2012 (7) TMI 872 - HC - Central Excise

Denial of refund claim - Cenvat credit - maintainability of appeal - Held that - Since in the instant appeal the amount involved is 50, 904/- only in view of the circular dated 20-10-2010 the appeal could not have been preferred by the Central Excise and Customs Department before this Court. It cannot be gainsaid that the Department is bound by its own circulars. Though the appeal has been admitted we did not go into the substantial question of law formulated by this Court. As we have recorded in our order in Tax Appeal No. 1294 of 2011 on being informed from the side of the Department it may be stated that after circular dated 17-8-2011 no other circular has been issued by the Ministry of Finance Department of Revenue Central Board of Excise and Customs Government of India New Delhi authorizing the Department to file appeals where the amount is less than 10 lacs. - Decided against Revenue.

Issues Involved:
1. Interpretation of Rule 5 of Cenvat Credit Rules and sub-rule 2(l) concerning the definition of "input service."
2. Inclusion of various expenses as services "used in manufacture" of the final product for export.
3. Ignoring Notification No. 5/2006-C.E. (N.T.), dated 14-3-2006 regarding refund of Cenvat credit.

Detailed Analysis:

Issue 1: Interpretation of Rule 5 of Cenvat Credit Rules and sub-rule 2(l) concerning the definition of "input service."
The appellant contended that the Tribunal erred in interpreting Rule 5 of the Cenvat Credit Rules along with sub-rule 2(l), particularly in defining "input service" and the phrase "used in manufacture." The Tribunal treated various maintenance services as services "used in manufacture," which the appellant argued was incorrect. The court did not delve into the merits of this issue due to the monetary limit prescribed by departmental circulars.

Issue 2: Inclusion of various expenses as services "used in manufacture" of the final product for export.
The appellant argued that the Tribunal wrongly included advertisement expenses, insurance premiums for employees (PA Policy), labor processing charges, repair of computers, legal and professional expenses, mobile expenses, consultation engineering services, and maintenance and repair services as "input services" used in the manufacture of the final product for export. The court again refrained from addressing the substantive legal questions due to the monetary limits set by departmental circulars.

Issue 3: Ignoring Notification No. 5/2006-C.E. (N.T.), dated 14-3-2006 regarding refund of Cenvat credit.
The appellant claimed that the Tribunal ignored Notification No. 5/2006-C.E. (N.T.), which stipulates that the refund of Cenvat credit is allowed only for input services used in the manufacture of the final product cleared for export. The court did not examine this issue in detail due to the monetary limits established by the department's circulars.

Monetary Limits and Circulars:
The court noted that the subject matter involved a refund claim of Rs. 36,505/-, which fell below the monetary limits specified in the department's circulars dated 20-10-2010 and 17-8-2011. These circulars set a threshold of Rs. 2 lacs and later increased to Rs. 10 lacs for filing appeals before the High Court. The court emphasized that the Department is bound by its own circulars, and appeals should not be filed if the amount involved is below the stipulated limit.

Conclusion:
The court dismissed the appeal without addressing the substantial questions of law due to the monetary limit prescribed by the department's circulars. The court noted that the appeal should not have been admitted in the first place, given the monetary limit of Rs. 10 lacs set by the circular dated 17-8-2011. The questions of law remain open to be decided in an appropriate case where the monetary limits are met.

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