Non-functional Grade Pay of ₹5,400 in PB-2 counts as MACP financial upgradation.

The applicants were Inspectors/Superintendents/Assistant Commissioners in the Central Excise and Central Tax Department. They had generally received the first ACP financial upgradation to the pay corresponding to Grade Pay of Rs. 4,800/- and were subsequently promoted as Superintendents. Under the CCS (Revised Pay) Rules, 2008, Superintendents completing four years of regular service in Grade Pay of Rs. 4,800/- were granted non-functional pay in PB-2 with Grade Pay of Rs. 5,400/-

The applicants claimed that the PB-2/Grade Pay Rs. 5,400/- benefit was merely a revision of pay attached to the post and not a promotion or financial upgradation. They therefore sought the second MACP in PB-3 with Grade Pay of Rs. 6,600/- and the third MACP in PB-3 with Grade Pay of Rs. 7,600/-, without counting the non-functional Grade Pay of Rs. 5,400/- as an earlier upgradation

The respondents rejected the claims by relying on paragraph 8.1 of the MACP Scheme and subsequent DoP&T/CBEC clarifications, which treated Grade Pay of Rs. 5,400/- in PB-2 and Grade Pay of Rs. 5,400/- in PB-3 as separate Grade Pays and required the non-functional upgradation granted to Superintendents to be counted against MACP benefits

The applicants consequently challenged paragraph 8.1, the departmental clarifications and the orders rejecting their representations

Whether the non-functional upgradation to PB-2 with Grade Pay of Rs. 5,400/- granted to Superintendents after four years of service should be counted as a financial upgradation under the MACP Scheme

Whether paragraph 8.1 of the MACP Scheme, treating Grade Pay of Rs. 5,400/- in PB-2 and PB-3 as separate Grade Pays, is arbitrary, discriminatory, unconstitutional or contrary to the CCS (Revised Pay) Rules, 2008

Whether the applicants were entitled to the second MACP in PB-3 with Grade Pay of Rs. 6,600/- and the third MACP in PB-3 with Grade Pay of Rs. 7,600/- by ignoring the non-functional Grade Pay of Rs. 5,400/- granted under the CCS (RP) Rules, 2008

Whether applicants who, after counting the non-functional upgradation, completed the requisite thirty years of service remained eligible for the third MACP in accordance with law

The Tribunal applied the CCS (Revised Pay) Rules, 2008, under which Superintendents completing four years in PB-2 with Grade Pay of Rs. 4,800/- could receive PB-2 with Grade Pay of Rs. 5,400/-

It applied paragraph 8.1 of the MACP Scheme dated 19 May 2009, which provides that Grade Pay of Rs. 5,400/- in PB-2 and Grade Pay of Rs. 5,400/- in PB-3 are separate Grade Pays for MACP purposes

The Tribunal also relied on the principle that time-bound or non-functional financial upgradations and regular promotions must be accounted for under the MACP Scheme and cannot be enjoyed cumulatively with MACP benefits

The Supreme Court decisions in Union of India v. M.V. Mohanan Nair, (2020) 5 SCC 421, Directorate of Enforcement v. K. Sudheesh Kumar, (2022) 3 SCC 649, Union of India v. R.K. Sharma, AIR 2021 SC 2873, and Union of India v. N.M. Raut, 2024 INSC 1042, were followed for the propositions that MACP is a Government policy based on Pay Commission recommendations, courts should not substitute their views for such policy in the absence of illegality or constitutional infirmity, and financial upgradations under the Revised Pay Rules must be reckoned for MACP purposes

The Tribunal also relied on State of Orissa v. Gopinath Dash, AIR 2006 SC 651, regarding judicial restraint in reviewing policy decisions

The Tribunal held that the applicants’ entire claim rested on the proposition that the PB-2/Grade Pay Rs. 5,400/- benefit was only a pay revision and not an upgradation

It rejected that distinction, reasoning that the benefit conferred a higher financial advantage after completion of four years and was therefore a financial upgradation for MACP purposes. Paragraph 8.1 did not nullify the CCS (RP) Rules, 2008; rather, it ensured that employees did not receive both the time-bound financial benefit and an additional MACP benefit for the same stage of service

The Tribunal further found that the Government had consistently interpreted paragraph 8.1 to require counting of the non-functional Grade Pay of Rs. 5,400/- in PB-2 as one MACP upgradation through successive DoP&T and CBEC clarifications

In light of N.M. Raut, the Revised Pay Rules and the MACP Scheme were not independent compartments conferring cumulative benefits; promotions and financial upgradations under both had to be taken into account

Since the MACP Scheme was a policy decision involving substantial financial implications and the applicants failed to establish mala fides, illegality or constitutional violation, judicial interference was unwarranted

However, the Tribunal clarified that rejection of the applicants’ argument against counting the non-functional Grade Pay did not prevent any applicant from receiving the third MACP if, after reckoning that upgradation, the applicant had completed thirty years of service and otherwise satisfied the scheme’s requirements

Paragraph 8.1 of the MACP Scheme was neither arbitrary nor unconstitutional, and the applicants were not entitled to claim the second and third MACP benefits by ignoring that upgradation

Accordingly, all four Original Applications were dismissed, with no order as to costs

The Tribunal nevertheless preserved the entitlement of applicants who became eligible for the third MACP after completing thirty years of service upon counting the non-functional upgradation

The miscellaneous applications for joining together in O.A. Nos. 180/00558/2022 and 180/00559/2022 were allowed, and any other pending miscellaneous applications were closed