2017 (7) TMI 457 - HC - Central Excise

Whether Rule 5 of the Hot Re-rolling Mills Annual Capacity Determination Rules, 1997 would apply to a case where annual capacity of production has been redetermined in terms of Rule 4(2) on account of change in parameters even though re-determined annual capacity is less than the actual production for the financial year 1996-97? Held that - by later circular dated 01.01.2016, the department has made it clear that the instructions contained in the circulars dated 17.08.2011 and 17.12.2015 would apply to all pending cases. Since the earlier circulars prescribed revised monetary limits prospectively, it was open for the department to contend that such revised higher limits would not apply to pending cases. However, with circular dated 01.01.2016 the entire issue has undergone a sea change. The department now wishes that the revised monetary limit be applied to all pending cases irrespective of the date of filing. Whether the present case falls in any of the exceptions? - Held that - First two exceptions provided in the circular dated 17.08.2011 for apparent reasons do not apply and are not even pressed in service before us by the counsel for the department. According to her, however, the third exception provided in circular dated 17.12.2015 would apply. We, however, note that the said exception is made in cases of classification and refunds issues which are of legal and/or recurring nature. Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Interpretation of Rule 5 of the Hot Re-rolling Mills Annual Capacity Determination Rules, 1997 in cases of redetermined annual capacity.
2. Threshold level for filing appeals based on the amount of duty involved.
3. Exceptions to pursuing appeals involving low tax effect as per CBEC circulars.
4. Application of exceptions to the present case based on the nature of the issue.

Analysis:
1. The primary issue in this case revolved around the interpretation of Rule 5 of the Hot Re-rolling Mills Annual Capacity Determination Rules, 1997 concerning cases where the annual capacity of production has been redetermined under Rule 4(2). The Court considered whether Rule 5 would apply even if the redetermined annual capacity is less than the actual production for a specific financial year.

2. Another significant aspect discussed was the threshold level for filing appeals based on the amount of duty involved. The respondent contended that the duty amount in this case fell below the minimum threshold level set by the CBEC in its circulars. The circulars specified different monetary limits for filing appeals, with subsequent revisions and exceptions based on the tax effect.

3. The Court delved into the exceptions provided by the CBEC for pursuing appeals involving low tax effect. The circulars outlined exceptions such as challenging the constitutional validity of provisions or contesting adverse judgments on legal grounds. The circulars also addressed issues related to classification, refunds, and recurring legal matters as exceptions to the general rule of not pursuing appeals with low tax effect.

4. In analyzing the application of exceptions to the present case, the Court scrutinized whether the issue fell within the scope of classification or refund matters of legal or recurring nature. Upon examination of the question framed in the appeal and the documents on record, the Court concluded that the issue did not align with the criteria for exceptions based on classification or refund issues.

In conclusion, the Court dismissed the tax appeal on the grounds of low tax effect, emphasizing the importance of meeting the criteria for exceptions outlined in the CBEC circulars to pursue appeals involving lower tax amounts.