TMI Blog1991 (6) TMI 78X X X X Extracts X X X X X X X X Extracts X X X X ..... d been classified under Sub-heading 5504.32 seeking to reclassify the yarn under Sub-heading 5504.39. The petitioner replied to the show cause notice but the Assistant Collector confirmed the re-classification of the yarn under Sub-headig 5504.39 by his order dated 28-2-1990. The petitioner preferred an Appeal from the order dated 28-2-1990 and also filed an application for stay. While the appeal and application were pending a second show cause notice was issued in respect of a classification list filed by the petitioner for the period effective from 30-10-1989. Demands were raised by the respondents on the petitioners on the basis of the order dated 28-2-1990. 3. The petitioner company filed this application under Art. 226 challenging inter alia the order dated 28-2-1990, the demands raised on the basis thereof and the second show cause notice. 4. On 21-8-1990 the following order was passed by a learned Judge of this Court : "The learned counsel appearing for the respondents, on instructions from his clients, has given an undertaking on behalf of his clients that no attempt shall be made to realise the demands in terms of the order dated 2nd March, 1990 or no step will be ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 55/5/88-CX. 1 dated 7-7-1989 should be reviewed in the light of the above decision." 6. On 26th November 1990 Circular No. 25/90-CX. 1 (hereinafter referred to as the said circular) was issued by the Ministry of Finance, Government of India to "All Principal Collectors All Collectors of Central Excise All Collectors of Central Excise Customs All Collectors of Central Excise Constitution." 7. The said circular after noticing the recommendation of the Conference (quoted above) reads as follows : "The matter has been further examined in the Board. On a reading of Section XI 'Textiles and Textile Articles' of CET it is clear that, for the purpose of classification of blended yarn, the two important factors to be considered are (1) predominance of a particular fibres and (2) the wordings of Headings and sub-headings. It is felt that, as per Section Notes 2(A) and 2(B). 2(B) (ii) of Section XI, the presence of any other textile materials in a blended yarn, even if it is not specifically mentioned, does not alter the classification of such a blended yarn, the classification of which depends on the two factors referred to above. The only exception is when the Governme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 37B of the Central Excises and Salt Act, 1944 (hereinafter referred to as the 1944 Act). The said section reads as follows : "37-B. INSTRUCTIONS TO CENTRAL EXCISE OFFICERS. The Central Board of Excise and Customs constituted under the Central Boards of Revenue Act, 1963 (54 of 1963) may, if it considers it necessary or expedient so to do for the purpose of uniformity in the classification of excisable goods or with respect to levy of duties of excise on such goods, issue such orders, instructions and directions to the Central Excise Officers as it may deem fit, and such officers and all other persons employed in the execution of this Act shall observe and follow such orders, instructions and directions of the said Board : Provided that no such orders, instructions or directions shall be issued - (a) so as to require any Central Excise Officer to make a particular assessment or to dispose of a particular case in a particular manner; or (b) so as to interfere with the discretion of the Collector of Central Excise (Appeals) in the exercise of his appellate functions." 12. This section was introduced in the 1944 Act by the Central Excises and Salt (Amendment) Act, 1985. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... carried out, a circular [No. 20 (XXI-6)/55] was issued by the Central Board of Revenue on the 10th May 1955. It is clear that a circular of the kind which was issued by the Board would be binding on all officers and persons employed in the execution of the Act under Section 5(8) of the Act." (ii) Ellerman Lines Ltd. v. Commissioner of Income-tax, West Bengal reported in 1971 (82) ITR page 913 at 921. "Now, coming to the question as to the effect of instructions issued under Section 5(8) of the Act, this court observed in Navnitlal C. Javeri v. K.K. Sen, Appellate Assistant Commissioner, Bombay : "It is clear that a circular of the kind which was issued by the Board would be binding on all officers and persons employed in the execution of the Act under Section 5(8) of the Act. This circular pointed out to all officers that it was likely that some of the companies might have advanced loans to their shareholders as a result of genuine transactions of loans, and the idea was not to affect such transactions and not to bring them within the mischief of the new provision". The directions given in that circular clearly deviated from the provisions of the Act, yet this court held th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... empty