2013 (4) TMI 127 - HC - Central Excise

Applicability of circular dated 17/8/2011 related to Reduction of Government litigation - providing monetary limits for filing appeals by the Department before CESTAT/High Courts and Supreme Court - Matter before the Court is whether Credit of service tax paid on services of Customs House Agent/port services is admissible to the manufacturers as input service tax credit by overlooking statutory provision of Rule 2(l) of Cenvat Credit Rules, 2004 for which respondent has raised a preliminary objections that the appeal is not maintainable in view of the smallness of amount as in this case the Cenvat Credit amount and of penalty. Held that - In the present appeal the amount involved is Rs. 1,23,739/-. Learned Senior Standing Counsel for the appellant could not dispute the contents of the circulars and the monetary limits respectively fixed therein. When the matter came up for admission, the circular had come into force. Therefore, we are of the considered view that the learned counsel for the appellant ought to have produced to the notice of this Court the Circular dated 17th August 2011 and if this circular had been brought to the notice of this Court the appeal would not have been admitted. It cannot be gainsaid that the Tribunal is bound by its own circular. In our opinion, since in the instant appeal the amount of Cenvat credit and penalty involved is small only in view of Circular dated 17th August 2011 the appeal could not have been preferred by the Central Excise and Customs Department. Same view has been taken by this Court in Tax Appeal No. 7 of 2011 in Commissioner of Central Excise and Customs, Surat-I vs. M/s. Sanoo Fashion Pvt. Ltd. 2013(4) TMI 76 - GUJARAT HIGH COURT . Therefore, it is not necessary for us to go into the substantial question of law formulated by this Court as the appeal filed by the Revenue itself was not maintainable. For the reasons aforesaid, this appeal is dismissed keeping question open to be filed in appropriate case.

Summary

Issues:
1. Maintainability of the appeal due to the small amount involved.
2. Interpretation of Circulars dated 20-10-2010 and 17-8-2011 regarding monetary limits for filing appeals.

Issue 1: Maintainability of the appeal due to the small amount involved:
The appeal raised a substantial question of law regarding the admissibility of service tax credit paid on services of Customs House Agent/port services as 'input service tax credit.' The respondent contended that the appeal was not maintainable due to the small amount involved, which was the same as the penalty imposed. The Circular dated 20-10-2010 emphasized reducing government litigation and set monetary limits for filing appeals. The Circular stated that no appeal should be filed where the duty involved or total revenue, including fines and penalties, is below specific thresholds. The Circular also highlighted that adverse judgments on certain issues should be contested regardless of the amount involved. The subsequent Circular No. 390/Misc./163/2010-JC, dated 17-8-2011, further clarified the monetary limits for filing appeals before different forums. The Court noted that the appeal amount of Rs. 1,23,739/- fell within the limits specified in the Circular dated 17-8-2011, rendering the appeal not maintainable.

Issue 2: Interpretation of Circulars dated 20-10-2010 and 17-8-2011 regarding monetary limits for filing appeals:
The Circular dated 20-10-2010 aimed to reduce government litigation by setting monetary limits for filing appeals based on the duty involved or total revenue, including penalties and fines. It specified that appeals should not be filed below certain thresholds unless specific conditions, such as constitutional validity challenges or illegal orders, were met. The subsequent Circular No. 390/Misc./163/2010-JC, dated 17-8-2011, revised and clarified the monetary limits for filing appeals before different appellate forums. It detailed that the determinative element for appeal filing would be the duty/tax under dispute and provided examples to illustrate the application of the monetary limits. The Court applied the Circular dated 17-8-2011 to the present case, where the appeal amount was within the prescribed limits, leading to the dismissal of the appeal. The Court emphasized that the Tribunal was bound by its own circulars and cited a previous case where a similar view was taken, further reinforcing the dismissal of the appeal based on the monetary limits set in the Circular.

In conclusion, the Court dismissed the appeal due to the small amount involved, as per the monetary limits specified in the Circular dated 17-8-2011, highlighting the importance of adhering to such circulars to reduce government litigation and ensure efficient use of judicial resources.