TaxTMI 
TaxTMI 
2008 (11) TMI 79
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....acts are, that the assessee was issued show cause notice for short/delayed payment of service tax for the quarter ending September, December, 2000, March, June, September and December, 2001 and quarter ending March, 2002. The necessary adjudication was made vide order in original dt. 16.10.2003, whereby the demand of service tax was confirmed, and penalty under Section 76 was imposed. Aggrieved by the said order the assessee preferred appeal before the Commissioner (Appeals), who vide order in appeal dt. 13.10.2004, upheld the order in original. Accordingly the assessee discharged the liability, and deposited the amount of penalty. 4. The Commissioner of Central Excise, thereafter, in purported exercise of powers vested in him under Section 84 issued show cause notice to the assessee on 12.8.2005, informing that he would like to review the imposition of penalty. The notice was opposed, on the sole ground, that the order in original has already merged with the order dt. 13.10.2004, hence on the date of issuance of show cause notice there was no order in original, which could be reviewed by the Commissioner. This contention was negatived, and the Commissioner enhanced the penalty. ....
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....l be exercised, as in that regard there is no merger. Then, learned counsel for the Revenue read to us the judgment of the Hon'ble Supreme Court in Kunhayammed & Ors. Vs. State of Kerala reported in 2001 (129) E.L.T. 11 (S.C.) = (2000) 6 SCC 359, where the Hon'ble Supreme Court has considered the aspect of merger, as to when it would be attracted, and when it will not be attracted, and after discussing the matter thread bare, and considering various previous judgments, in para-44 had drawn conclusions, which we may gainfully quote. Since conclusions no. (iv), (v), and (vi) are not relevant for the present purpose, only conclusions no. (i), (ii), (iii) and (vii) are being quoted, which read as under:- "(i) Where an appeal or revision is provided against an order passed by a court, tribunal or any other authority before superior forum and such superior forum modifies, reverses or affirms the decision put in issue before it, the decision by the subordinate forum merges in the decision by the superior forum and it is the latter which subsists, remains operative and is capable of enforcement in the eye of law. (ii) The jurisdiction conferred by Article 136 of the Constitution ....
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....so dismissed. Thereafter the assessee filed an application for restoration, and submission was made, that after dismissal of the Revenue's appeal, the assessee's appeal was not maintainable, as consequent upon dismissal of the Revenue's appeal the impugned order of Commissioner got merged. This submission was negated, by holding that the Revenue's appeal was restricted to the reduction of the penalty amount by the Commissioner, whereas the assessee's appeal challenged the entire order of the Commissioner. Learned counsel then relied upon a judgment of Calcutta High Court, in Hindustan Aluminium Corporation Ltd. v. Commissioner of Income-tax reported in 178 ITR-74, wherein the Division Bench of the Calcutta High Court held, that the doctrine of merger is not a doctrine of rigid and universal application, and it cannot be said, that wherever there are two orders, one by an inferior tribunal, and the other by a superior tribunal, passed in an appeal or revision, there is a fusion or merger of the 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. It was....
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.... appeal filed by the Revenue was held to be not maintainable. Learned counsel then relied upon larger Bench judgment of the Tribunal Delhi, in Commissioner of Central Excise v. L.M.L. Ltd. reported in 2002 (143) E.L.T. 431, wherein again the assessee filed appeal before the Tribunal against the order of the Commissioner imposing penalty while not confirming the demand of duty, which appeal was allowed, holding that when there is no duty demand, there could be no penalty. However, the Revenue pursuant to order in review passed by the Commissioner, in exercise of its power under Section 35(2) of the Central Excise Act, 1944 filed appeal before the Tribunal, against the same order, and much after the decision of the Tribunal, the Board itself sought to review on the appeal filed by the assessee, and in those facts it was held, that the order impugned has already been merged with final order passed by the Tribunal, much before any order was passed by the Board of Revenue. It was also held, that even if the appeal filed by assessee challenges a portion of the impugned order, the doctrine of merger will apply. This is the whole case law cited before us. 10. Arguing the appeal it was con....
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...., may be rightly, or wrongly. Therefore, on the parameters laid down in conclusion no. (iii), by Hon'ble the Supreme Court, the superior jurisdiction was capable of reversing, modifying, or affirming the order which was in issue before it, and in the present case the learned Commissioner (Appeals) declined to modify, and simply affirmed. 12. We are not inclined to subscribe to the view as propounded before us, that since this was not precisely prayed in the appeal, even by way of alternative prayer, that the penalty be further reduced, there could be no merger. This would be too far fetched a proposition to be accepted by us. The judgments in CCE, Madurai v. Chellapandi Match Works reported in 2006 (197) ELT 272, Commissioner of Central Excise v. Bhagwati Ispat Ltd. reported in 2002 (146) E.L.T. 221, and Commissioner of Central Excise v. L.M.L. Ltd. reported in 2002 (143) E.L.T. 431, in our view, do clearly cover the controversy appropriately, and in favour of the assessee. 13. At this place we may gainfully read the judgment in Hindustan Aluminium's case, and that in Arbuda Mills' case, in juxtaposition with each other. In Hindustan Aluminium's case the High Cour....