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IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL     APPEAL     NO.5049     OF     2003   

RAJA MECHANICAL CO.(P) LTD.           ...APPELLANT

VERSUS

COMMNR. OF CENTRAL EXCISE,     ...RESPONDENT DELHI-I

O     R     D     E     R   

1.This Civil Appeal is directed against the judgment  

and order dated 21.12.2001 passed by High Court of  

Delhi at New Delhi in Central Excise Case No.41 of  

2001, wherein the High Court has dismissed the  

reference application filed by the appellant.  

2. The facts in nutshell are that the assessee is a  

manufacturer of dutiable excisable goods. For its  

manufacturing activity, it had purchased certain  

capital goods, namely Windsor Model Injection  

Moulding Machine and screw assembly along with tool  

kit falling under Chapter sub heading 8477.10. The  

assessee has availed a MODVAT Credit of Rs.  

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1,47,000/- by filing a declaration dated 30.6.1995  

under Rule 57T(1), whereby it declared the receipt  

of the said goods from M/s D.G.P. Windsor India  

Ltd. vide invoice dated 18.6.1995, along with the  

application for condonation of delay, before the  

adjudicating authority/assessing authority.  

However, the said declaration was not filed within  

the time prescribed under the ‘Central Excise Act,  

1944 (for short ‘the Act’) and the rules framed  

thereunder. Accordingly, the adjudicating authority  

had issued a show cause notice dated 11.10.1995 to  

the assessee, inter alia, directing it to show  

cause as to why the MODVAT credit to the tune of  

Rs.1,47,000/-, availed by it, should not be  

disallowed and recovered under Rule 57G of the  

central Excise Rules, 1944 (for short ‘the Rules’)  

read with Section 11A of the Act and, further  

directed it to show cause as to why penalty under  

Rule 173Q of the Rules should not be imposed.  

Thereafter, a Corrigendum dated 23.4.1997 to the  

Show cause notice was issued to the assessee, inter  

alia, directing it to show cause to the Assistant  

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Commissioner instead of the Deputy Collector, as  

mentioned in the Show cause notice dated  

11.10.1995. The assessee was further directed to  

show cause as to why the penalty under Section 11AC  

should not be imposed and, further, interest should  

not be recovered under Section 11AB of the Act.

3.In its reply dated 16.11.1995 and 26.6.1997 to the  

Show cause notice, the assessee had submitted that  

it had received the said goods in the factory only  

on 30.9.1995, however, had wrongly mentioned the  

date of receipt of said goods as 18.6.1995 in its  

declaration filed under Rule 57T due to  

inadvertence, which was actually the date of  

invoice issued by the supplier. The assessee  

further submitted that it had also filed the  

application for condonation of delay in filing the  

declaration.  

4. After receipt of the reply that was filed by the  

appellant, the adjudicating authority, after taking  

cognizance of the cash voucher of the assessee  

dated 30.6.1997, observed that the cash voucher  

which shows the payment made by the party is the  

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evidence of delivery of the goods to the party.  

Therefore, the actual delivery of the goods to the  

assessee was made on 30.6.1997 instead of  

30.6.1995. It also observed that the whole  

machinery was transported by one consignment, as  

evident from the invoice, which bear vehicle number  

used for transportation. In view of this, the  

adjudicating authority has confirmed the show cause  

notice and disallowed the benefit of the MODVAT  

credit vide his order dated 17.10.1997 and,  

thereby, had directed the recovery of MODVAT credit  

of Rs.1,47,000/-. He also imposed a penalty of  

Rs.20,000/-.

5. The assessee, being aggrieved by the orders so  

passed by the adjudicating authority, had preferred  

an Appeal before the same authority which had  

passed the orders in original. Nearly after a  

year's time, the assessee realized that the appeal  

that was filed by him was not before the  

appropriate authority but before an authority which  

had passed the order in original. Thereafter, the  

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assessee has filed an appeal before the first  

appellate authority, namely, the Commissioner of  

Appeals, but by that time there was a delay in  

filing the appeal. Along with the appeal, the  

assessee had also filed an application under  

Section 5 of the Limitation Act, 1963 explaining  

the delay in filing the appeal.

6. The first appellate authority, being of the opinion  

that it has no powers to condone the delay beyond  

the prescribed period, has rejected the appeal vide  

its Order dated 1.3.2000. Aggrieved by the same,  

the assessee had carried the matter by way of  

Second Appeal before the Tribunal. The Tribunal, by  

its judgment and order dated 17.10.2000, confirmed  

the orders passed by the first appellate authority.  

Thereafter, the assessee had filed an application  

for rectification of the judgment and orders passed  

by the Tribunal on the ground that the Tribunal  

ought to have considered the assessee's appeal not  

only on the ground of limitation but also on merits  

of the case. The Tribunal vide its miscellaneous  

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order dated 9.3.2001, in our opinion, has rightly  

rejected the application filed for rectification of  

the order passed.  Being aggrieved by the order  

passed by the Tribunal, the assessee had approached  

the High Court by filing the reference application  

with a request to direct the Tribunal to state the  

case and the question of law for its consideration  

and decision. The High Court, after noticing the  

question of law that was framed by the assessee,  

has answered the same in negative and against the  

assessee and in favour of the revenue vide its  

judgment and order dated 21.12.2001. It is the  

correctness or otherwise of this order of the High  

Court is the subject matter of this appeal.

