REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 5848 OF 2006
Commissioner of Central Excise, ....Appellant
Mumbai
Versus
M/s. Hindoostan Spinning & Wvg. M. Ltd.
& Anr. ....Respondents
JUDGMENT
Dr. ARIJIT PASAYAT, J.
1. Heard learned counsel for the parties.
2. 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, Bolpur v. Ratan Melting & Wire Industries [2008
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(13) SCC 1].
3. 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 in Collector of Central Excise, Patna v. Usha Martin Industries
(1997 (7) SCC 47) on which the Customs, Excise and Gold (Control)
Appellate Tribunal placed reliance was over-ruled by the subsequent decision
of the Constitution Bench in Dhiren Chemical’s case (supra). But learned
counsel for the assessee-respondent submitted that paragraph 11 of Dhiren
Chemical’s case (supra) operates in its favour. It reads as under:
“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.”
4. It was noted by the three-Judge Bench that the effect of the
aforesaid observations was noted in several decisions. In Kalyani Packaging
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Industry v. Union of India and Anr. (2004 (6) SCC 719), it was noted as
follows:
“We have noticed that para 9 (para 11 in SCC) of
Dhiren Chemical case (2004 (6) SCC 722) is being
misunderstood. It, therefore, becomes necessary to
clarify para 9 (para 11 in SCC) of Dhiren Chemical
case (2004 (6) SCC 722). One of us (Variava, J.)
was a party to the judgment of Dhiren Chemical
case and knows what was the intention in
incorporating para 9 (para 11 in SCC). It must be
remembered that law law laid down by this Court is
law of the land. The law so laid down is binding on
all courts/tribunals and bodies. It is clear that
circulars of the Board cannot prevail over the law
laid down by this Court. However, it was pointed
out that during hearing of Dhiren Chemical case
because of the circulars of the Board in many cases
the Department had granted benefits of exemption
notifications. It was submitted that on the
interpretation now given by this Court in Dhiren
Chemical case the Revenue was likely to reopen
cases. Thus para 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 Board in preference to
a decision of the Constitution Bench 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.”
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5. 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 vis-`-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
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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-`-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.”
10. 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 Melting’s case (supra).
11. All contentions are left open to the parties.
12. The Civil appeal and all interim applications are disposed of accordingly.
……………………………………J.
(Dr. ARIJIT PASAYAT)
……………………………………J.
(ASOK KUAMR GANGULY)
New Delhi,
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April 16, 2009
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