TMI Blog2017 (2) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... enior counsel with Ms. Shailaja Kher Hidayatullah, Ms. Chandni Tanna an Mr. Makarand Joshi i/b India Law Alliance for the Petitioner. Mr. M. Dwivedi with Mr. Vipul Bajpayee for the Respondents. ORAL JUDGMENT : [Per S.C. Dharmadhikari, J.] 1 This writ petition challenges a show cause notice issued by the respondent-Revenue and thereafter an order made in furtherance thereof. 2 The challenge arises in the following facts and circumstances. The petitioner is a company incorporated under the Indian Companies Act, 1956, and the respondent Nos.2 and 3 are the officers of respondent No.1 exercising powers under the then Central Excise and Salt Act, 1944, The Central Excise Rules, 1944 and the Central Excise Tariff Act, 1985. The fourth respondent is a statutory Board / body constituted under the Central Board of Revenue Act, 1963. 3 The petitioners began the manufacture of hermetic motors in 1964/1965. They were issued a licence for such manufacture. The licence was renewed from time to time. There are two main parts of this motor, namely, stators and rotors. The hermetic motors manufactured by the petitioners are, in turn, used as component of compre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ors under heading 84.14. The said circular, however, directed that the practice followed in the light of the earlier circular dated 26th September, 1986, be changed only prospectively. Annexure E is a copy of this Circular. 8 Thereafter, the petitioners were directed to file fresh classification list by letter dated 20th February, 1990. In consequence of this, all further classification lists were filed invoking sub-heading 8414.91, but under protest. Then, a demand was raised and a personal hearing was granted. The petitioners appeared for the personal hearing and also filed written submissions. 9 However, not being satisfied with all this, the second respondent passed the impugned order dated 6th December, 1990, inter alia, classifying stators and rotors used in the manufacture of hermetic compressors under sub-heading 8414.1 and the rate of duty was notified at 40% ad-valorem under Notification No.166/1986. 10 This writ petition was entertained directly against the impugned order passed on the show cause notices by over-ruling the Revenue's objections that there is a remedy available to the petitioners to challenge this order in appeal. 11 The writ petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th Mr. Dwivedi. The show cause notice has been issued on 11th January, 1989. The show cause notice relies upon the tariff entries but seek to classify the products, namely, stators and rotors under Chapter Heading No.8414.91. On 21st April, 1989, this was also the position when the second show cause notice was issued. However, what this ignores is the clear instruction coming from the Central Board of Excise and Customs dated 25th September, 1986. The said circular is addressed to all Collectors of Central Excise and others. The subject of the same is Central Excise - classification of parts and accessories of refrigerating and air conditioning machinery and appliances. There was a doubt and which was sought to be cleared. The All India Air conditioning and Refrigeration Association, New Delhi furnished a list of parts and accessories in respect of which they had such doubts. Though the matter was examined by the Board and it opined that it was not possible in the absence of detailed technical information of each of the parts or accessories to provide comprehensive rulings on the classification of each of the products, nevertheless the guidelines as emerging from these circula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... However, the practice followed in the light of earlier clarification of the Board may be changed only prospectively. 17 Once there is a clear instruction that the practice followed in the light of the earlier clarification of the Board may be changed only prospectively, we have no doubt in our minds that on the date on which the earlier circular was in force, the show cause notice could not have been issued nor the demand raised. 18 We are in agreement with Mr. Hidayatullah that the law laid down by the Hon'ble Supreme Court in the case of Collector of Central Excise, Bombay vs. Jayant Dalal Private Limited (supra) binds the Revenue. Once there are clarifications given and to operate prospectively, then, how the authorities and answerable to the Board and bound by its instructions could have held otherwise has not been explained at all. It is precisely this tendency and which deserves to be curbed according to the Supreme Court in Paper Products (supra). Therefore, the Hon'ble Supreme Court, after referring to all its earlier views, held as under : 2. . The appellant also submits that with effect from the said date the appellant is cl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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