2014 (9) TMI 330 - HC - Central Excise

Denial of refund claim - Revenue appeal - monetary limit - Held that - In the present appeal the amount involved is 36,505. Appellant could not dispute the contents of the circulars and the monetary limits respectively fixed therein. It is true that though the appeal was filed on 15-9-2010 and thus before the date of circular, however when it came up for admission on 28-4-2011 at that time the circular was in force. appellant ought to have brought to the notice of this Court the Circular dated 20-10-2010 and, if this circular had been brought to the notice of this Court, the appeal would not have been admitted. It cannot be said that the Department is bound by its own circular. Since in the instant appeal the amount involved is ₹ 50,904/- only, in view of the circular dated 20-10-2010, the appeal could not have been preferred by the Central Excise and Customs Department before this Court. Though the appeal has been admitted, we did not go into the substantial question of law formulated by this Court. As we have recorded on being informed from the side of the Department in our order in Tax Appeal No. 1294 of 2011, it may be stated that after circular dated 17-8-2011, no other circular has been issued by the Ministry of Finance, Department of Revenue, Central Board of Excise and Customs, Government of India, New Delhi, authorizing the Department to file appeals where the amount is less than ₹ 10 lacs. Decided against Revenue.

Issues Involved:
1. Interpretation of Rule 5 of Cenvat Credit Rules regarding "input service" and "used in manufacture."
2. Inclusion of various expenses as services "used in manufacture" of the final product for export.
3. Ignoring Notification No. 5/2006-C.E. (N.T.) regarding the refund of Cenvat credit for input service used in the manufacture of final product cleared for export.

Issue-wise Detailed Analysis:

1. Interpretation of Rule 5 of Cenvat Credit Rules regarding "input service" and "used in manufacture":
The appeal questioned whether the Tribunal erred in interpreting Rule 5 of the Cenvat Credit Rules along with sub-rule 2(1) concerning the definition of "input service." Specifically, it involved the interpretation of the phrase "used in manufacture" and whether various maintenance services could be treated as services "used in manufacture." The Tribunal's interpretation was challenged, but the court did not delve into the merits due to the monetary limit prescribed by the circulars.

2. Inclusion of various expenses as services "used in manufacture" of the final product for export:
The second issue addressed whether the Tribunal committed an error by including expenses such as advertisement, insurance premium for employees, labor processing charges, repair of computers, legal and professional expenses, mobile expenses, consultation engineering services, and maintenance and repair services as services "used in manufacture" of the final product for export. This inclusion was contested by the Department, but again, the court did not examine the merits due to the monetary threshold for filing appeals.

3. Ignoring Notification No. 5/2006-C.E. (N.T.) regarding the refund of Cenvat credit:
The third issue involved whether the Tribunal erred in ignoring Notification No. 5/2006-C.E. (N.T.), dated 14-3-2006, which stipulates that the refund of Cenvat credit is allowed only in respect of input service used in the manufacture of the final product cleared for export. The Department's contention was that the Tribunal overlooked this notification. However, the court chose not to address this issue substantively due to the monetary limit set by the circulars.

Monetary Limits and Circulars:
The court noted that the amount involved in the present appeal was Rs. 50,904/-, which falls below the monetary limits set by the Department's own circulars dated 20-10-2010 and 17-8-2011. These circulars fixed monetary limits for filing appeals before the High Court at Rs. 2 lakhs and later revised to Rs. 10 lakhs. The court emphasized that these limits aim to reduce government litigation and ensure that valuable court time is spent resolving significant cases.

Conclusion:
Given that the amount involved was below the prescribed monetary limit, the court concluded that the appeal should not have been filed by the Central Excise and Customs Department. The appeal was dismissed without addressing the substantial questions of law, keeping these questions open for decision in an appropriate case. The court highlighted that the Department is bound by its circulars, and appeals involving amounts below the threshold should not be filed.

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