Customs Appeal Adjourned: Tax Effect Below Rs. 50 Lakh Threshold, Awaiting Commissioner's Decision on CBIC Instruction.

The appeal against the Customs, Excise & Service Tax Appellate Tribunal's order under Section 35G of the Central Excise Act, 1944, was adjourned. Despite the Larger Bench's decision favoring the Revenue, the appeal's tax effect was below the Rs. 50 lakh threshold set by CBIC Instruction No. 390. Consequently, the Court directed the Commissioner of Central Excise to decide on proceeding with the appeal, considering the binding nature of the CBIC instruction. The Commissioner was required to file an affidavit if the instruction was deemed inapplicable, with further proceedings scheduled for 30 July 2019.

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Issues:
1. Challenge to the order of the Customs, Excise & Service Tax Appellate Tribunal under Section 35G of the Central Excise Act, 1944.
2. Questions of law regarding refund of CENVAT credit and cash refund.
3. Reference of questions to the Larger Bench.
4. Decision of the Larger Bench in favor of the Revenue.
5. Threshold limit for appeal as per CBIC Instruction No. 390.
6. Disposal of appeal based on CBIC instructions.

Analysis:

1. The appeal challenges the order of the Customs, Excise & Service Tax Appellate Tribunal under Section 35G of the Central Excise Act, 1944. The substantial questions of law raised include the correctness of ordering a cash refund of CENVAT credit of duty paid, the equity aspect of such refund, and the legality of refunding CENVAT credit taken on inputs as cash when the final product is duty-exempt.

2. The appeal was considered along with other appeals before the Division Bench, which referred questions to the Larger Bench regarding the permissibility of cash refund under the proviso to section 11B(2) of the Act, granting refunds due to the closure of manufacturing activities, and the applicability of a specific order of the Apex Court as a declaration of law.

3. The Larger Bench, in a decision dated 14 June 2019, answered the questions in favor of the Revenue and against the Assessee, establishing the undisputed position that the Revenue's appeal must be allowed based on this decision.

4. The Respondent pointed out that the tax effect in the present appeal falls below the threshold limit of Rs. 50 lakhs set by CBIC Instruction No. 390, implying that the Revenue cannot pursue the appeal before the High Court based on this instruction.

5. Despite the merits being in favor of the Revenue, the Respondent argued that the CBIC instruction binds the Central Excise officers not to prosecute appeals with a tax effect below Rs. 50 lakhs. The Court acknowledged the instruction's binding nature and adjourned the appeal to allow the Commissioner of Central Excise to decide whether to proceed with the appeal in accordance with the CBIC instructions.

6. The Court emphasized the obligation of the Commissioner to follow CBIC instructions and directed the Commissioner to file an appropriate affidavit if they believe the instruction is not applicable in this case. The appeal was adjourned for further consideration based on the Commissioner's decision.

7. The matter was scheduled for further proceedings on 30 July 2019 to determine the course of action regarding the appeal in light of the CBIC instruction and the Commissioner's decision.

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