Notional promotion period counts as regular service for MACP/NFG benefits.

The applicants, initially appointed as Lower Division Clerks, were promoted to Upper Division Clerk, which was the feeder cadre for promotion to Inspector under the Central Excise and Land Customs Department Group 'C' Posts Recruitment Rules, 1979.

Due to cadre restructuring in 2001, numerous Inspector vacancies arose.

Litigation regarding filling these vacancies led to the Andhra Pradesh High Court's judgment in WP No. 7963/2004, directing that vacancies prior to 07.12.2002 be filled per the 1979 Rules.

The Ministry of Finance accepted this judgment, leading to Review DPCs in 2011-2012, where applicants were promoted to Inspector on a regular basis with retrospective effect from 06.12.2002 against regular vacancies.

Their pay was fixed under FR 22(1)(a)(i) as regularly promoted from that date.

These promotions were subject to the outcome of Supreme Court proceedings, which culminated in D. Raghu v. R. Basaveswarudu, where the Apex Court protected promotions already granted for vacancies arising before 07.12.2002.

Based on this regular promotion, applicants completed ten years of continuous regular service in Grade Pay ₹4600/- on 06.12.2012, and were granted 3rd financial upgradation under MACP in Grade Pay ₹4800/- w.e.f. 06.12.2012.

Upon completing four years in Grade Pay ₹4800/-, on 06.12.2016, they became entitled to Non-Functional Selection Grade (NFSG) in Grade Pay ₹5400/-.

However, the respondents, relying on clarificatory letters dated 07.02.2018 and 14.07.2021, sought to deny/withhold MACP and consequential NFSG, contending that service from 06.12.2002 could not be treated as "regular service" for MACP purposes.

This Tribunal had previously set aside these clarifications in similar cases (O.A. No. 1085/2018, 691/2023, 143/2024, 717/2024, 937/2024).

Whether the promotion given to the applicants with retrospective effect from 06.12.2002, protected by the Supreme Court, attained finality and cannot be disturbed, thereby entitling them to all consequential benefits?

Whether the applicants are hit by the provisions of the MACP Scheme referred to in the impugned letters/orders dated 07.02.2018 and 14.07.2021, given that these have been quashed by the Tribunal in other O.As?

Whether the applicants are eligible for Non-Functional Upgradation (NFG) of Rs. 5400/- in PB-2 with effect from 06.12.2016 after completing 4 years of regular service in grade pay of Rs. 4800/-, as in the case of M. Subramaniam vs. UOI and others?

Whether the respondents should be commanded to release all outstanding dues and pay interest on the withheld amount?

The Tribunal applied the principles of settled judicial pronouncements, particularly the Supreme Court's protection of promotions against vacancies arising prior to 07.12.2002 in D. Raghu v. R. Basaveswarudu.

It relied on the interpretation of "regular service" in the MACP Scheme, distinguishing it from ad hoc or temporary service and affirming that notional dates for regular promotions, once judicially protected, cannot be excluded for MACP benefits.

The Tribunal also applied the binding precedents of its own coordinate benches, affirmed by the High Court, which set aside clarifications from CBIC/DoP&T (dated 07.02.2018 and 14.07.2021) that sought to deny MACP benefits based on notional promotions.

For the grant of NFSG, the Tribunal followed the judgment of the Madras High Court in M. Subramaniam v. Union of India, affirmed by the Supreme Court, which held that employees are entitled to Grade Pay ₹5400/- upon completion of four years in Grade Pay ₹4800/-.

The Tribunal found that the applicants' promotions as Inspectors, effective 06.12.2002, were granted on a regular basis through review DPC proceedings and were explicitly protected by the Supreme Court in D. Raghu v. R. Basaveswarudu.

This judicial protection meant that the applicants' status as regular Inspectors from 06.12.2002 was affirmed and could not be indirectly reopened.

The respondents' argument that the promotion was merely "notional" and thus not "regular service" for MACP purposes was rejected, as "regular service" refers to service that is not ad hoc or temporary, and a notional date for a regular promotion still confers the status of a regular appointment.

The Tribunal emphasized that administratively issued clarifications (07.02.2018 and 14.07.2021) cannot override binding judicial pronouncements, and these very clarifications had already been set aside by the Tribunal in similar cases, a position affirmed by the High Court.

Therefore, the withdrawal of 3rd MACP benefits was legally unsustainable.

Similarly, regarding NFSG, the Tribunal found that the applicants, having validly received Grade Pay ₹4800/- w.e.f. 06.12.2012, were consequently eligible for Grade Pay ₹5400/- upon completing four years in that grade, i.e., from 06.12.2016.

This entitlement was squarely supported by the M. Subramaniam judgment, which is binding precedent.

The respondents' plea of audit objections lacked merit without evidence of fraud or misrepresentation by the applicants.

It held that the impinged actions based on the letters dated 07.02.2018 and 14.07.2021, related to the applicants, are set aside.

The respondents are directed to restore the 3rd MACP granted to the applicants with effect from 06.12.2012 and to grant them the benefit of NFSG in Grade Pay ₹5400/- in PB-2 with effect from 06.12.2016, along with all consequential benefits including re-fixation of pay and revision of pensionary benefits, if applicable.

This exercise must be completed within four months.

While interest at 18% per annum was not granted, the Tribunal directed that if respondents fail to comply within the stipulated period, outstanding dues shall carry simple interest @ 6% per annum from the date of expiry of the compliance period until actual payment.