Per Justice K.K. Usha :

The appeal No. E/1530/2001 is filed by the Revenue Challenging order in original No. CCE (ADJ.) VLS/10/2000 dated 27.4.2000 passed by the Commissioner of Central Excise (Adjudication), New Delhi. Under the above order the Commissioner had dropped a demand of Rs. 8,45,84, 484/- raised against the respondent herein under a show cause notice dated 30.12.91 in respect of a period from 1.12.86 to 31.3.91. While dropping the demand the Commissioner had imposed a penalty of Rs. 25,000/- on the assessee under Rule 173-Q for violation of the provisions of Rule 173-C of the Central Excise Rules. The assessee filed an appeal before this Tribunal as Appeal No. E/1836/2000-A challenging the imposition of penalty. The above appeal was allowed by this Tribunal under order dated 29.6.2000 holding that it is settled law that when there is no duty demand there could be no penalty. The Central Board of Excise & Customs in exercise of its power under sub-section (1) of Section 35-E of the Central Excise Rules, 1944 passed an order dated 24.4.2001 directing the Commissioner to apply to this 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. Pursuant thereto the above appeal was filed before this Tribunal on 13.7.2001.

2. When the appeal came up for hearing the respondent- assessee had filed a memorandum of cross-objection and took the contention that the appeal against the order of the Commissioner dated 27.4.2000 is not maintainable since the above order had already merged with the order of this Tribunal dated 29.6.2000 much before the Board of Revenue passed the proceedings under Section 35-E(1) on 24.4.2001. Reliance was placed by the learned counsel for the respondent in support of the above contention on the judgement of this Tribunal in CCE Meerut Vs. Bajaj Carpet Industries 2001 (42) RLT 621 (CEGAT). On the other hand, the learned DR submitted that a contrary view has been taken by the Tribunal in the case of CCE Chandigarh Vs. M/s Leader Engineering Works 2001 (42) RLT 383. In the light of the apparent conflict between the two decisions, the matter was placed before a Larger Bench.

3. In the show cause notice dated 30.12.91 issued against the respondent-assessee it was alleged that they were collecting booking advance of Rs. 500/- per scooter from the customers, the amount of booking advance collected was either invested by the assessee in income yielding securities/deposits in Unit Trust of India and Banks, which in turn earned dividends/interest for them or they have used the said amount for meeting their working capital requirements. It was, therefore, contended that the above resulted in accrual of monetary benefit and it had influenced their pricing. Non inclusion of these factors in the assessable value had allegedly resulted in evasion of duty. Following an earlier decision of this Tribunal in the case of the very same assessee vide Final Order No. 958/99-A dated 6.7.99 which was not further challenged by the Revenue, the Commissioner took the view that the demand is unsustainable in law. Reliance was also placed on the decision of the Supreme Court in VST Industries V. Collector 1998 (24) RLT 221 (SC)=1998 (97) ELT 395 (SC). After dropping the duty demand the Commissioner proceeded to hold that the assessee failed to furnish information regarding the monetary benefit earned out of the deposits while filing the price list. Therefore, the assessee had rendered itself liable to penalty under Rule 173-Q of the Central Excise Rules for violation of the provisions of Rule 173-C read with Section 4 of the Central Excise Act. This order was set aside by the Tribunal at the instance of the assessee. It is the contention of the respondent that the above order of the Commissioner has merged in the order passed by this Tribunal on 29.6.2000 in Revenue's appeal and therefore, the appeal of the R