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Judgment
By Justice Rajiv Joshi, Member (Judicial):
Heard Mr. Jaswant Singh, learned counsel for the applicant and Shri Krishna Kumar Ojha, learned counsel for the respondents at the time of hearing.
The instant Original Application under Section 19 of the Central Administrative Tribunal Act, 1985 has been filed for the following reliefs:
I. To quash and set aside the impugned order dated 05.07.2022, by which, the applicant was denied of grant of Non-Functional Grade of Rs.5400/- as the applicant is similar to the persons, who despite given three financial upgradation they were given Non-Functional Grade of Rs.5400/-.
II. To grant such other relief, as the applicant might be found entitled to in the facts and circumstances of the case.
III. Award the cost of 18 % interest of this original application in favour of the applicant throughout.
The brief facts as apparent from the record of Original Application, are that the applicant joined as Upper Division Clerk w.e.f. 13.10.1987 and promoted to the post of Tax Assistant w.e.f. 13.08.1991. Subsequently, he was further promoted to the post of Inspector on 06.07.1993 and again promoted to the post of Superintendent on 31.12.2023. He retired from the services on 31.03.2018 on attaining the age of superannuation from the office of Principal Commissioner Central GST, Noida.
Prior to implementation of recommendations made by the 6th Pay Commission and formulation of the Revised Pay Rules, 2008, the cadre of Inspectors in the CBIC was in the pre-revised pay scale of Rs.6500-10500 and the cadre of Superintendent was in the pre-revised pay scale of Rs.7500-10500. However, after implementation of 6th Pay Commission, the Inspectors were placed in the Pay Band-II carrying the scale of Rs.9300-34800 with Grade Pay of Rs,4600/- and Superintendents were placed in Pay Band-II carrying the scale of Rs.9300-34800/- +4800 Grade Pay.
Under the recommendations of the 6th CPC, the erstwhile Annual Career Progression Scheme (ACP) of granting two financial upgradations in the 12th and 24th years of service were replaced by the Modified Career Progression Scheme (MACP) wherein the employees became entitled to receive three financial upgradations in the 10th, 20th and 30th years of their service.
The Central Board of Excise and Customs, Department of Revenue, Ministry of Finance, Government of India vide a letter dated 21.11.2008 issued the following clarification:-
3.The Department of Expenditure have now clarified that the 4 year period is to be counted w.e.f. the date on which an officer is placed in the pay scale of Rs. 7500-12000 (pre-revised). Thus, if an officer has completed 4 years n 1.1.2006 or earlier, he will be given the non-functional upgradation w.e.f. 1.1.2006. If the officer completes 4 years on a date after 1.1.2006, he will be given nonfunctional upgradation from such date on which he completes 4 years in the pay scale of Rs. 7500-12000 (pre-revised).
However, the CBIC vide letter dated 11.02.2009 issued a further clarification on the subject stating therein that non functional upgradation to the grade pay of Rs.5400/- in the pay Band PB-2 can be given on completion of four years of regular service in the grade pay of Rs.4800/-in PB-2 (pre-revised scale of Rs. 7500-12000) after regular promotion and not on account of financial upgradation due to ACP.
The aforesaid letter was challenged before Hon'ble Madras High Court by means of Writ Petition No. 13225/2010, M Subramaniam vs Union of India, wherein vide order dated 06.09.2010 in the Hon’ble High Court Madras directed the respondents to extend the benefit of Grade Pay of Rs 5400/-to the petitioner w.e.f. the date he had completed four years of regular service in the pre-revised scale of 7500-12,000 (corresponding to Grade Pay of Rs 4800), as per Resolution dated 29.08.2008 of the Finance Department.
The Special Leave Petition before the Apex Court filed by Union of India against the aforesaid order of Hon’ble Madras High Court, was dismissed by the Hon'ble Apex Court vide its order dated 10.10.2017 and a Review Petition thereupon was also dismissed vide order dated 23.08.2018.
