The Ahmedabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) dismissed department’s appeal stating that appeals filed by the revenue department are exempt from the monetary threshold limit only in cases involving constitutional validity or ultra vires issues.
RMG Polyviny India Ltd., the company filed a claim for a refund of pre-deposit amounts paid after a show cause notice was issued. The company made deposits totaling Rs. 67,48,635 in December 2014, following the issuance of two show-cause notices.
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The adjudicating authority initially upheld the demand. The company appealed to the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), which ruled in their favor in 2017. The appellant sought interest on the refund amount from the date of the deposit.
The revenue department argued that interest should be payable only from the date of the appeal filing (March 2017) per CBEC Circular No. 984/08/2014-CX, rather than the deposit date (December 2014).
On appeal, the Commissioner sanctioned a refund of Rs. 78,26,385 with Rs. 30,05,247 as interest calculated from the date of the original deposit. Aggrieved, the revenue department appealed the decision, challenging the interest calculation basis.
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CBIC (Central Board of Indirect Taxes and Customs) circulars set a monetary threshold for appeals to reduce litigation, generally limiting appeals in cases below Rs. 50 lakhs. The revenue argued that its appeal was exempt from the monetary threshold due to the nature of the dispute, which it claimed involved statutory interpretation issues.
The department counsel argued that the case fell under the exceptions for monetary limits specifically pointing to issues of interest calculation under Sections 35FF and 11BB of the Central Excise Act. They argued that this issue constituted a matter of statutory interpretation which should be exempt from the threshold rule, allowing the appeal despite the amount being below Rs. 50 lakhs.
The two-member bench comprising P.K. Choudhary, Member (Judicial Member), and Sanjiv Srivastava (Technical Member) observed that the CBIC circular clearly restricts exceptions to issues involving constitutional validity or ultra vires matters only.
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The tribunal clarified that an interpretation of statutory provisions, such as interest calculation under Sections 35FF and 11BB of the Central Excise Act, does not equate to a constitutional validity challenge. The Tribunal noted that the revenue’s argument lacked a constitutional or ultra vires basis and thus could not be exempted from the monetary threshold limit.
The Tribunal ruled that the appeal was not maintainable, as the revenue department’s arguments did not fall under the specified exceptions for exemption from the monetary limit. The revenue’s appeal was dismissed.
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