COMMISSIONER OF CENTRAL EXCISE, MUMBAI versus M/S. HINDUSTAN SPINNING & WVG. M. LTD. AND ANR.

Heard learned counsel for the parties.

p. 479, margin D

By order dated 12.12.2006 this court had directed that the present matter be placed for disposal after the decision of this Court in CCE v. Ratan Melting & Wire Industries, which had been referred· to a larger bench. The larger bench has rendered its judgment in the matter on 14.10.2008 which is reported in Commissioner of Central Excise, Bo/pur v. Ratan Melting & Wire Industries [2008 (13) SCC 1].

p. 479, margin E

On a reference made by a Bench of three Judges in Commissioner of Central Excise, Bolpur v. Ratan Melting and Wire Industries, Calcutta (2005 (3) SCC 57), these matters were placed before the Five Judge Bench. The reference was necessitated because of certain observations by a Constitution Bench in Collector of Central Excise v. Dhiren Chemical Industries (2002 (2) SCC 127). During the hearing of the appeal before the three-Judge Bench it was fairly conceded by the parties that the decision of this Court Excise, Patna v. Usha Martin Industries on which the Customs, Excise and Tribunal placed reliance was over-ruled decision of the Constitution Bench in (supra). But learned counsel for the submitted that paragraph 11 of Dhiren Chemical's (supra) operates in its favour. It reads "We need to make it clear interpretation that we have placed there are circulars which have been Board of Excise and Customs interpretation upon the said phrase, be binding upon the Revenue."

pp. 479–480, margin F

It was noted by the three-Judge the aforesaid observations was noted Kalyani Packaging Industry v. Union (6) sec 719), it was noted as follows: "We have noticed that para Dhiren Chemical case (2004 misunderstood. It, therefore, becomes para 9 (para 11 in SCC) of Dhiren (6) SCC 722). One of us (Variava, judgment of Dhiren Chemical case the intention in incorporating para must be remembered that law law is law of the land. The law so laid courts/tribunals and bodies. It is Board cannot prevail over the law However, it was pointed out that Chemical case because of the circulars of many cases the Department had exemption notifications. It was interpretation now given by this Court case the Revenue was likely to reopen 9 (para 11 in SCC) was incorporated to ensure that in cases where benefits of exemption notification had already been granted, the Revenue would remain bound. The purpose was to see that such cases were not reopened. However, this did not mean that even in cases where the Revenue/Department had already contended that the benefit of an exemption notification was not available, and the matter was sub judice before a court or a tribunal, the court or tribunal would also give effect to circulars of the Bo~rd in preference to a decision of the Constitution Benc:h of this Court. Where as a result of dispute the matter is sub judice, a court/tribunal is, after Dhiren Chemical case, bound to interpret as set out in that judgment. To hold otherwise and to interpret in the manner suggested would mean that courts/tribunals have to ignore a judgment of this Court and follow circulars of the Board. That was not what was meant by para 9 of Dhiren Chemical case."

pp. 480–481, margin D

The three-Judge Bench agreed with the view expressed in Kalyani's case (supra) and observed that the view about invalidation was sufficient to clarify the observations in paragraph 11 of Dhiren Chemical's case (supra). On taking note of the fact that Dhiren Chemical's case (supra) was decided by a bench of five Judges it was felt appropriate that a bench of similar strength should clarify the position .. Accordingly the reference was made. In answering the reference, it was held as follows: "Circulars and instructions issued by the Board are no doubt binding in law on the authorities under the respective statutes, but when the Supreme Court or the High Court declares the law on the question arising for consideration, it would not be appropriate for the Court to direct that the circular should be given effect to and not the view expressed in a decision of this Court or the High Court. So far as the clarifications/circulars issued by the Central Government and of the State Government are concerned they represent merely their understanding of the statutory provisions. They are not binding upon the court. It is for the Court to declare what the particular provision of statute says and it is not for the Executive. Looked at from another angle, a circular which is contrary to the statutory provisions has really no existence in law. As noted in the order of reference the correct position visa-vis the observations in para 11 of Dhiren Chemical's .. case (supra) has been stated in Kalyani's case (supra). If the submissions of learned counsel for the assessee are accepted, it would mean that there is no scope for filing an appeal. In that case, there is no question of a decision of this Court on the point being rendered. Obviously, the assessee will not file an appeal questioning the view expressed vis-a-vis the circular. It has to be the revenue authority who has to question that. To lay content with the circular would mean that the valuable right of challenge would be denied to him and there would be no scope for adjudication by the High Court or the Supreme Court. That would be against very concept of majesty of law declared by this Court and the binding effect in terms of Article 141 of the Constitution. The reference is accordingly answered holding that the correct view has been expressed by Kalyani's case (supra) as noted in the reference order." 1 o. Without going into the merits, the present matter is remanded to be decided by the CESTAT, Mumbai, keeping in view the applicability and/or relevance of Ratan Me/ting's case (supra). 11. All contentions are left open to the parties. 12. The Civil appeal and all interim applications are disposed of accordingly. D.G. Appeal disposed of.

pp. 481–482, margin D