formality." (vii) Oriental Paper Mills Ltd. v. Union of India reported in 1978 (2) E.L.T. J 345 at J 349: "It is obvious as well as admitted that both the Collector and the Central Government proceeded on the basis that the direction given by the Board was decisive of the matter. The revision applications filed before the Government were heard and decided by one of the members of the Board. He appears to have proceeded on the basis that in view of the directions given by the Board nothing more need be said as to the point in dispute. It is regrettable that when administrative officers are entrusted with quasi- judicial functions, often times they are unable to keep aside administrative considerations while discharging quasi-judicial functions. This court as well as the High Courts have repeatedly tried to impress upon them that their two functions are separate; while functioning as quasi-judicial officers they should not allow their judgments to be influenced by administrative considerations or by the instructions or directions given by their superiors. In this case both the Ctollector as well as the Central Government have ignored the line that demarcates their administ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the statute provides but it can relax the rigour of the law. The Supreme Court has recognised the validity of beneficent circulars and the right of the tax-payer to enforce these and get relief even in court - [See Ellerman Lines Ltd. v. UOI (1971 (82) ITR 913 (S.C.)]. (xiv) Commissioner of Income-tax, A.P. II v. T. V. Ramanaiah Sons reported in 1986 (157) ITR 300 at 307. "... decision of the Supreme Court set at rest any doubt as to the binding nature of the circulars issued by the Central Board of Direct Taxes so far as the officials of the Income-tax Department are concerned. .... Whenever the instructions given by the Central Board of Direct Taxes to relieve hardship to an assessee are violated and if such instructions are issued in exercise of the powers vested in the Central Board of Direct Taxes under Section 119 of the Act, it is certainly open to this court to compel the Income-tax Officer to follow the instructions of the Central Board of Direct Taxes. This is not to say that this court is bound by the instructions of the Central Board of Direct Taxes. All that is required to be said is that, so far as the officials of Income-tax Department are concerned, it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same time it cannot be lost sight of that several decisions noted above have held that Central Excise Officers acting quasi-judicially must exercise their independent judgment. 18. In my view the principles that emerge from the aforesaid decisions read in the light of Section 37B of the Act are : (1) There is a distinction between a decision in a particular assessment by a quasi-judicial authority and a decision on principle by the Board. While an instruction issued under Section 37B cannot be binding upon a quasi-judicial authority under the Act, the departmental officers conducting the lis before such quasi-judicial authority cannot take a stand contrary to the directive/instruction issued. (2) The instructions which may be binding on the Central Excise Officers are not binding on the Assessee who may question the correctness of the same before a quasi-judicial authority and before a Court. Both the quasi-judicial authority and afortiori, the Court, can question the correctness of the instructions. (3) An assessee has on the other hand the right to claim and the court may compelcom pliance with such instructions as are for the benefit of the assessee by the Central E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntend that the impugned orders were passed before the circular was issued and therefore the said orders cannot be set aside on that ground. As I have held that it is not open to the respondents to contend that the yarn was classifiable under sub-heading 5504.39 of the Schedule to the Act before this court, it follows that it is also not open to the respondents to contend that the impugned orders, notices and demands are correct. There is no scope also for implementation of the impugned orders by the respondents contrary to the instructions of the Board. 26. In any event as the instructions were classificatory they relate back to the introduction of the sub-heading itself. As the respondents cannot and indeed do not contend that the instructions are illegal, they must concede that the impugned orders are incorrect and based on a misconstruction of the relevant sub-headings. Even judicial decisions are considered in the light of subsequent decisions by higher judicial authorities and not on the state of the law which existed when the decision was rendered. 27. The matter therefore involves the determination of the jurisdiction of the respondents to act and is clearly covered by t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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