2015 (8) TMI 501 - HC - Service Tax

Maintainability of appeal - Monetary limit - Held that - Division Bench of this Court in the case of Commissioner of Central Excise & Customs v. Stovec Industries Ltd., reported in 2013 (1) TMI 72 - GUJARAT HIGH COURT held that in view of instruction dated 17-8-2011, tax appeal below ₹ 10 lakh is not maintainable and this instruction also applies to the pending appeal. Following the aforesaid decision of the Division Bench, we dismiss these tax appeals as not maintainable - Decided against Revenue.

Summary

Issues:
1. Interpretation of Rule 5 of Cenvat Credit Rules regarding "input service" 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. (NT) regarding refund of Cenvat credit for exports.

Analysis:
1. The Court examined whether the CESTAT erred in interpreting Rule 5 of Cenvat Credit Rules and sub-rule 2(1) concerning the definition of "input service" in relation to services "used in manufacture." The dispute centered on the treatment of maintenance services as services "used in manufacture." The Court deliberated on the correct interpretation of these rules to determine the eligibility of certain services for Cenvat credit.

2. Another issue addressed was the CESTAT's decision to include various expenses like advertisement, insurance premium, labor processing charges, repairs 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. The Court analyzed whether these expenses truly qualified as input services under the relevant regulations.

3. The Court also considered whether the CESTAT overlooked Notification No. 5/2006-C.E. (NT), issued on 14-3-2006, which specified that the refund of Cenvat credit is permissible only for inputs or input services utilized in the manufacture of final products cleared for export. This issue focused on the compliance with the notification's provisions and the implications for the refund eligibility criteria under the Cenvat Credit Rules.

4. Ultimately, the Court referenced a prior decision in Commissioner of Central Excise & Customs v. Stovec Industries Ltd., which established that tax appeals below a certain threshold were not maintainable as per an instruction dated 17-8-2011. Following this precedent, the Court dismissed the tax appeals as not maintainable due to falling below the specified monetary limit. Consequently, the questions of law raised in the appeals were resolved in favor of the assessee and against the revenue, based on the maintainability issue rather than the substantive tax law interpretations.