2011 (2) TMI 850 - HC - Central Excise

Refund - Rule 3(4) of Cenvat Credit Rules, 2002 - the Appellate Authority and the Tribunal decided against the department, the amount involved is only Rs.39,117/- sanction of refund of differential duty, debited in view of Rule 3(4) of Cenvat Credit Rules, 2002 on account of short reversal of credit on clearance of capital goods as such on the ground that Tribunal s decision dated 4.7.08 on main issue is in favour of party, - Inspite of the judgments of Hon ble Supreme Court as well as observations made by this Court, the department is turning a deaf ear and is wasting public money on avoidable litigation - Appeal dismissed with cost.

Summary

Issues Involved:
Appeal under Section 35G of the Central Excise Act, 1944 against an order passed by the Customs, Excise & Service Tax Appellate Tribunal, New Delhi regarding the sanction of refund of differential duty on account of short reversal of credit on clearance of capital goods.

Analysis:
The appellant, the revenue, filed an appeal under Section 35G of the Central Excise Act, 1944 against an order dated 28.1.2010 passed by the Customs, Excise & Service Tax Appellate Tribunal, New Delhi. The substantial question of law raised in the appeal was whether the Tribunal was right in rejecting the appeal of the Department without delving into the merits of the case and upholding the sanction of refund of differential duty debited due to short reversal of credit on clearance of capital goods 'as such'. This was based on Rule 3(4) of Cenvat Credit Rules, 2002. The Tribunal had previously ruled in favor of the party in a related matter, which the Department argued had not attained finality as their appeal before the Hon'ble High Court of Punjab & Haryana was pending decision.

The order-in-original dated 12.5.2006 had dropped proceedings alleging deficient payment of excise duty due to wrongful availment of cenvat credit. This order was upheld by the Commissioner (Appeals) and further by the Tribunal. Despite the Tribunal's commendation of the department's perseverance and the previous decision in favor of the party, the department still chose to file the appeal in the High Court. The High Court noted the department's carelessness and non-application of mind, especially considering the minimal amount involved, which was only Rs.39,117/-. The High Court criticized the department for disregarding judgments of the Hon'ble Supreme Court and wasting public money on avoidable litigation.

Consequently, the High Court dismissed the appeal and imposed costs quantified at Rs.10,000/- to be recovered from the person responsible for deciding to file the appeal. The costs were to be deposited with the High Court Legal Services Committee within three months. The Commissioner of Central Excise, Chandigarh-II, was required to file an affidavit of compliance, and a copy of the order was to be sent to the Secretary, Finance, Government of India, New Delhi.