2022 (3) TMI 103 - HC - Central Excise

Maintainability of appeal - Quantum of penalty - monetary amount involved in the appeal as per litigation policy - HELD THAT - Admittedly, the quantum of penalty which was imposed by the original authority is far below the threshold limit fixed by the CBEC in their circular instruction. Therefore, the appellant cannot pursue this appeal. The revenue has preferred appeal before the Hon ble Supreme Court and an order of stay has been granted. Therefore, it is submitted that the revenue should be permitted to pursue this appeal regardless of the fact that this is far below the monetary limit prescribed in the circular - such a course need not be adopted for more than one reasons firstly, as pointed out that there is no dispute to the fact that the circular instruction issued by the CBEC would prevent the department from pursuing the appeal as the penalty imposed was ₹ 86,461/-. The subject-matter of challenge before the authority as well as the tribunal was only with regard to the imposition of penalty. It may be true that certain observations have been made by the first appellate authority as regards the validity of Rule 8(3)A and also quoted certain decisions of the various High Courts which have struck down the rule - if the legal issue with regard to the validity of Rule 8(3)A is left open, then the interest of the revenue will stand protected and at the same time if it is held that the appeal cannot be pursued by the revenue on account of the low tax effect, the interest of the assessee would also be safeguarded. The appeal filed by the revenue is dismissed on the ground that the amount of penalty imposed is lesser than the threshold limit fixed in the circular instruction by CBEC as part of the national litigation policy - Application dismissed.

Summary

Issues:
1. Delay in filing the appeal and condonation of delay.
2. Monetary limit for pursuing appeals before High Courts.
3. Imposition of penalty and validity of Rule 8(3A) of the Central Excise Rules.

Analysis:
1. Delay in filing the appeal and condonation of delay:
The appellant/revenue sought to condone a delay of 950 days in filing the appeal, citing a Supreme Court order. The High Court noted that the limitation for filing the appeal had expired earlier and found no satisfactory explanation for the delay. However, considering the exceptional clause due to the interpretation of Rule 8(3A) pending before the Supreme Court, the Court exercised discretion and condoned the delay.

2. Monetary limit for pursuing appeals before High Courts:
The revenue raised substantial questions of law in an appeal under the Central Excise Act, challenging the Tribunal's order. Despite arguments to pursue the appeal due to the stay granted by the Supreme Court, the Court found that the penalty amount imposed was below the threshold fixed by the CBEC. The Court emphasized that the circular instruction prevented the department from pursuing the appeal due to the low tax effect. The Court dismissed the appeal based on the monetary limit set by the CBEC, safeguarding the interests of both the revenue and the assessee.

3. Imposition of penalty and validity of Rule 8(3A) of the Central Excise Rules:
The appeal involved the imposition of a penalty under the Central Excise Act, with the Commissioner of Appeals setting aside the penalty. The Tribunal's order dismissing the appeal was based on the penalty amount being below the threshold limit. While certain observations were made regarding the validity of Rule 8(3A), the Court decided to dismiss the appeal due to the low tax effect, ensuring the interests of both parties. The Court left the legal issue regarding the validity of Rule 8(3A) open for future consideration.

In conclusion, the High Court addressed the issues of delay in filing the appeal, monetary limits for pursuing appeals, and the imposition of penalty under the Central Excise Act. The Court balanced the interests of the revenue and the assessee while considering legal interpretations and relevant precedents, ultimately delivering a comprehensive judgment in line with the applicable laws and policies.