Bombay High Court
The Commissioner Of Cgst And Central ... vs Dorf Ketal Pvt. Ltd on 19 December, 2018
Bench: Akil Kureshi, M.S.Sanklecha
Priya Soparkar 1 26 cexa 155-18-o
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
CENTRAL EXCISE APPEAL NO.155 OF 2018
The Commissioner of CGST and
Central Excise, Raigad Commissionerate ... Appellant
V/s.
M/s Dorf Ketal Pvt. Ltd. ... Respondent
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Mr.Jitendra B. Mishra with Mr.Sham Walve for the Appellant.
Mr.Durgesh Nadkarni i/by M/s Legal Solutions for the
Respondent.
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CORAM : AKIL KURESHI AND
M.S.SANKLECHA, JJ.
DATE : DECEMBER 19, 2018.
P.C.:-
1. This appeal is filed by the revenue to challenge the judgment of the Custom, Excise and Service Tax Appellate Tribunal (CESTAT) dated 26th May, 2017. When the appeal was taken up for admission herein, learned counsel for the respondent-
assessee raised preliminary objection contending that the tax effect involved in this appeal is below Rs.50 lakhs, which is the minimum prescribed by the CBIC in its circular dated 11 th July, ::: Uploaded on - 21/12/2018 ::: Downloaded on - 25/12/2018 21:25:23 ::: Priya Soparkar 2 26 cexa 155-18-o 2018 to enable the department to file and press the appeals before the High Court. In this context, we had heard learned counsel for the parties.
2. Learned counsel Shri Mishra for the department submitted that he has not been instructed to withdraw the appeal, though he agreed that the tax effect involved in this appeal is less than Rs.50 lakhs. He placed on record a copy of a letter dated 22 nd November, 2018 written by the Assistant Commissioner, Raigad conveying to him that the question of withdrawal of any departmental appeal lies with the discretionary powers of the Commissioner. In the present case, this case is not considered fit for withdrawal and no instructions have been received to withdraw the same and that therefore, the counsel should defend the case before the High Court.
3. In addition to recording the statement of counsel for the department that the tax effect involved in the appeal is less than Rs.50 lakhs, we have also ascertained the same from the documents on record. The order passed by the adjudicating ::: Uploaded on - 21/12/2018 ::: Downloaded on - 25/12/2018 21:25:23 ::: Priya Soparkar 3 26 cexa 155-18-o authority in the present case was one in which he had confirmed a Cenvat credit amount of Rs.31,35,863/- to be recovered from the respondent-assessee with interest and matching penalty.
4. In background of such facts the question is, Can the department without pointing out applicability of any of the exceptions in circular dated 11th July, 2018 of CBIC, continue to press the appeal on merits?
5. As is well known by way of its policy for reduction of litigation, the Central Board of Direct Taxes i.e. CBDT and CBIC have been issuing circulars from time to time instructing the department not to file and in some cases if so filed, not to press appeals before Higher Authorities, Tribunal, High Court or Supreme Court as the case may be unless the tax effect involved is higher than the minimum threshhold respectively prescribed in such circulars. In the present case, we are governed by the latest circular of CBIC dated 11th July, 2018. Relevant portion of the circular reads as under:-
"In exercise of the powers conferred by Section ::: Uploaded on - 21/12/2018 ::: Downloaded on - 25/12/2018 21:25:23 ::: Priya Soparkar 4 26 cexa 155-18-o 35R of the Central Excise Act, 1944 made applicable to Service Tax vide Section 83 of the Finance Act, 1944, the Central Board of Indirect Taxes and Customs fixes the following monetary limits below which appeal shall not be filed in the CESTAT, High and Supreme Court:
Sr. No. Appellate Forum Monetary Limit
1. CESTAT Rs.20,00,000/-
2 High Courts Rs.50,00,000/-
3 Supreme Court Rs.1,00,00,000/-
2. This instruction applies only to legacy issues i.e. matters relating to Central Excise and Service Tax, and will apply to pending cases as well.
3. Withdrawal process in respect of pending cases in above forums, as per the above revised limits, will follow the current practice that is being followed for the withdrawal of cases from the High Courts, CESTAT and Commissioner (Appeals). All other terms and conditions of concerned earlier instructions will continue to apply.
4. It may be noted that issues involving substantial questions of law as described in para 1.3 of the Instruction dt 17.08.2011 from F No 390/Misc/163/2010-JC would be contested irrespective of the prescribed monetary limits.