7. We have heard Mr.P.C.Jain, learned counsel for the  

assessee and Mr.Harish Chandra, learned senior  

counsel for the revenue.  Firstly, Mr.Jain, would  

contend that the Tribunal ought to have considered  

the assessee's appeal not only on the ground of  

limitation but also on merits of the case. Since  

that has not been done, according to the learned  

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counsel, the Tribunal has committed a serious  

error.  The learned counsel would further submit  

that the “doctrine of merger” theory would apply in  

the sense that though the first appellate authority  

has rejected the appeal filed by the assessee on  

the ground of limitation, the orders passed by the  

original authority would merge with the orders  

passed by the first appellate authority and,  

therefore, the Tribunal ought to have considered  

the appeal filed by the assessee not only on the  

ground of limitation but also on merits of the  

case.  To buttress his arguments, the learned  

counsel has drawn our attention to the observations  

made by this Court in the case of Collector of  

Customs, Calcutta, Vs. East India Commercial  

Co.Ltd., AIR 1963 1124, Shyam Sunder Sarma Vs.  

Panllalal Jaiswal, 2005 (181) ELT 163 (SC),  

Kunhayammed Vs. State of Kerala, 2001 (129) ELT 11  

(SC) and the decision of the Tribunal in the case  

of Mark Auto Industries Vs. CCE, New Delhi, 2000  

(41) RLT 756 (CEGAT).  

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8.In reply to the submissions made by learned counsel  

for the appellant, Shri Harish Chandra, learned  

senior counsel appearing for the revenue has  

invited our attention to the decision of this Court  

in the case of Chandi Prasad & Ors., Vs. Jagdish  

Prasad & Ors., (2004) 8 SCC 724 wherein this Court,  

after consideration of the earlier decisions has  

come to the conclusion that the doctrine of merger  

would not apply to a case where an appeal is  

dismissed only on the ground of the limitation. In  

the said decision, this Court has observed as  

under:

“.....when an appeal is dismissed on the ground  

that delay in filing the same is not condoned,  

the doctrine of merger shall not apply.”

9.The learned counsel has also invited our attention  

to the observations made by this Court in the case  

of State of Kerala & Anr. Vs. Kondottyparambanmoosa  

& Ors.,(2008) 8 SCC 65. In the said decision, the  

Court has stated as under:

“Keeping these principles as enunciated by this  

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Court in the aforesaid three decisions in mind  

and applying the said principles in the facts  

of this case, we have no hesitation in our mind  

to conclude that the High Court in the impugned  

order did not at all consider that in the  

earlier revision order of the High Court,  

revisional application was rejected not on  

merits but only on the ground of delay.  

Therefore, it must be held that since the  

earlier revision application was not rejected  

on merits, the said order rejecting the same on  

the ground of delay cannot be said to be the  

order of affirmance and that being the  

position, we must hold that since the earlier  

revision petition was not decided on merits,  

the doctrine of merger cannot be applied to the  

facts and circumstances of the present case.”

10. In this connection, the observations made by  

this Court in the case of Chandi Prasad & Ors.  

(supra), needs to be reproduced, which are as  

under:

“It is trite that when an appellate court passes  

a decree, the decree of the trial court merges  

with the decree of the appellate court and even  

if and subject to any modification that may be  

made in the appellate decree, the decree of the  

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appellate court supersedes the decree of the  

trial court. In other words, the merger of a  

decree takes place irrespective of the fact as to  

whether the appellate court affirms, modifies or  

reverses the decree passed by the trial court.  

When a special leave petition is dismissed  

summarily, doctrine of merger does not apply but  

when an appeal is dismissed, it does.”   

11. The facts are not in dispute and cannot be  

disputed that there was a delay in filing the  

prescribed forms before the assessing authority.  

Therefore, the assessing authority had rejected the  

claim of the assessee and accordingly, had directed  

him for payment of the excise duty credit availed  

by the assessee. Aggrieved by that order, the  

assessee had belatedly filed an appeal before the  

proper appellate authority.  Since there was delay  

in filing the appeal and since the same was not  

within the time that the appellate authority could  

have condoned the delay, accordingly had dismissed  

the same.  It is that order which was questioned  

before the Tribunal.  Before the Tribunal, as we  

have already noticed, the assessee had requested  

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the Tribunal to first condone the delay and next to  

decide the appeal on merits, i.e. to decide whether  

the adjudicating authority was justified in  

disallowing the benefit of the MODVAT credit that  

was availed by the assessee.  The Tribunal had not  

conceded to the second request made by the assessee  

and only accepted the findings and conclusions  

reached by the Commissioner of Appeals, who had  

rejected the appeal.

12. The question now that falls for our  

consideration and decision is whether the Tribunal  

was justified in not considering the case of the  

assessee on merits.  The assessee's stand before  

the Tribunal and before this Court is that the  

orders passed by the adjudicating authority would  

merge with the orders passed by the first appellate  

authority and the Tribunal ought to have considered  

the appeal filed by the assessee on merits also.  

In our opinion, the same cannot be accepted. In  

view of the plethora of decisions of this Court,  

wherein this Court has, categorically, observed  

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that if for any reason an appeal is dismissed on  

the ground of limitation and not on merits, that  

order would not merge with the orders passed by the  

first appellate authority.  In that view of the  

matter, we are of the opinion, that the High Court  

was justified in rejecting the request made by the  

assessee for directing the revenue to state the  

case and also the question of law for its  

consideration and decision. In view of the above  

discussion, we do not find any merit in this  

appeal.

13. Accordingly, the appeal stands rejected.  No  

costs.

Ordered accordingly.

 ...................J.

(H.L. DATTU)

...................J. (ANIL R. DAVE)

NEW DELHI; APRIL 19, 2012  

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