2012 (7) TMI 882 - 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. Refund of Rs. 38,890/- of accumulated Cenvat credit under Rule 5 of the Cenvat Credit Rules, 2004.
2. Interpretation of Rule 5 of Cenvat Credit Rules and the definition of "input service."
3. Applicability of Notification No. 5/2006-C.E. (N.T.) regarding refund of Cenvat credit for input or input service used in the manufacture of final product cleared for export.
4. Adherence to monetary limits for filing appeals as per circulars issued by the Central Excise Department.

Issue-Wise Detailed Analysis:

1. Refund of Rs. 38,890/- of accumulated Cenvat credit:
The respondent assessee claimed a refund of Rs. 38,890/- of accumulated Cenvat credit under Rule 5 of the Cenvat Credit Rules, 2004. The Revenue questioned the justifiability of this claim by issuing a show cause notice on 14-6-2007, which led to the adjudicating authority rejecting the claim. The matter was escalated through appellate forums, and ultimately, the Tribunal ruled in favor of the assessee, confirming the Appellate Commissioner's order. This decision prompted the Revenue to appeal to the High Court.

2. Interpretation of Rule 5 of Cenvat Credit Rules and the definition of "input service":
The Court formulated the question of whether the Tribunal erred in interpreting Rule 5 of the Cenvat Credit Rules along with sub-rule 2(1) regarding the definition of "input service" and the term "used in manufacture." The Tribunal had treated various maintenance services as services "used in manufacture," which was contested by the Revenue.

3. Applicability of Notification No. 5/2006-C.E. (N.T.):
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 the final product cleared for export. The Revenue contended that the Tribunal's decision was inconsistent with this notification.

4. Adherence to monetary limits for filing appeals:
The respondent's advocate highlighted two circulars dated 20-10-2010 and 17-8-2011 from the Central Excise Department, which set monetary limits for filing appeals. The circular dated 20-10-2010 fixed a limit of Rs. 2 lacs for appeals to the High Court, which was later increased to Rs. 10 lacs in the circular dated 17-8-2011. The amount involved in the present appeal was Rs. 36,890/-, which is below the prescribed limits. Therefore, the Court was dissuaded from considering the merits of the appeal due to these monetary limits.

Conclusion:
The Court acknowledged the binding nature of the Department's own circulars and the instructions therein. Despite the questions formulated, the Court chose not to delve into the merits of the appeal, as the monetary limits prescribed by the circulars applied. Consequently, the appeal was dismissed without addressing the substantive issues, leaving the questions open for decision in an appropriate case.

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