The applicant was promoted to the post of Inspector in the grade pay of Rs.4600/-. Thereafter, he was granted MACP in the grade pay of Rs.4800/- w.e.f. 01.09.2008 and thereafter, promoted in the same grade pay. Since the applicant had completed four years of regular service in the same grade pay of Rs.4800/- w.e.f. 01.09.2012 itself, but he was not granted the benefit of Non-Functional Grade (hereinafter referred as ‘NFG’) in the grade pay of Rs.5400/- on completion of four years of regular service in Grade Pay of Rs.4800/- in terms of Extraordinary Gazette No.1/1/2008-1C issued by Ministry of Finance (Department of Expenditure), Government of India dated 29.08.2008.
Aggrieved by the same, he earlier approached this Tribunal, by way of O.A. No.561/2021, which was allowed vide order dated 05.08.2021 with a direction to ensure the benefit of judgment passed by this Tribunal on 09.01.2020 in O.A. NO.1005/2019 and judgment dated 06.12.2018 passed in O.A .No.1318/2018 be also given to the applicant, if he is found otherwise entitled for the same as per merits of his individual case. However, the respondents vide order dated 05.07.2022 rejected the claim of the applicant on the ground that the case of the applicant does not fall under the similarly placed officers of the decision in M. Subramanian case of Hon’ble High Court of Madras dated 06.09.2010 in W.P. No.13225/2010 as the applicant was already granted three financial upgradations including promotion and letter dated 03.03.2022 stipulates that NFG is to be counted against MACP and number of upgradation to be restricted to three only. Hence, this original application has been filed.
At the very outset, Mr. Jaswant Singh, learned counsel for the applicant submitted that the issue involved in this Original Application regarding for grant of Non-Functional Grade (NFG) Pay Scale of Rs.9300-34800/- in Pay Band-II with grade of Rs.5400 w.e.f the date on which the employee completed four years of regular service in the Grade Pay of Rs.4800/-, irrespective of whether the said grade attained through MACP or promotion, has already been decided by a Co-ordinate Bench of this Tribunal in O.A. No.138/2023 ( V. Balasubramanian Vs. The Union of India & Ors.) vide its order dated 22.07.2025 and as such, this case may also be disposed of in view of the observations made in O.A. No.138/2023.
On the other hand, learned counsel for the respondents vehemently opposed the submissions advanced by the learned counsel for the applicant and submitted that the applicant had already been granted two promotions and one financial upgradation under the MACP Scheme and, thereafter, further promotion in the Grade Pay of Rs. 4,800/-. Therefore, the case of the applicant was examined in the light of the Guidelines dated 03.03.2022, wherein it has been clearly stipulated that the case of each employee is required to be examined if he/she has already been granted three promotions/financial upgradations prior to the grant of NFG in the Grade Pay of Rs. 5,400/-.
Learned counsel for the respondents further submitted that since the applicant had already been granted three promotions/financial upgradations, the respondents have rightly rejected his claim. The NFG is required to be counted against the MACP and the number of financial upgradations is to be restricted to three only. The respondents, while considering the claim of the applicant, passed a detailed and reasoned order after taking into consideration the judgment rendered in the case of M. Subramanian (supra). There is, therefore, no illegality or infirmity in the impugned order. Hence, the Original Application is liable to be dismissed.
We have considered the submissions so raised by the learned counsel for both the parties and perused the records.
From perusal of the records, it appears that the issue involved in this Original Application has already been decided by a Co-ordinate Bench of this Tribunal in O.A. No.138/2023 ( V. Balasubramanian Vs. The Union of India & Ors.) vide its order dated 22.07.2025 with the following observation and directions:-
10.We have considered the rival submissions and gone through the entire records.
11.The main contention of the respondents is that the applicant has already availed three financial upgradations (two promotions and one MACP) and as such, is not entitled to any further financial benefit, including NFU. They rely on DoPT’s FAQ dated 01.04.2021 (Q.16), the CBIC clarifications dated 11.02.2009 and 20.06.2016, and cite the ruling of the Hon’ble Supreme Court in Union of India v. N. M. Raut, which emphasized that cumulative financial upgradations under MACP and earlier schemes must be accounted for to prevent redundancy.
