Appeal can be admitted even if amount is less than Rs.50,000/- if issue involves question of law.

PJ/Case Law/2014-15/2344

Case:-RATHI DAGA Vs COMMISSIONER OF CENTRAL EXCISE, NASHIK

Citation:-2014-TIOL-1765-CESTAT-MUM

Brief facts:-The appeal and stay petition are directed against Order-in-Appeal No. AKP/187/NSK/2011 dated 30/09/2011 passed by the Commissioner of Customs & Central Excise (Appeals), Nashik. Vide the impugned order, the lower appellate authority has upheld the confirmation of demand of an amount Rs. 26,487/- on the ground that the appellant availed CENVAT credit in excess of 20% cap in respect of inputs and input services which were used in or in relation to rendering of taxable as well as exempted service.

Appellant’s contentions:-The learned counsel submits that prior to issue of the notice, the appellant reversed the excess credit availed of Rs. 927/- along with interest thereon thereby complying with the requirement of law and therefore, the impugned demands at 8% of the value of exempted services would amount to double taxation. In these circumstances, it is prayed that the appeal be admitted even though the amount involved is less than Rs. 50,000/-.

Respondent’s contentions:-The learned Superintendent (AR) appearing for the Revenue submits that this is only a one off transaction and has no recurring effect and therefore, rejection of appeal at the admission stage will not cause any prejudice and hence the appeal and stay petition be rejected at the admission stage itself.

Reasoning of judgment:-The issue for consideration in this case is whether, reversal of credit taken on common input services used in or in relation to taxable service as well as exempted service would suffice or the appellant should be compelled to pay an amount @ 8% of the value of the exempted service as provided for in Rule 6 (3) of the CENVAT Credit Rules, 2004. The cap of 20% for availing of credit was lifted w.e.f. 01/04/2008 and the assessees were permitted to avail CENVAT credit without any limit. Therefore, as clarified by the Board, what could have been demanded from the assessee is only interest liability on the excess credit availed and not denial of the entire credit. In these circumstances, there is a question of law involved for consideration of the appeal and, therefore, the appeal deserves to be admitted even though the amount involved is less than Rs. 50,000/-. Accordingly, the appeal is admitted and the Registry is directed to list the appeal for final hearing in due course.

Decision:- Appeal admitted.

Comment:- The analogy of the case is that the Cap of 20% for availing of credit was lifted w.e.f 01/04/2008 and the assessees were permitted to avail CENVAT credit without any limit and so the appellant should not be compelled to pay an amount @ 8% of the value of the exempted service. Therefore, as clarified by the Board, what could have been demanded from the assessee is only interest liability on the excess credit availed and not denial of the entire credit. Accordingly, the appeal was admitted although the amount involved is less than Rs.50,000/-.

Prepared by:- Monika Tak

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PJ/Case Law/2014-15/2344

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