Finality of appellate order barred later enhancement of penalty after the original penalty had already been upheld.

Once an order-in-original imposing a nominal penalty was carried in appeal and expressly upheld, the original order merged in the order-in-appeal and attained finality. On that basis, the Commissioner (Appeals) could not later reopen the concluded matter and substitute the confirmed penalty with an enhanced penalty equal to the duty amount. The attempted enhancement was therefore held unsustainable and was set aside, preserving the earlier appellate determination.

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Issues: Whether the Commissioner (Appeals) could enhance the penalty under Section 11AC after the earlier appellate order had upheld the order-in-original confirming the duty demand and the nominal penalty.

Analysis: The order-in-original imposing a penalty of Rs. 5,000 was already carried in appeal and was expressly upheld by the Commissioner (Appeals), with the appeal rejected. Once that appellate order attained finality, the original order merged in the order-in-appeal. In such circumstances, the Commissioner (Appeals) could not subsequently reopen the matter and substitute the confirmed personal penalty with an enhanced penalty equal to the duty amount.

Conclusion: The enhancement of penalty was not sustainable and was set aside, resulting in success for the appellant.

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