2015 (6) TMI 1026 - HC - Central Excise

Maintainability - Monetary limits - Recovery of Cenvat credit along with interest and imposition of penalty - Purchase of Sugar Confectionery namely Butter Scotch packaged in 30 gms. pouch in bulk and availed Cenvat credit on the said goods - Assessee put one 30 gms. pouch containing Butter Scotch inside the pack of Coffee Bite weighing 500 gms. manufactured by the assessee with the indication that the 30 gms - Appellant contended that for preferring an appeal, monetary limit is fixed and only if the monetary limit exceeds ₹ 2 Lakhs, appeal can be filed. Since the monetary limit in the present case, even as per the order of the Commissioner (Appeals) is well within the limit of ₹ 2 Lakhs, the present appeal, is not maintainable. Held that - even though the appeal has been admitted way back on 8-9-2008, a cursory look at the duty demand would reveal that the demand is approximately ₹ 1 lakh. The reason for the litigation policy being put into operation coupled with the fact that the duty demand is only to the tune of ₹ 1 lakh approximately would not stand in the way of this Court to bring this appeal within the ambit of the above policy inspite of the appeal having been admitted on 8-9-2008. Therefore, even though this appeal is filed to consider the question of law, we are not inclined to entertain this appeal in view of the preliminary objection made by the the respondent that the monetary limit to prefer an appeal is pegged at ₹ 2,00,000/- by the litigation policy of the Government issued by the Ministry of Finance, Department of Revenue, Central Board of Excise & Customs vide Instructions dated 20-10-2010. It is very clear from the records that the monetary limit having been fixed at ₹ 2 lakhs, even as per the order of the Original authority, the interest and penalty being less than ₹ 2 Lakhs, the appeal is not maintainable. Therefore, in the light of circular issued by the Board dated 20-10-2010, the Court is not inclined to entertain this appeal. - Decided against the revenue

Summary

Issues:
1. Interpretation of the process of combining packing of a pouch inside a pack under Central Excise Act.
2. Determination of whether the pouch inside the pack without any treatment amounts to manufacture.
3. Allowance of credit of duty paid on the pouch as an input for the final product.

Analysis:
1. The case involved a dispute regarding the manufacturing process of combining a pouch of Butter Scotch inside a pack of Coffee Bite. The Tribunal had to determine whether this process constituted manufacturing under Section 2(f)(iii) of the Central Excise Act. The assessee, a manufacturer of Sugar Confectionery, included a 30 gms. pouch of Butter Scotch inside a 500 gms. pack of Coffee Bite. The Revenue sought recovery of Cenvat credit and imposed penalties on the assessee for this inclusion.

2. After due process, the original authority ordered the recovery of wrong credit taken by the assessee, along with interest and penalties. The Commissioner (Appeals) rejected the appeal, leading the assessee to appeal to the Tribunal. The Tribunal allowed the appeal, prompting the Department to file the present appeal before the High Court.

3. The Department faced a challenge regarding the maintainability of the appeal based on the National Litigation Policy issued by the Ministry of Finance. The Policy set monetary limits for filing appeals, and the Department argued that the appeal was admitted before the Policy came into effect. However, the Court considered the Policy's objective to reduce Government litigation and bring efficiency to the legal process. Despite the appeal being admitted earlier, the Court applied the Policy retrospectively and dismissed the appeal as not maintainable due to the monetary limit specified in the Policy.

In conclusion, the High Court dismissed the appeal based on the monetary limit set by the National Litigation Policy, without delving into the substantive legal issues raised in the case.