12.The core issue before this Tribunal is whether the applicant, having attained Grade Pay ₹4800 under MACP and completed four years in that grade, is entitled to NFU to ₹5400 as per the Ministry of Finance Resolution dated 29.08.2008 and related OMs, or whether the denial on the ground of three financial upgradations stands legally justified.
13.It will be useful to quote the relevant portion of the clarification regarding grant of NFU dated 11.02.2009 , which reads as under:-
Non-functional upgradation to the grade pay of Rs.5,400 in the pay band PB-2 can be given on completion of 4 years of regular service in the grade pay of Rs.4,800 in PB-2 (pre-revised scale of Rs.7,500-12,000) after regular promotion and not on account of financial upgradation due to ACP.
This clarification was issued without amendment of the original resolution or rules, and has been the crux of the dispute. The applicant submits that this clarification is arbitrary, and contrary to the Resolution dated 29.08.2008 and earlier clarification dated 21.11.2008.
14.The applicant has also relied upon the judgment and order passed by Madras High Court in W.P. No.13225 of 2010 (M. Subramanian v. Union of India) in which Hon’ble Court has held as under:-
The clarification dated 11.02.2009 cannot override the rules/resolution. NFU must be granted even if GP ₹4800/- was attained under ACP/MACP .
The said decision was upheld by the Hon’ble Supreme Court in Civil Appeal No.8883 of 2011, where the Apex Court ruled on 10.10.2017:
“We do not find any ground to interfere with the judgment of the High Court. Appeal is dismissed.
15.The Central Administrative Tribunal, Allahabad Bench, in OA No.1318/2018 (Kaushal Kishore Bhaskar v. Union of India) also held that NFU benefits must be extended to those who have completed 4 years in GP ₹4800/-, even if that grade was reached via MACP.
16.The respondents have passed the rejection order dated 22.12.2022, which the applicant has termed as arbitrary. However, the said order cannot be termed as arbitrary merely because it does not favour the applicant. The order is speaking in nature, reflecting the reasons for rejection, and whether those reasons are ultimately found to be right or wrong in law, it does not render the order arbitrary.
17.The relevant Resolution dated 29.08.2008 by the Ministry of Finance states that Group B Officers in the pay scale of ₹7500-12000 (pre-revised) shall be granted Grade Pay of ₹5400/- in PB-2 on completion of 4 years in the grade. This resolution does not differentiate between regular promotion or MACP as the means of reaching GP ₹4800/-. Further the OM dated 21.11.2008, issued by the Department of Revenue clarifies that Four years shall be counted from the date the officer is placed in the pay scale of ₹7500-12000 (pre-revised. Therefore, placement in the grade – whether by promotion or MACP – is the qualifying condition.
18.Further, in OA No.1318/2018 before the CAT Allahabad Bench (Kaushal Kishore Bhaskar) and OA No.591/2020 before CAT Lucknow Bench (V. Balasubramanian), similar issues were adjudicated in favour of the applicants, holding that NFU is available to all officers completing 4 years in GP ₹4800/-, irrespective of how they attained it.
19.Judgment and order passed by hon’ble Supreme Court in Union of India & ors. Vs. N. M. Raut and ors, in which hon’ble Apex Court has observed that the MACPS is not intended to operate in isolation but as a continuum within the larger framework of pay progression rules. Therefore, financial upgradations provided under previous schemes like the Assured Career Progression Scheme (ACPS) should be taken into account when determining eligibility under the MACPS. Hon’ble Court also observed that employees who have already received three financial upgradations, including those under previous schemes like the ACPS, are not entitled to further benefits under the MACPS. All prior financial upgradations must be accounted for to prevent redundancy and ensure equitable treatment among employees.
