1999 (8) TMI 70 - SUPREME COURT

What is the true nature and effect of the Circulars issued by the Board in exercise of its power under Section 37B of the Central Excise Act, 1944 ?

Held that:- the Circulars issued by the Board are binding on the Department, the Department is precluded from challenging the correctness of the said Circulars even on the ground of the same being inconsistent with the statutory provision. Therefore, it is clear that so far as the Department is concerned, whatever action it has to take, the same will have to be consistent with the Circular which is in force at the relevant point of time.

it is an admitted fact in the present case that by virtue of Circular No. 4/85, dated 23-7-1986 as clarified by Circular dated 7-8-1987, all the three products of the appellant are to be treated as the products of the printing industry and not that of the packaging industry. A change in the said view of the Board occurred for the first time by virtue of its Circular No. 6/89, dated 16-1-1989. Further, the Board itself by its subsequent Circular No. 29/89, dated 5-5-1989 has made it abundantly clear that the change notified in Circular No. 6/89 will be prospective from the date of issuance of Circular No. 6/89, that is, from 16-1-1989. Therefore, it is clear that till the issuance of Circular No. 6/89 which is dated 16-1-1989 the products of the appellant, by virtue of the two Circulars dated 23-7-1986 and 7-8-1987, have to be classified under Chapter 49 of the Act as being products of the printing industry eligible for exemption of duty under Notification Nos. 122/75 and 234/82 as applicable at the relevant time. The impugned show cause notices and consequent demand being ab initio bad inasmuch as the same was contrary to the existing Circulars of the Board, the same cannot be sustained. In favour of assessee.