Monetary limit for departmental appeals and Cenvat credit on education cess were applied to dismiss the Revenue challenge and grant relief.

Departmental appeals below the prescribed monetary threshold were held not maintainable, and the binding monetary-limit instruction was applied to pending appeals, so the Revenue appeal was dismissed without merits review. On the substantive tax issue, credit of education cess and secondary and higher education cess on goods received from a 100% export oriented unit was held admissible under Rule 3 of the Cenvat Credit Rules, 2004. The non obstante clause in Rule 3(7) was read as not defeating the substantive credit entitlement, and the contrary order was set aside.

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Issues: (i) whether the Revenue appeal was maintainable in view of the monetary limit prescribed for departmental appeals; and (ii) whether credit of education cess and secondary and higher education cess was admissible on goods received from a 100% export oriented unit under Rule 3 of the Cenvat Credit Rules, 2004.

Issue (i): whether the Revenue appeal was maintainable in view of the monetary limit prescribed for departmental appeals.

Analysis: The appeal involved an amount below the prescribed monetary threshold for filing departmental appeals before the Tribunal. The binding instruction on monetary limits was applied to pending appeals as well, and the appeal was therefore not examined on merits.

Conclusion: The Revenue appeal was not maintainable and stood dismissed on monetary limit.

Issue (ii): whether credit of education cess and secondary and higher education cess was admissible on goods received from a 100% export oriented unit under Rule 3 of the Cenvat Credit Rules, 2004.

Analysis: The issue was treated as settled in favour of the assessee by prior Tribunal authority. It was held that Rule 3(1) applies to the class of manufacturers concerned and that Rule 3(7)(b), read with the scheme of Rule 3, permits utilisation of the relevant credit for payment of education cess. The contention that the non obstante clause in Rule 3(7) curtailed the substantive credit entitlement was rejected.

Conclusion: Credit of education cess was admissible to the assessee and the contrary order was set aside.

Final Conclusion: The connected appeals were disposed of by rejecting the Revenue appeal on monetary limit and granting relief to the assessee on the substantive credit issue.

Ratio Decidendi: Where the governing Cenvat Credit Rules expressly permit credit and utilisation for education cess in the relevant manner, the non obstante clause cannot be read so as to defeat the substantive entitlement, and departmental appeals below the prescribed monetary limit are not to be entertained.

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