20.It is undisputed fact that the resolution dated 29.08.2008 is a statutory policy document and was issued pursuant to the recommendations of the Sixth Central Pay Commission. It explicitly provides that officers in Grade Pay ₹4800 shall be granted Grade Pay ₹5400 after four years of service in that grade. Notably, the resolution does not make any distinction between those who attain ₹4800 via promotion and those who do so via financial upgradation under ACP or MACP. Neither it stipulates any condition that employees, those who have got three MACPs or equivalent are not entitled for NFU.
21.The Department's reliance on the clarification dated 11.02.2009 to restrict NFU only to regular promotees has already been judicially examined. The Madras High Court in M. Subramanian held that such a clarification cannot override a resolution issued by the Ministry of Finance. The Supreme Court's dismissal of the government’s appeal in that matter further affirms the binding nature of the said judgment.
22.While the respondents rely on N.M. Raut, that judgment pertains primarily to the operation of the MACP scheme and accounting for previous financial upgradations including ACP. However, NFU is a separate mechanism provided under the Pay Commission recommendations and is not part of the MACP scheme per se. NFU is a time-bound upgradation to remove stagnation and bring parity among officers of the same cadre who may not get timely promotions due to lack of vacancies and it is distinct from MACP. NFU has not been categorically denied to officers who have got three financial upgradations prior to due date of NFU. The contention of respondents that the case of applicant is different from the issue involved in O.A. No. 1005/2019 and 1388/2018 is without any justification. It is also not mentioned that how the issue involved in above O.As are different from the instant O.A.
23.Furthermore, the argument that the applicant has received three financial upgradations and hence is ineligible for further benefit is not tenable in light of the distinction between MACP and NFU. The applicant’s NFU arises from his completion of four years in GP ₹4800 and is not a promotion in the usual sense, nor is it counted as an additional MACP. This position has been clarified in various judgments cited above, and even the CBIC in its clarification dated 09.04.2021 has supported this interpretation.
24.Further OM F. No. A. 26017/98/1008-Ad.II.A dated 21.11.2008 and clarification dated 11.02.2009 mention that grant of NFU after four years of service in the grade pay of Rs. 4800/- (pre revised scale of Rs. 7500-12000). The relevant portion of the OM F. No. A. 26017/98/1008-Ad.II.A dated 21.11.2008 is reproduced below:-
The Department of Expenditure have now clarified that the 4-year period is to be counted w.e.f. the date on which an officer is placed in the pay scale of Rs.7,500-12,000 (pre-revised). Thus, if an officer has completed 4 years on 01.01.2006 or earlier, he will be given the non-functional upgradation w.e.f. 01.01.2006. If the officer completes 4 years on a date after 01.01.2006, he will be given non-functional upgradation from such date on which he completes 4 years in the pay scale of Rs.7,500-12,000 (pre-revised).
25.The denial of benefit of clarification dated 02.07.2023 issued by CBIC to applicant can’t be justified. Similarly, denial of benefit of NFU to applicant as he has achieved the grade pay of Rs. 4800/- through MACP has already attained finality in M. Subramaniam vs UOI up to Apex Court and denial of benefit to the applicant is contrary to the above guidelines and is also discriminatory in nature. Ration decided in UOI vs N. M. Raut does not restrict the grant of NFU to officials who have got three financial upgradations.
26.Office of the Principal commissioner CGST Noida, in their letter dated 15.03.2019 has implemented the order without mentioning the condition that applicants have earlier got three financial upgradations.
