2012 (9) TMI 773 - HC - Service Tax

Appeal u/s 35G with High Court Assistant Commissioner disallow the Cenvat Credit of ₹ 5,01,561 Commissioner Appeal upheld the same CESTAT set aside the order of commissioner appeal Now department file appeal with High court u/s 35G Held that - Since in the instant appeal the amount involved is ₹ 5,01,561/- only, In view of the circular dated 17.08.2011, the appeal could not have been preferred by the department before this Court. Therefore, authorizing the Department to file appeals where the amount is less than ₹ 10 lacs. It cannot be gainsaid that the Department is bound by its own circulars. Appeal decide against revenue

Issues Involved:
1. Admissibility of input service tax credit for Customs House Agent/port services under Rule 2(l) of Cenvat Credit Rules, 2004.
2. Applicability of monetary limits for filing appeals as per CBEC circulars dated 20.10.2010 and 17.08.2011.

Issue-Wise Detailed Analysis:

1. Admissibility of Input Service Tax Credit:
- The core issue revolves around whether the Tribunal committed a substantial error of law by holding that credit of service tax paid on services of Customs House Agent (CHA) and port services is admissible to manufacturers as 'input service tax credit' under Rule 2(l) of the Cenvat Credit Rules, 2004.
- The respondent-assessee, engaged in the manufacture of various machinery parts, was found to have wrongly availed Cenvat credit on services like Canteen Services, Air Tickets, and CHA & Port services during an audit verification. These services were deemed not to be 'input services' under Rule 3 of the Cenvat Credit Rules, 2004, read with Rule 2(1)(ii).
- A show-cause notice was issued, leading to the Assistant Commissioner disallowing the Cenvat Credit amounting to Rs. 5,01,561 and imposing a penalty of Rs. 4,000 under Rule 15(3) of the Cenvat Credit Rules, 2004, along with recovery of interest.
- The Commissioner (Appeals) upheld the Assistant Commissioner's order, but the Tribunal allowed the appeal, setting aside the Commissioner (Appeals) order. The present appeal under section 35G of the Central Excise Act challenges the Tribunal's decision.

2. Applicability of Monetary Limits for Filing Appeals:
- The appeal's subject matter involves a refund claim of Rs. 5,01,561, which brings into consideration the Excise Department's circulars dated 20.10.2010 and 17.08.2011, aimed at reducing government litigation by setting monetary thresholds for filing appeals.
- The circular dated 20.10.2010, issued by the Ministry of Finance, Department of Revenue, Central Board of Excise & Customs, emphasizes that appeals should not be filed if the matter is covered by a series of judgments that have not been challenged in the Supreme Court, or if the assessee has acted in accordance with long-standing practice.
- The circular also states that appeals in the Tribunal should not be filed where the duty involved or total revenue including fine and penalty is Rs. 1 Lakh and below, and for High Courts, the threshold is Rs. 2 Lakhs and below.
- The subsequent circular dated 17.08.2011 revised these monetary limits, setting the threshold for appeals in the Tribunal at Rs. 5,00,000, for High Courts at Rs. 10,00,000, and for the Supreme Court at Rs. 25,00,000.
- The court noted that the learned counsel for the appellant failed to bring the circular dated 17.08.2011 to the court's notice, which would have precluded the admission of the appeal as the amount involved was only Rs. 5,01,561.
- The court emphasized that the Department is bound by its own circulars and, given the monetary limits specified, the appeal should not have been preferred by the Central Excise and Customs Department.

Conclusion:
- The court dismissed the appeal, noting that the amount involved was below the monetary threshold set by the circulars, and therefore, the appeal should not have been admitted. The substantial question of law formulated by the court was not addressed, leaving it open to be decided in an appropriate case.

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