2012 (7) TMI 881 - HC - Service Tax

Refund of accumulated Cenvat credit - held that - No other circular has been issued by the Ministry of Finance, Department of Revenue, Central Board of Excise & Customs, authorizing the Department to file appeal where the amount is less than ₹ 10 lacs - appellant was not in position to dispute the instructions of the aforementioned circulars and the monetary limit prescribed therein. While it is true that the present appeal was filed and notice was issued prior to the circular dated 20-10-2010, when it comes up for consideration and hearing before us, the contents of the circular and the limits prescribed therein apply. In that light, it is not being disputed that the issues involved and the questions formulated in this appeal need not be decided. - It cannot be gainsaid that the Department is bound by its own circulars and the instructions thereof. - Decided against Revenue.

Issues Involved:
1. Interpretation of Rule 5 of the Cenvat Credit Rules, 2004, and the definition of "input service."
2. Consideration of Notification No. 5/2006-C.E. (N.T.), dated 14-3-2006, regarding the refund of Cenvat credit for input or input service used in the manufacture of final products cleared for export.
3. Applicability of monetary limits for filing appeals as per circulars issued by the Central Excise Department.

Issue-wise Detailed Analysis:

1. Interpretation of Rule 5 of the Cenvat Credit Rules, 2004, and the definition of "input service":
The core issue in this case was the refund of Rs. 89,476/- of accumulated Cenvat credit claimed by the respondent-assessee under Rule 5 of the Cenvat Credit Rules, 2004. The Revenue questioned the justifiability of this claim, leading to a show cause notice and subsequent rejection by the adjudicating authority. The matter was escalated through appellate forums, ultimately resulting in the Tribunal ruling in favor of the assessee. The Court had to consider whether the Tribunal erred in interpreting Rule 5 and sub-rule 2(l) related to the definition of "input service" by treating various maintenance services as services "used in manufacture."

2. Consideration of Notification No. 5/2006-C.E. (N.T.), dated 14-3-2006:
The second question formulated by the Court was whether the Tribunal ignored Notification No. 5/2006-C.E. (N.T.), which stipulates that the refund of Cenvat credit is allowed only for input or input service used in the manufacture of final products cleared for export. The Tribunal's interpretation and application of this notification were under scrutiny to determine if there was an error in their judgment.

3. Applicability of monetary limits for filing appeals:
The respondent's advocate highlighted two circulars issued by the Central Excise Department, dated 20-10-2010 and 17-8-2011, which set monetary limits for filing appeals before the High Court. The circular dated 20-10-2010 fixed a limit of Rs. 2 lacs, which was later enhanced to Rs. 10 lacs in the circular dated 17-8-2011. Given that the amount involved in this appeal was Rs. 89,476/-, the Court was dissuaded from delving into the merits of the appeal based on these monetary limits.

The circular dated 20-10-2010 emphasized reducing government litigation and ensuring efficient use of court time. It stated that appeals should not be filed if the matter is covered by a series of judgments or if the amount involved is below the prescribed limit. The subsequent circular dated 17-8-2011 further clarified the monetary limits for filing appeals in various forums, including the Tribunal, High Courts, and the Supreme Court.

Conclusion:
The Court acknowledged the binding nature of these circulars on the Department. Despite the formulation of questions regarding the interpretation of Rule 5 and the relevant notification, the Court refrained from addressing these issues due to the monetary limits prescribed by the circulars. Consequently, the appeal was dismissed without delving into the merits, leaving the questions open for decision in an appropriate case.

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