2015 (7) TMI 345 - HC - Central Excise

Denial of MODVAT Credit - exemption under Notification No.214/86 CE - Held that - On fact that the Commissioner (Appeals) as well as the Tribunal have taken a clear finding that the respondent/assessee had not wrongly availed the credit and therefore there appears to be a question of fact. Further more, in view of the preliminary objection raised by the learned counsel for 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 in F.No.390/Misc./163/2010-JC, we are not inclined to entertain the appeals. - Even as per monetary limit - Appeal is not maintainable - Decided against assessee.

Summary

Issues:
1. Interpretation of Modvat Scheme and Notification No.214/86-CE regarding movement of inputs for job worked goods.
2. Allowance of duty paid by job worker as credit to the assessee under Modvat Scheme.
3. Clearance of job worked goods under Notification No.214/86 CE.

Issue 1: Interpretation of Modvat Scheme and Notification No.214/86-CE:
The appellant challenged the Tribunal's order dismissing the appeals filed by the Revenue. The substantial questions of law framed for consideration included whether the authorities failed to understand the Modvat Scheme and the procedure under Notification No.214/86-CE governing input movement for job worked goods. The dispute centered on the duty paid by the job worker and its treatment as credit against the law's letter and spirit. The Tribunal's decision allowing the duty paid by the job worker as credit to the assessee was questioned for deviating from the legal provisions.

Issue 2: Allowance of duty paid by job worker as credit under Modvat Scheme:
The respondent, engaged in manufacturing, arranged to clear modvat inputs directly to their job worker. The job worker processed inputs, adding electric wires, and invoiced under Rule 52(A) instead of Rule 57F(4) Challan. The Department disallowed credit, alleging irregularities in input receipt and contravention of rules. The Adjudicating Authority confirmed the demand and imposed penalties. The Commissioner (Appeals) later allowed the appeals, leading to the Department's appeals before the Tribunal. The Tribunal upheld the credit allowance, leading to the Revenue's appeal before the High Court.

Issue 3: Clearance of job worked goods under Notification No.214/86 CE:
A preliminary objection was raised regarding the maintainability of the appeal based on the Government's litigation policy setting monetary limits for filing appeals. The Government's circular restricted appeals where the duty involved or total revenue, including fines and penalties, did not exceed specific thresholds. The High Court found that the demands and penalties were below the monetary limit specified, rendering the appeals not maintainable. The Court dismissed the appeals in line with the Board's circular, emphasizing adherence to the specified monetary limits.

In conclusion, the High Court dismissed the appeals based on the Government's litigation policy regarding monetary limits for filing appeals, finding the demands and penalties below the specified threshold. The judgment emphasized the importance of adhering to the circular's directives in determining the maintainability of appeals, thereby upholding the policy's applicability to the case at hand.