Ministry of Finance
Department of Revenue
Central Board of Excise & Customs
New Delhi 12th December, 2013
1. All Chief Commissioners and Directors General under the Central Board of Excise and Customs.
2. Chief Commissioner (AR), Customs, Excise & Service Tax Appellate Tribunal.
3. All Commissioners of Customs/Central Excise/Service Tax/All Commissioners (AR), CESTAT/Commissioner, Directorate of Legal Affairs.
Sub:- Reduction of Government litigation - providing monetary limits for filing appeals by the Department before CESTAT/High Courts and Supreme court – Regarding.
The Instruction issued from F. No.390/Misc/ 163/2010-JC dated 20.10.2010 which was modified by Instruction of even number dated 17.08.2011 prescribed the monetary limits below which appeal shall not be filed by the Department in the Tribunal / Courts. Section 35R of the Central Excise Act, 1944 made applicable to the Finance Act, 1994 vide Section 83 of the said Act, and Section 131BA of the Customs Act, 1962 vest power with the Board to regulate filing of appeals in the Tribunal and the Courts by specifying monetary limit below which appeal need not be filed.
2. Sub-Section 3 of Section 35R and Section 131BA provides that if an appeal has not been filed by the Department following Instructions issued for not filing appeal below the monetary limit, no person, being a party in appeal, shall contend that the Department has acquiesced in the decision on the disputed issue by not filing appeal. In effect, the decisions / judgments accepted for reasons of monetary limit do not have precedent value.
3. Instances have come to the notice of the Board where while arguing on the legal effect of an order accepted on account of low amount, the Department has failed to emphasize the relevant provisions of Section 35R as
above before the Courts / Tribunal. In a recent case, the Hon’ble High Court dismissed an order passed by the adjudicating authority and even quashed the Show Cause Notice on the ground that an earlier Tribunal order which had decided the issue was not challenged by the Department. The duty involved in the said case was below the threshold limit prescribed for filing appeal. The plea that non-filing of appeal against the said Tribunal order was on account of low amount and did not have any precedent value in the light of the provisions of Section 35R ibid and that the merits of the case are not finally settled, however, was not pleaded, resulting in two such judgments of the High Court.
3.1. It was further noticed that the issue involved in the said case was already before the Supreme Court in a Departmental appeal. As per the Board’s extant Circular No. 162/73/95-CX dated 14.12.1995 relating to Call Book, Show Cause Notices in question should have been transferred to Call Book awaiting the decision of the higher appellate forum.
4. In view of the above, the Departmental Counsels and the DRs in the Tribunal must plead that a judgment accepted for reasons of low amount should not be relied upon by the appellate forum and that the Department is at liberty to agitate the issue in subsequent proceedings till the matter is settled on merits. The officers in the field formations are hereby directed to take note of the statutory provisions mentioned in the Para 1 & 2 above and prepare the grounds of appeal / defense in suitable cases quoting the relevant provisions.
(Sunil K. Sinha)
Director (Judicial Cell)