6. Circular is issued in exercise of powers under Section 35R of the Central Excise Act, 1944, which pertains to appeal not to be filed in certain cases. Sub-section (1) of Section 35R provides that the Central Board of Excise and Customs may from time to ::: Uploaded on - 21/12/2018 ::: Downloaded on - 25/12/2018 21:25:23 ::: Priya Soparkar 5 26 cexa 155-18-o time issue orders or instructions or directions fixing such monetary limits as it may deem fit for the purposes of regulating the filing of the appeal, applications, revision or reference by the Central Excise Officers under the provisions of Chapter VI-A of the Central Excise Act, pertaining to appeals. Thus, this circular has a statutory force.
7. The perusal of the circular would show that the same prescribes revised monetary limits below which the department shall not file appeal before CESTAT, High Court or the Supreme Court. In so far as High Court is concerned, the monetary limit prescribed is Rs.50 lakhs. The circular in Paragraph No.3 provides that in respect of pending cases process of withdrawal would be undertaken as per such revised limits. This paragraph also clarifies that all other terms and conditions of the earlier instructions will continue to apply. Paragraph No.4 of the circular further clarifies that the cases filed in Paragraph No. 1.3 of the instructions dated 17th August, 2011 would be contested irrespective of the prescribed monetary limits. ::: Uploaded on - 21/12/2018 ::: Downloaded on - 25/12/2018 21:25:23 :::
Priya Soparkar 6 26 cexa 155-18-o
8. The earlier circular dated 17th August, 2011 also prescribed monetary limits for filing appeals, revision etc. In Paragraph No.3 thereof the circular carved out certain exceptions under which irrespective of the monetary limits, the department would pursue its appeals before the appropriate forum. These exceptions are as under :-
"(a) Where the constitutional validity of the provisions of an Act or Rule is under challenge.
(b) Where Notification/Instruction/Order or Circular has been held illegal or ultra virus."
9. Combined reading of the said circulars dated 11 th July, 2018 and 11th July, 2018 would be that the appeals involving tax effect less than Rs.50 lakhs would neither be filed by the department before the High Court nor pressed those already filed. The revised monetary limit, thus is intentionally made applicable to all pending appeals as well. The only exceptions being those laid down in the earlier circular dated 17 th August, 2011, relevant portion of which we have reproduced above.
10. We may record that like reasoned judgment in case of ::: Uploaded on - 21/12/2018 ::: Downloaded on - 25/12/2018 21:25:23 ::: Priya Soparkar 7 26 cexa 155-18-o Director of Income Tax Vs. S.R.M.B.Dairy Farming (P.) Ltd. 1, the Supreme Court had the occasion to examine the contents of a similar circular issued of the CBDT on 9 th February, 2011 prescribing revised monetary limits for filing appeals. According to the revenue, the revised monetary limits would apply to fresh cases to be instituted after the issuance of the circular. The Supreme Court referred to the Government of India's Litigation Reduction Policy and held that revised monetary limits would apply even to pending cases.
11. In the present case, the department does not point out that the monetary limit is higher than one prescribed by CBIC in its circular dated 11th July, 2018 or that the case falls within any of the exceptions provided in the circular dated 17 th August, 2011. The letter of the Assistant Commissioner, Raigad to the counsel for the department only conveys that it is wholly discretionary within the powers of the Commissioner whether to withdraw certain appeal or not. We do not think that this brings out the correct intention of the CBIC or for that matter 1 (2018)400 ITR 9(SC) ::: Uploaded on - 21/12/2018 ::: Downloaded on - 25/12/2018 21:25:23 ::: Priya Soparkar 8 26 cexa 155-18-o correct position in law. As noted, the circular dated 11 th July 2018 is issued in exercise of statutory powers and thus has statutory force. The successive circulars lay down the exceptions in which cases irrespective of the monetary limit the appeal may be pursued before the higher forum. The department, however, cannot contend that it is solely within the discretion of the Commissioner whether to apply such policy or not. If the tax effect is less than the monetary limit prescribed, the department can pursue the appeal only it falls in any of the exceptions; not otherwise. This would give rise to wholly arbitrary application of the Government policy which is simply not permissible in law. Excepting the stand of the department would permit the authorities to withdraw appeals against one assessee, whereas without citing any reasons, pursue the appeal against the another assessee situated identically as the former.
12. In the result, the appeal is dismissed as involving low tax effect.
(M.S.SANKLECHA,J.) (AKIL KURESHI,J.)
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