COMMISSIONER OF CENTRAL EXCISE, DELHI versus M/S. PEARL DRINKS LTD.

Citation: [2010] 7 S.C.R. 808 · Decided: 06-07-2010 · Supreme Court of India · Bench: D.K. JAIN · Disposal: Appeal(s) allowed

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Judgment (excerpt)

A 
B 
[2010) 7 S.C.R. 808 
COMMISSIONER OF CENTRAL EXCISE, DELHI 
v. 
M/S. PEARL DRINKS LTD. 
(Civil Appeal Nos. 2059-2060 of 2003) 
JULY 6, 2010 
[D.K. JAIN AND T.S. THAKUR, JJ.] 
Central Excises Act, 1944 - s. 4 - Levy of excise duty -
Claim of deductions under eight heads - Disallowed under 
C two heads and allowed under the remaining six heads -
Appeal by assessee - Order disallowing deductions under two 
heads upheld by tribunal and Supreme Court - Appeal by 
Revenue challenging deductions under the six heads -
Tribunal holding that order under challenge had merged in 
D the earlier order passed by tribunal in company's appeal 
whereby disallowance of two of the eight deductions had been 
upheld - Sustainability of - Held: Not sustainable - Doctrine 
of merger not applicable - Subject matter of appeal by 
assessee against adjudicating authority's order in original was 
E limited to disal/owance of two out of eight deductions claimed 
by assessee -
Tribunal had no occasion to examine 
admissibility of deductions under the remaining six heads 
because assessee did not question the same - Admissibility 
of the said deductions could have been raised only by 
F Revenue who had lost its case qua those deductions before 
adjudicating authority and tribunal failed to notice this -
Doctrines. 
Doctrines -
Doctrine of Merger - Applicability of -
Explained. 
The respondent-company is engaged in the 
manufacture and sale of aerated water. It claimed 
deductions under eight heads before arriving at the 
assessable value u/s. 4 of the Central Excises and Salt 
808 
COMMISSIONER OF CENTRAL EXCISE, DELHI v. 
809 
PEARL DRINKS LTD. 
Act, 1944. The Commissioner of Central Excise 
A 
disallowed deductions under the two heads and allowed 
deductions under the remaining six heads. The 
respondent company filed an appeal. The tribunal 
dismissed the same holding that the disallowance of 
deductions under the two heads was in order. The 
B 
Supreme Court also dismissed the appeal. Thereafter, the 
Central Board of Excise and Customs reviewed the order 
of the Commissioner and held that the deductions under 
the six heads was not justified. The Commissioner 'OL · 
Central Excise filed an appeal. The tribunal dismissed the c 
appeal holding that the order under challenge had 
merged in the earlier order passed by the tribunal In the 
company's appeal whereby disallowance of two of the 
eight deductions had been upheld. Hence the appeals. 
Allowing the appeals, the Court 
HELD: 1.1 The order passed by the tribunal 
dismissing the appeal by the Revenue on the doctrine of 
merger is erroneous and unsustainable. The order 
passed by the tribunal is set aside and the matter is 
remanded back to the tribunal for a fresh disposa: in 
accordance with law. [Para 15] (819-F] 
1.2 The doctrine of merger has its origin in common 
law. It 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 and quasi-judicial courts 
and authorities it implies that the order passed by a lower 
authority would lose its finality and efficacy in favour of 
D 
E 
F 
an order passed by a higher authority before whom 
correctness of such an order may have been assailed in 
G 
appeal or revision. The doctrine applies ragardless 
whether the higher court or authority affirms or modifies 
the order passed by the lower court or authority. [Para 
11) [816-F-G] 
H 
810 
SUPREME COURT REPORTS 
[2010] 7 S.C.R. 
A 
Commissioner of Income Tax, Bombay v. Amritlal 
Bhogifal and Co. AIR 1958 SC 868; State of Madras v. 
Madurai Mills Co. Ltd. AIR 1967 SC 681; Gojer Bros. (Pvt.) 
Ltd. v. Ratan Lal Singh (1974) 2 SCC 453; S.S. Rathore v. 
State of Madhya Pradesh (1989) 4 SCC 582; Kunhayammed 
B and Ors. v. State of Kera/a and Anr. (2000) 6 sec 359; 
Mauria Udyog Ltd. v. Commissioner of Central Excise, Delhi 
II (2003) 9 SCC 139 - relied on. 
1.3. The doctrine of merger will depend largely on the 
C 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. Applying the said test to 
the instant case, the doctrine would have no application 
for the plain and simple reason that the subject matter of 
the appeal filed by the assessee against the adjudicating 
D authority's order in original was limited to disallowance 
of two out of eight deductions claimed by the assessee. 
[Para 13 & 14] [818-C-E] 
1.4. T

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