27.Further in their letter no. F. No. A-23011/06/2021-Ad.IIA, dated 02.01.2023, Central Board of Indirect Taxes and Customs have clarified that NFU is not limited with number of promotions granted earlier. The letter ( Annexure no. A-15) is reproduced below:-
xxx xxx xxx
28.It is noteworthy to mention here that Shri Daya Shankar Dubey, who was grated third financial upgradations w.e.f. 01.07.2011 in a letter dated 07.05.2014 and he was granted NFU w.e.f. 01.07.2015. Both the letters are reproduced below:-
xxx xxx xxx
29.Similarly, Ms. Sangita Dua was granted similar benefits and the relevant portion of her pay fixation order is as follows:-
In pursuance Establishment Order No. 01/2021 dated 10-02-2021 issued under C. No. 1(22)ET. 18/MACP/Noida-Customs/2020/1063 dated 10-02-2021 by the Joint Commissioner(P&V), Noida Customs Commissionerate with the approval of the Principal Commissioner, Noida Customs Commissionerate and in compliance to directions contained of letter F. No. A-23011/67/2020-Ad.-IIA dated 24-09-2020 issued from CBIC regarding implementation of the judgment delivered by the Hon'ble CAT, Allahabad Bench vide order dated 24-07-2020 in OA No. 330/0296/2020 filed by Shri Ajit Singh Gahlawat Vs. UOI & Ors., and clarification received vide C.No. Matters/70/2020/1223(S/L) II(3)CCO/MRT/Admn. dated Misc.Court 07.10.2020 from the Deputy Commissioner (CCO), Customs, Excise & CGST, Meerut Zone, Meerut, Non-Functional up gradation in pay scale Grade Pay Rs. 5400/- (PB-2, Now Level-9) on completion of 4 years of regular service in Grade Pay of Rs. 4800/-( for equivalent in pre-revised scales) has been granted to Mrs. Sangeeta Dua, Superintendent w.e.f. 01.07.2015.
2.Accordingly, as per option under FR 22(1)(a)(1), the pay Mrs. Sangeeta Dua, Superintendent is fixed in the pay band of PB-2 Rs. 9300-34800 with Grade Pay of Rs. 5400/-
30.On close scrutiny of entire facts and circumstances of the case and in view of the above discussions, it is evident that applicant has established the relief claimed in the O.A. and O.A. is liable to be allowed. Accordingly, O.A. is allowed. The impugned order dated 22.12.2022 is hereby set aside. The respondents are directed to grant the applicant the benefit of Non-Functional Upgradation (NFU) to Grade Pay ₹5400/- in PB-2 (now Pay Level-9) w.e.f. 01.09.2012, being the date on which he completed four years of regular service in the Grade Pay ₹4800/-, irrespective of whether the said grade was attained through MACP or promotion. This direction is in consonance with the Ministry of Finance Resolution dated 29.08.2008, clarifications dated 21.11.2008, and judicial pronouncements including M. Subramanian v. UOI, upheld by the Hon’ble Supreme Court. The respondents are further directed to pass necessary orders and issue revised pay fixation in favour of the applicant within a period of three months from the date of receipt of a certified copy of this order. The applicant shall also be entitled to all consequential benefits, including arrears of pay and allowances, as per law. No order as to costs. All associated M.As stand disposed of.
As the facts and controversy involved in this Original Application is squarely covered by the aforesaid Order/Judgment, this Original application is disposed of finally in terms of the orders/directions dated 22.07.2025 issued in Original Application O.A. No.138/2023 (V. Balasubramanian Vs. The Union of India & Ors.) passed by a Co-ordinate Bench of this Tribunal, which shall be applicable in this case mutatis mutandis.
Accordingly, in view of aforesaid judicial pronouncements, impugned order dated 05.07.2022 is hereby set aside. The respondents are directed to grant the applicant the benefit of Non-Functional Upgradation (NFU) to Grade Pay ₹5400/- in PB-2 (now Pay Level-9) w.e.f. 01.09.2012, being the date on which he completed four years of regular service in the Grade Pay ₹4800/-, irrespective of whether the said grade was attained through MACP or promotion. This direction is in consonance with the Ministry of Finance Resolution dated 29.08.2008, clarifications dated 21.11.2008, and judicial pronouncements including M. Subramanian v. UOI, upheld by the Hon’ble Supreme Court. The respondents are further directed to pass necessary orders and issue revised pay fixation/pension in favour of the applicant within a period of three months from the date of receipt of a certified copy of this order. The applicant shall also be entitled to all consequential benefits, including arrears of pay and allowances as well as pension, as per law.
Resultantly, instant Original Application stands allowed.
All MAs pending in this O.A. also stand disposed off.
No order as to costs.