TMI Blog2023 (8) TMI 656X X X X Extracts X X X X X X X X Extracts X X X X ..... legal and incorrect. Secondly, during the relevant period 2011-12 to 2013-14, Circular dated 19.05.2010 was in force according to which the goods were classifiable under heading 8437. It is settled position under various Hon ble Supreme Court Judgments that any Circular which is beneficial to the assessee should be given effect irrespective to the different correct legal position of classification. Therefore, even though subsequently the Larger Bench has decided the classification under heading 8419 but by virtue of Circular dated 19.05.2010 during the currency of the said Circular the goods is classifiable under heading 8437 and consequently no duty could have been demanded on this very issue. This Tribunal, in the case of JYOTI SALES CORPORATION, HSF FOOD PROTECH PVT LTD, SHRI VINAYAKRICE TECHNO, SUNEEL GUPTA AND PUNJAB FABRICATORS VERSUS C.C.E. S.T. -PANCHKULA AND C.C.E. S.T. -ROHTAK [ 2019 (4) TMI 989 - CESTAT CHANDIGARH] held that For the period prior to 15.05.2014 if the appellants have classified their products in question under Chapter Heading No. 8437 of CETA, no demand is sustainable in terms of the Circular No. 924/14/2010-CX dated 19.05.2010. Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l machinery. The department has classified the said goods under Chapter Heading 8419 which attracted duty at the appropriate rate whereas the appellant plea was that the said goods were not chargeable to duty as the same were classifiable under Chapter heading 8437 of the Central Excise Tariff Act, 1985. 2. Shri Vikrant Kackaria, learned Counsel appearing on behalf of the appellant at the outset submits the issue regarding classification of the goods in question has been decided against the appellant by the Larger Bench of this Tribunal in the case of M/s. Jyoti Sales Corporation vs. CCE, Panchkula 2016 (341) ELT 328 (Tri. LB) wherein it was held that parboiling plants and parts thereof are classifiable under Chapter heading 8419. The appellant in that case has challenged the order of the Tribunal before the Hon ble Supreme Court which is pending. He further submits that subsequently after the decision of the Larger Bench, the matter was placed before the Division Bench of the Tribunal and the Division bench in the case of M/s. Jyoti Sales Corporation vs. CCE, Panchkula 2020 (374) ELT 936 (Tri. Chan.) it has been held that there was Circular No. 924/14/2010-CX dated 19.05.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above submissions, he further submits that the demand for the extended period cannot be sustained as there was no fraud, suppression or willful misstatement on the part of the appellant. Moreover, since the issue was referred to the Larger Bench itself proves that there was no fraud, suppression or willful misstatement which would warrant invocation of extended period. He placed reliance on the Hon ble Supreme Court decision in the case Continental Foundation Jt. Venture vs. CCE, Chandigarh 2007 (216) ELT 177 (SC). He, without prejudice to the above, further submits that the value of the goods in question realized ought to be treated as inclusive of excise duty hence, the appellant is entitled for the benefit of cum-duty price. He also submits that if the duty is demanded the appellant should be allowed benefit of modvat/ Cenvat credit. 3. Shri Rajesh Nathan, learned Assistant Commissioner, (AR) appearing on behalf of the Revenue reiterates the findings of the impugned order. He further submits that since the show cause notice was issued subsequent to rescinding of Circular No. 982/06/2014-CX dated 15.05.2014, in the present case, the show cause notice was validly issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iling process is exclusive to paddy. It has also been contended by the Association that parboiling units are integral part of rice mill. Subsequent to the parboiling process, the further process of dehusking and drying is carried out in the same unit. Therefore, parboiling rice machinery is an integral part of rice mill plant. Thus it has been argued by the Association that these machines merit classification under heading 8419 because of following main grounds : (i) Rice parboiling machineries are used only in rice mill plant. (ii) These are integral part of rice processing plant and these cannot function in isolation. Therefore, function of Rice parboiling machinery/drying unit is complementary to other function of rice processing plant. 3. On the other hand, in support of classifying it under tariff heading 8419, it has been argued that Parboiling and drier plants perform the function of steaming and drying which are independent of milling and these occur before milling process. Therefore it has been viewed that parboiling and drier plant are not essential and integral part of rice mill and therefore it would merit classification under heading 8419. It has also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arboiling machinery, drier plant and rice mill in conjunction form the paddy processing. Thus such a plant can be considered as composite machines fitted together to perform the function of rice milling which is the principal function of such a combination. Thus in terms of the Section Note 3 4 even if one of the component/machinery is performing complementary functions, the classification of such component/machinery will be governed by the principal function being performed, and that in this case is rice milling. 