2001 (10) TMI 130 - AT - Central Excise

Summary

Issues:
Conflict between interpretation in Board Circular and Supreme Court decision on proviso (ii) of Section 4(1)(a) of Central Excise Act, 1944.

Analysis:

1. Background and Appeal Details:
The appeal involves a conflict between the interpretation provided by a Board Circular and a Supreme Court decision regarding proviso (ii) of Section 4(1)(a) of the Central Excise Act, 1944. The appellant, engaged in manufacturing bulk drugs, received a show cause notice for selling goods below the price fixed under the Drugs Price Control Order, 1995. The Assistant Commissioner confirmed the demand and imposed a penalty. The Commissioner (Appeals) later accepted the contention that goods sold at the normal price attract duty only at that price, based on the Board Circular dated 8-8-75. The revenue appealed against this decision.

2. Interpretation Conflict:
The appellant contended that the Tribunal erred in not following the Supreme Court decision in a previous case, which held that proviso (ii) of Section 4(1)(a) creates a legal fiction where the price fixed under any law must be considered the normal price. The Supreme Court emphasized that goods under assessment should be valued with reference to the normal price, especially when a Price Control Order is in force.

3. Board Circular Interpretation:
The respondent relied on a Board Circular dated 8-8-75, which clarified proviso (ii) of Section 4(1)(a). The Circular emphasized that the statutory price should be deemed the normal price only when goods are actually sold at that price. It further explained scenarios where the proviso does not apply, such as selling goods above the maximum price fixed by law.

4. Supreme Court Precedent:
The Tribunal highlighted the principle that when the Supreme Court interprets a statutory provision, such interpretation should prevail over any contrary interpretation in a Board Circular. Citing a Supreme Court case, it emphasized that the Circular cannot override the Court's decision. Therefore, the Commissioner (Appeals) should have followed the Supreme Court's decision rather than a Tribunal decision.

5. Decision and Conclusion:
The Appellate Tribunal set aside the Commissioner (Appeals) order and allowed the appeal, emphasizing the importance of following the Supreme Court's interpretation over conflicting interpretations in Board Circulars. The Tribunal concluded that since the issue was covered by the Supreme Court decision, there was no need to refer the matter to a Larger Bench.

In summary, the judgment resolved the conflict between the Board Circular and the Supreme Court decision regarding the interpretation of proviso (ii) of Section 4(1)(a) of the Central Excise Act, 1944. The Tribunal upheld the Supreme Court's interpretation, emphasizing the precedence of judicial decisions over administrative circulars in legal matters.