TMI Blog2005 (3) TMI 161X X X X Extracts X X X X X X X X Extracts X X X X ..... . 84.37 which reads as under : "84.37 Machines for cleaning, sorting or grading seed, grain or dried 'leguminous vegetable' machines used in milling industry or for the working of cereals or dried leguminous vegetables, other than farm type machinery". The petitioner has been classifying domestic flour mill under the said Heading of Tariff Act. However, on 31st May, 1990 the Central Board of Excise and Customs (CBEC) issued Circular bearing No. 11/90-CX. 4 whereby it was declared that flour mills, with or without electric motors were properly classifiable under Heading No. 85.09 of the Tariff Act. 3.The circular came to be challenged before this Court by way of Writ -Petition bearing Special Civil Application Nos. 10542 of 1994 and 10544 of 1994. After hearing the parties the Court directed the petitioners therein, including the present petitioners, to approach the Appellate Tribunal with a direction to the Revenue not to effect any recovery of duty for past dues accrued up to 15th September, 1994 till the appeals were decided by the Tribunal. 4.Before the appeals were taken up for hearing by the Tribunal the CBEC issued one more Circular dated 5th December, 1994 bearing No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver, which give power to the Domestic Electric Flour Mill. The weight normally ranges between' 40 Kgs. to 70 Kgs. per Flour Mill. From the above, it is seen that there is no specific mechanism by which the above disputed equipment could be operated by hand manually, without electric power. This disputed item under consideration cannot be operated without power. Further, there is nothing on record to show that the "gharghanti" supplied/cleared without motors and those fitted with electric motors were two different classes of goods. From the above it is seen that the mechanism of the disputed goods is similar to the mechanism of the goods described in para 9 of Tribunal's decision in case of Gurukrupa Trading Co. as well as described in the Board's Circular dated 5-12-94". Thereafter respondent No. 2 referred to the earlier circular dated 31st May, 1990 and concluded that "till the issue of the Circular dated 5-12-94, the product namely Domestic Electric Flour Mill both with or without electric motors by virtue of Circular dated 31-5-1990 have to be classified under Chapter Heading 8509 of Central Excise Tariff Act, 1985". Respondent No. 2 has further observed in his order that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated that : The argument that the later circular has only prospective"15. operation and that it cannot apply to these appeals because the Tribunal had already decided them must also be rejected. It is not open to the Revenue to raise a contention that is contrary to a binding circular issued by the Board. It cannot but urge the point of view made binding by the later circular." 6.1That in the aforesaid case of Ranadey Micronutrients, before the Apex Court, the language used by the later circular stated that "Board's earlier Circular No. 26/99-CX.3, dated 26-6-1990 accordingly stands withdrawn", while in the present case later Circular states that earlier direction stands superseded. That there was no difference, and even if there was any difference the language employed in the Circular of 5th December, 1994 was more emphatic in content than the Circular which was under consideration before the Apex Court. 6.2A further submission connected with the same aspect of the controvercy was that in case where a circular has to be applied only prospectively, the circular itself makes the same abundantly clear and for this purpose attention was invited to the decision in case of Pape ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... open to the petitioner to challenge the same by way of appeal before the Tribunal. 8.The question is not as to whether a particular circular is or is not applicable to the facts of the case that is incidental. In a case where a superior forum had issued direction, can it be said that it is open to the inferior Tribunal to disregard the same in any manner whatsoever. The controversy is no longer res integra. In the case of Bhopal Sugar Industries Ltd. v. Income Tax Officer, Bhopal - 1960 40 ITR 618, the Supreme Court was called upon to decide this point. In the case before the Apex Court the assessee company which manufactured and sold sugar used sugarcane purchased from other cultivators as well as grown in its own farms. It claimed deduction of agricultural income from its total income by valuing the sugarcane grown in its own farm at market value and deducting therefrom the agricultural expenses. In appeal the Tribunal directed the Income Tax Officer to ascertain the average transport charges from the purchasing centres to the assessee's factory and after adding to it the rate of purchase in order to ascertain the market value give any relief that may be due to the assessee. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... injustice in disregarding that order. As we have said earlier, such a view is destructive of one of the basic principles of the administration of justice." 8.1 The aforesaid decision was rendered in 1960. Three decades down the line the Apex Court has reiterated the principle in the case of Union of India v. Kamlakshi Finance Corporation Ltd. - 1991 (55) E.L.T. 433 (S.C.) in the following terms : "It cannot be too vehemently emphasised that it is of utmost importance that, in disposing of the quasi judicial issues before them, Revenue officers are bound by the decisions of the appellate authorities. The order of the appellate Collector is binding on the Assistant Collector's working within his jurisdiction and the order of the Tribunal is binding upon the Assistant Collectors and the Appellate Collectors who function under the jurisdiction of the Tribunal. The principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority is not 'acceptable' to the department - in itself an objectionable phrase - and is the subject matter of an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 authority to disregard the said circular after holding that the same was applicable in the facts of the case considering the product manufactured by the petitioner. 12.The contention relating to Circular not being retrospective in operation and the law being applicable as on the date of manufacture of the product cannot be accepted for the simple reason that the same was not an issue and once the proceedings were pending, and the Circular of 5th December, 1994 had superseded all earlier directions, on the date when the adjudication was to take place, it had to take place in light of the Circular in existence viz. Circular dated 5th December, 1994 as that was the only Circular effective on the date when respondent No. 2 decided the issue. The aforesaid decision in case of Paper Product Ltd., (supra) on which reliance has been placed by respondent No. 2 as well as in affidavit-in-reply instead of assisting the revenue supports the case of the petitioner. The Apex Court has taken cognizance of the fact that as per the language employed by the Circular, on the basis of which the Apex Court was called upon to resolve the controversy, specifically made it clear that the change would ..... X X X X Extracts X X X X X X X X Extracts X X X X
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