2010 Supreme(SC) 515

2010 (5) Supreme 369
SUPREME COURT OF INDIA
D.K. Jain and T.S. Thakur, JJ.
Commissioner of Central Excise, Delhi — Appellant
versus
M/s Pearl Drinks Ltd. — Respondent
Civil Appeal Nos.2059-2060 of 2003
Decided on : 6-7-2010

IMPORTANT POINT
Doctrine of merger depends largely on the nature of the jurisdiction exercised by the superior court and the content or the subject matter of challenge laid or capable of being laid before it.

Headnote:Central Excise Act, 1944- Section 35(L)(b)- Appeals against order passed by Customs, Excise and Gold (Control) Appellate Tribunal, whereby an appeal preferred by Revenue against an order passed by Commissioner of Central Excise had been dismissed on principle of merger- The Tribunal held that the order passed by the Excise Commissioner had merged in that passed by the former in an earlier appeal filed by assessee against very same order-Held doctrine would have no application for the plain and simple reason that the subject matter of the appeal filed by assessee against the adjudicating authority’s order in original was limited to disallowance of two out of eight deductions claimed by the assessee- The Tribunal was in that appeal concerned only with the question whether adjudicating authority was justified in disallowing deductions under the said two heads- It had no occasion to examine admissibility of deductions under remaining six heads obviously because the assessee’s appeal did not question the grant of such deductions- Admissibility of said deductions could have been raised only by Revenue who had lost its case qua those deductions before adjudicating authority-Dismissal of the appeal filed by assessee could consequently bring finality only to question of admissibility of deductions under the two heads regarding which the appeal was filed- The said order could not be understood to mean that the Tribunal had expressed any opinion regarding the admissibility of deductions under remaining six heads which were not the subject matter of scrutiny before the Tribunal- That being so, proceedings instituted by the Commissioner, Central Excise pursuant to the order passed by the Central Board of Excise and Customs brought up a subject matter which was distinctively different from that which had been examined and determined in the assessee’s appeal no matter against same order, especially when the decision was not rendered on a principle of law that could foreclose Revenue’s case- Tribunal failed to notice this distinction and proceeded to apply the doctrine of merger rather mechanically- Hence held that Tribunal dismissing appeal by Revenue on the doctrine of merger was erroneous and unsustainable-Impugned order set aside and matter remanded back to the Tribunal for a fresh disposal in accordance with law-Appeals allowed. (Paras 14, 15)

       Doctrine of Merger-Scope and Ambit of-The doctrine of merger has its application not only in the realm of judicial orders but also in the realm of estates- In its application two orders passed by judicial & quasi-judicial courts and authorities it implies that the order passed by a lower authority would lose its finality and efficacy in favour of an order passed by a higher authority before whom correctness of such an order may have been assailed in appeal or revision- The doctrine applies regardless whether the higher court or authority affirms or modifies the order passed by the lower court or authority. (Para 11)

       Facts of the Case :

       Present Appeals have been filed against order passed by Customs, Excise and Gold (Control) Appellate Tribunal, whereby an appeal preferred by Revenue against an order passed by Commissioner of Central Excise had been dismissed on principle of merger.

       Findings of the Court :

       Held doctrine would have no application for the plain and simple reason that the subject matter of the appeal filed by assessee against the adjudicating authority’s order in original was limited to disallowance of two out of eight deductions claimed by the assessee. The Tribunal was in that appeal concerned only with the question whether adjudicating authority was justified in disallowing deductions under the said two heads. It had no occasion to examine admissibility of deductions under remaining six heads obviously because the assessee’s appeal did not question the grant of such deductions. Admissibility of said deductions could have been raised only by Revenue who had lost its case qua those deductions before adjudicating authority. Dismissal of the appeal filed by assessee could consequently bring finality only to question of admissibility of deductions under the two heads regarding which the appeal was filed. The said order could not be understood to mean that the Tribunal had expressed any opinion regarding the admissibility of deductions under remaining six heads which were not the subject matter of scrutiny before the Tribunal. That being so, proceedings instituted by the Commissioner, Central Excise pursuant to the order passed by the Central Board of Excise and Customs brought up a subject matter which was distinctively different from that which had been examined and determined in the assessee’s appeal no matter against same order, especially when the decision was not rendered on a principle of law that could foreclose Revenue’s case. Tribunal failed to notice this distinction and proceeded to apply the doctrine of merger rather mechanically. Hence held that Tribunal dismissing appeal by Revenue on the doctrine of merger was erroneous and unsustainable. Impugned order was set aside and matter was remanded back to the Tribunal for a fresh disposal in accordance with law. Appeals were allowed.

       Result : Appeals allowed.