TaxTMI 
TaxTMI 
2008 (9) TMI 246
X X X X Extracts X X X X
X X X X Extracts X X X X
....ble 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 appellants claim that a credit of Rs. 75,03,849/- is not deniable, as prior to 23-7-1996, Line Stone Crusher falling under CH 84.74 was covered by Clause (a) of definition of capital goods under rule 57Q and hence spares, accessories and components of Lime Stone Crusher was covered by clause (b) thereof. W.e.f 31-8-1996, they further argue, Lime Stone Crusher falling under CH 84.74 is covered by clause (aa) of definition of capital goods under Rule 57....
X X X X Extracts X X X X
X X X X Extracts X X X X
....,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 the demand of duty was erroneous in law and in the facts of the case. In respect of these set of facts, the Tribunal held that doctrine of merger is applicable. It may be seen that once it was held by the Tribunal that the order of the Commissioner imposing penalty while dropping the demand was not correct and therefore, the penalty was set aside, it is quite clear that the judgment of the Tribunal in the case was that the demand was not sustainable at all. (ii) Further, the Larger Bench has....
X X X X Extracts X X X X
X X X X Extracts X X X X
....9 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 Courts all the time that when there are two conflicting provisions in an Act, which can not be reconciled with each other, they should be so interpreted that, if possible, effect should be given to both. This is the essence of the rule of 'harmonious construction'. (4) The Courts have also to keep in mind that an interpretation which reduces one of the provisions as 'dead letter' or "useless lumber' is not harmonious construction. (5) To harmonise is not....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ection (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 taken any step under Section 40 of the Act. Proceedings were initiated only under the provisions of Section 48. It was, therefore, held that since the society had not elected to pursue its remedy under Section 40, there is nothing standing in the way of its taking recourse under Section 48. In the present case merely because the Revenue has not opted for its remedy under sub-section (4) of Section 35B or Section 35E, it cannot be held that proceeding under Section 35E is barred. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he 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 application of principle of merger. The said principle on the factual situation herein has no applicability whatsoever. Mr. Rawal, the learned Additional Solicitor General very rightly did not support the order on the ground of the applicability of the principle of merger." and held that doctrine of merger is not applicable. Similarly, in Mahalakshmi Dyg. & Ptg. (I) Pvt. Ltd. the West Zonal Bench held that since the subject matters of appeal were different, the doctrine of merger is not appli....
X X X X Extracts X X X X
X X X X Extracts X X X X
............. 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 impugned order and remanding the matter to the Original Adjudicating Authority. As such at the time of passing of the review order, the impugned order of Commissioner had become non est, having been set aside by the Tribunal. The issue arises as to whether such non est order in the eyes of law, can be reviewed and then appealed against by the Department. 10. Undisputedly the issue stands decided by the Larger Bench decision of the Tribunal, which stands followed by Tribunal in number ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....vt. 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-maintainable. Ordered accordingly. Sd/- (Archana Wadhwa) Member (Judicial) DIFFERENCE OF OPINION Whether the appeal filed by the Revenue is required to be decided on merits as held by ld. Member (Technical) or the same is required to be dismissed on the preliminary ground of non-maintainability as held by ld. Member (Judicial)? Sd/- (B.S.V. Murthy) Member (Technical) &nb....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sp; Member (Judicial) 13. [Order per : Justice S.N. Jha, President]. - This appeal came for h....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e matter to the original authority, as such, at the time of passing of the review order, the impugned order of the Commissioner was non est, and a non est order could not be reviewed and then appealed against by the Revenue. Member (Judicial) accordingly proposed that the appeal be dismissed as not maintainable. 17. At this stage, reference may be made to the Tribunal's order dated 2-9-2005. The order has been quoted in extenso in the order proposed by Member (Technical) but it may be convenient to extract the relevant part thereof to make the present order complete. The order reads as follows: ".........The appellants claim that a credit of Rs. 75,03,849/- is not deniable, as prior to 23-7-1996, Lime Stone Crusher falling under CH 84.74 was covered by Clause (a) of definition of capital goods under rule 57Q and hence spares, accessories and components of Lime Stone Crusher was covered by clause (b) thereof. W.e.f. 31-8-1996, they further argue, Lime Stone Crusher falling under CH 84.74 is covered by clause (aa) of definition of capital goods under Rule 57Q and hence spares, accessories and components of Lime Stone Crusher is covered by clause (d) thereof. 2. The appellant....
X X X X Extracts X X X X
X X X X Extracts X X X X
....use 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 the modvat credit amounting to Rs. 462604 on capital goods for product "Whytheat-C-Super' falling under sub-heading 3816.00. He has observed that during the period from 16-3-95 to 22-7-96, capital goods 'refractory' was defined as 'refractories falling within Chapter 69' and by virtue of Notfn. numbered 14/96-CE(NT) of 23-7-96, the definition was amended to cover 'refractory and refractory materials'. He has noticed that the credit had been availed during the period from 16-3-95 to 22-7-96 under sub-heading 3816.00 and the Unit had also accepted that these capital goods were used as refractory materials during the period from 16-3-95 to 22-7-96. However, in the notice of 30-7-98 the adjudicating authority has allowed the credit of Rs. 163683 on the product "whytheat-Super-C' falling under sub-headi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e 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 nature of the appellate or revisional order in each case and the scope of the statutory provisions conferring the appellate or revisional jurisdiction." [emphasis added] Similar issue came for consideration in Kunhayammed v. State of Kerala, 2001 (129) E.L.T. 11 (S.C.), in which reiterating the earlier view, the Supreme Court observed: "Doctrine of merger is not a doctrine of universal or unlimited application. It will depend on the nature of jurisdiction exercised by the superior forum and the content or subject matter of challenge laid or capable of being laid shall be determinative of the applicability of merger, the superior jurisdiction should be capable of reversing, modifying or affirming the order put i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ought 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 or an order passed by the Appellate Assistant Commissioner under sub-section (3) of Section 31 or by the Deputy Commissioner under sub-section (1) of Section 32 may make such inquiry or cause such inquiry to be made and subject to the provisions of this Act may pass such order thereon as it thinks fit. (2) The Board of Revenue shall not pass any order under sub-section (1) if — (a) the time for appeal has not expired; or (b) the order has been made the subject of an appeal to the Appellate Tribunal or of a revision in the High Court; or (c) ....... ........... ............. 36. Appeal to the Appellate Tribunal. - (1) Any person objecting to an order passed by the Appel....
X X X X Extracts X X X X
X X X X Extracts X X X X
....(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 Section 36 itself. But subject to that procedural safeguard there is no prohibition against the Appellate Tribunal in considering the question of enhancement of penalty in an appeal preferred by the assessee against this part of t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....der 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.L. Ltd. (supra) cannot be relied upon as an authority on the point of merger. 29. Adverting to the present case, as seen above, the appeal of the assessee was confined to the issue, of availability of Modvat/Cenvat credit on spa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ision 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 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....