2014 (5) TMI 565 - HC - Central Excise

Denial of refund claim - Maintainability of appeal - Limit below than prescribed limit by CBEC - Held that - by issuing such instructions, the C.B.E. & C. provided for certain directives for the Department to prefer appeals before the Tribunals. High Courts and Supreme Court, essentially to reduce the number of small appeals and to filter conditions of frivolous appeals, minimum tax effect was prescribed below which, it would not be open for the Department to file appeal to the High Court. - Department was unable to controvert the contention of the counsel for the respondents that in each case, the revenue effect involved was less than Rs. 2 lakhs - Decided against Revenue.

Summary

Issues:
Appeals filed by the Department challenging refund claims allowed by the Tribunal; Maintainability of appeals based on revenue effect below threshold limit set by C.B.E. & C. circular; Interpretation of C.B.E. & C. instructions on filing appeals based on tax effect; Dismissal of appeals due to revenue effect falling below prescribed limit.

Analysis:
The judgment involves appeals filed by the Department against refund claims allowed by the Tribunal. The primary issue raised during the hearing was the maintainability of these appeals based on the revenue effect, which was argued to be below the threshold limit specified in the circular issued by the C.B.E. & C. The circular aimed to restrict the filing of appeals with low tax effect to reduce the number of small and frivolous appeals. It set specific limits for filing appeals in Tribunals and High Courts based on the duty involved or total revenue, with exceptions outlined for certain circumstances.

The C.B.E. & C. circular provided clear instructions on the thresholds for filing appeals, stating that appeals in the Tribunal should not be filed where the duty involved or total revenue, including fines and penalties, is below a specified amount. It emphasized that the duty involved would be the decisive element in determining the filing of appeals. Additionally, exceptions were listed in the circular where adverse judgments on specific issues should be contested regardless of the amount involved, such as challenges to constitutional validity, illegal notifications, or accepted audit objections.

During the proceedings, the Department's counsel could not refute the argument put forth by the respondents' counsel that the revenue effect in each case was below the prescribed limit of Rs. 2 lakhs. Consequently, the High Court dismissed all the appeals, citing that they involved a tax effect lower than the limit set by the C.B.E. & C. instruction. Importantly, the court clarified that the dismissal was based on the revenue effect and did not involve an examination of the merits of the issues presented in the appeals.

In conclusion, the judgment focused on the interpretation and application of the C.B.E. & C. circular regarding the filing of appeals based on tax effect limits. By upholding the threshold set in the circular, the High Court dismissed the appeals due to the revenue effect falling below the prescribed limit, without delving into the substantive merits of the cases presented before them.