By Puloma Dalal, Jayesh Gogri, Mandar Telang Chartered Accountants
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Whether CBEC Circulars/Instructions which are administrative in nature are binding on the department? Held, yes.
Facts:
The department preferred an appeal against an Order of CESTAT dated 14-07-2007 rejecting appeal filed by the department. The issue involved was the demand of refund of Rs. 89,476/- sanctioned by the Tribunal under Rule 5 of the CENVAT Credit Rules, 2004.
The department filed this appeal challenging the order passed by the CESTAT and on 25-02-2010 by way of an order the High Court formulated questions on the issue. The CBEC on 20-10-2010 issued Circular/ Instruction F. No. 390/Misc./163/2010-JC providing for monetary limits in respect of filing of appeals by the department in the Tribunal, High Court and Supreme Court. The said instruction had prescribed monetary limit of Rs. 10 lakh of tax and penalty in case appeal to be preferred by the department to the High Court. The respondent argued that, though the said Instruction was issued after the formulation of questions by the High Court in the present case, the department could not violate the CBEC instructions and since the present case is below prescribed monetary limits, department’s appeal should be dismissed.
Held:
The High Court held that the department was not authorised to prefer an appeal where the same is the below prescribed monetary limit. Though questions were framed in an earlier hearing, the High Court refrained from considering the merits of the case and dismissed the appeal as it was in violation to CBEC instructions.