4.3 Chapter Note 2 provides that if a machine can be classified based on description under heading 8419 and also under 8437, in that case it should be classified under 8419 only. Therefore, it would be seen that as per Chapter Note 2, the parboiling machine merit classification under heading 8419 but as per Section Note 3 and 4, the machinery merit classification under heading 8437. The Board observes that this controversy has been perceived by the HSN and at pages 1235 it has been mentioned that Chapter Note 2 which is known as rule of precedence for heading 8401 to 84.24 applies only to machines considered as whole. Composite machines or multifunction machines ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in conjunction with the milling machinery, the par-boiling machine and dryer do not appear to satisfy the requirements of Section Note 3 to be called composite machines/ multi-function machines meriting classification under CETH 8437. Further, par-boiling machinery does not constitute grain dampening machine as the end result of par-boiling of rice is reduction in the moisture of paddy. In view of the above, rice par-boiling machine and dryer would merit classification under CETH 8419 as per Note 2 to Chapter 84. 3. Circular No. 924/14/2010-CX., dated 19-5-2010 is rescinded and it is directed that classification of rice par-boiling machine and dryer may be made under CETH 8419. Necessary action to protect the revenue interest in respect of past clearances may also be taken. From the above Circular, it can be seen that the department has taken U turn and clarified in the above Circular that the goods are correctly classifiable under Chapter heading 8419. 5. It is a settled legal position that the Board Circular issued by CBEC/CBIC is binding on the departmental officers. In view of this settled legal position, firstly, the show cause notice ought not to have been iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said Circulars even on the ground of the same being inconsistent with the statutory provision. The ratio of the judgment of this Court further precludes the right of the Department to file an appeal against the correctness of the binding nature of the Circulars. 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. Further, in the case of Dhiren Chemical Industries (supra), the Hon ble Apex Court observed as under :- 9. We need to make it clear that, regardless of the interpretation that we have placed on the said phrase, if there are circulars which have been issued by the Central Board of Excise and Customs which place a different interpretation upon the said phrase, that interpretation will be binding upon the Revenue. Further, the Hon ble Apex Court came to the occasion to examine the said issue again in the case of Kalyani Packaging Industries (supra) wherein the Hon ble Apex Court observed as under :- 6. We have noticed that Para 9 of Dhiren Chemical s case is being misunderstood. It therefore becomes n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. Further, in the case of Shreenath Fabrics (supra), the Hon ble Gujarat High Court observed as under :- 4.3 While it may be that when the appeal was preferred, the circular dated 17-8-2011 was not issued. However, it appears from record that the appeal was posted before the Court first time on 11-12-2011 and the notice was issued on 12-11-2012. At the time of issuance of notice in the appeal, the circular dated 17-8-2011 was very much in force and the monetary limit of 10 lakhs provided therein was applicable. Had the said aspect been pointed out to the Court, the Court would not have issued the notice. In any way, when this appeal has come up for consideration, the circular is in vogue and the monetary limit applies. We, therefore, do not find it necessary to go into the merits of the appeal, as the disputed amount in the present appeal is below 10 lakhs. 4.4 The department is bound by its own Circular and the instruction thereof. We are informed that no other circular withdrawing or reducing the monetary limit has been issued by the Department and circular dated 17-8-2011 hold the field as far as the prescription of monetary limit for filing appeal before Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In view of above analysis, we hold that for the period prior to 15-5-2014 if the appellants have classified their products in question under Chapter Heading No. 8437 of CETA, no demand is sustainable in terms of the Circular No. 924/14/2010-CX., dated 19-5-2010. 14. In result, the impugned orders for demanding duty from the appellants are set aside. Consequently, no penalties are imposable. 15. In view of the above, the appeals are allowed. From the above decision it can be seen that even though the Larger Bench has decided the merits of classification under heading 8419 but despite that the issue that when the Board Circular was in force which classified the goods under heading 8437 shall prevail as per various Supreme Court decisions discussed by the Larger Bench in the aforesaid decision. 6. As regards the Revenue s contention that at the time of issuance of show cause notice, the Board Circular dated 19.05.2010 was rescinded, we are of the view that it is not the date of issuance of show cause notice which is relevant but the period during which the goods were cleared. In the present case, the period involved is 2011-12 to 2013-14 and during this period the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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