situation where the Revenue being respondent in such appeal would seek such enhancement by filing cross-objections. Of course before deciding such a grievance put forward by the Revenue seeking such enhancement the appellant has to be given reasonable opportunity of being heard as contemplated by sub-section (3) of Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in State of Tamil Nadu v. Tvl. Jeevanlal Ltd. 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 General Sales Tax Act and, thus, held that even if challenge was limited to a portion of the order (before the Tribunal) the doctrine of merger will apply. With utmost respect, the Larger Bench over-looked that under Section 36(3)(a)(i) of the Tamil Nadu General Sales Tax Act, the Appellate Tribunal has power to enhance the assessment or penalty, or both, that is to say, pass an order adverse to the assessee; similar jurisdiction is not vested in the Appellate Tribunal under the Central Excise Act. 28. As seen above, in Madurai Mills Co. Ltd. and Kunhayammed (supra) the Supreme Court held that the question of merger will depend on the nature of jurisdiction exercised by the superior Court or Tribunal and the content or subject matter of challenge laid or capable of being laid before it. The superior Court should be capable of reversing, modifying or affirming the order of the inferior Tribunal. In these premises, the decision in L.M. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or maintainable. 32. I am conscious that my understanding of the decision in Tvl. Jeevanlal Ltd. (supra) is in conflict with the Larger Bench and, I would have considered referring the case to a Larger Bench in the light of the decision of the Supreme Court in Union of India v. Paras Laminates (P) Ltd., 1990 (49) E.L.T. 322 (S.C.) (even though the case has come before me on difference of opinion as a third Member), but in view of the decision of the Supreme Court in Mauria Udyog Ltd. v. CCE, Delhi-II, 2002 (146) E.L.T. 37 (S.C.), I am not required to take that course. The law declared by the Supreme Court is binding on all Courts and Tribunals under Article 141 of the Constitution of India. In the aforesaid case, the Tribunal had refused to restore the appeal of the assessee on the ground that the impugned order of the Commissioner (Appeals) had merged in the order of the Tribunal as a result of dismissal of the appeal of the Revenue and, therefore, the appeal of the assessee could not be dealt with on merits. Disapproving the approach of the Tribunal, the Supreme Court observed as follows: "4. It is evident from the facts noticed above that the principle of merger ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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