Supreme Court of India
COMMISSIONER OF CENTRAL EXCISE, BOLPURversusMIS RATAN MELTING & WIRE INDUSTRIES
- Citation
- 2008 INSC 1144
- Decided
- 14 October 2008
- Disposal
- Disposed off
- Bench
- K G BALAKRISHNAN
Holding
Circulars issued by the Central Board of Excise and Customs bind revenue authorities but cannot override the law laid down by the Supreme Court or High Court, and courts are not bound by them.
Summary
The Commissioner of Central Excise, Bolpur (Revenue) appealed against the order of the Customs, Excise and Gold Control Appellate Tribunal in a dispute with Mis Ratan Melting & Wire Industries. The central issue was whether circulars issued by the Central Board of Excise and Customs could override a law declared by the Supreme Court or a High Court, and whether the Revenue could be barred from raising a ground contrary to such a circular in an appeal. The Court held that while circulars bind revenue authorities under the statutes, they cannot prevail over judicial pronouncements and are not binding on courts. Consequently, the Revenue may still challenge a circular and raise grounds contrary to it in appeal. The Court affirmed the view expressed in Kalyani Packaging Industry v. Union of India, clarifying the limited effect of circulars. As a result, the appeals filed by the Revenue were allowed and those filed by the assessee were dismissed.
Issues considered
- Whether circulars issued by the Central Board of Excise and Customs are binding on revenue authorities and courts when they conflict with Supreme Court or High Court decisions.
- Whether a revenue authority is precluded from taking an appeal on a ground contrary to a circular once the circular is before the court.
- How the observations in Collector of Central Excise v. Dhiren Chemical Industries regarding the binding effect of circulars should be interpreted in light of Kalyani Packaging Industry v. Union of India.
Subjects
circularsbinding effectSupreme Court precedentArticle 141excise lawcustoms lawrevenue authorityappealstatutory interpretation
Judgment
[2008] 14 S.C.R. 653
~ COMMISSIONER OF CENTRAL EXCISE, BOLPUR A
v.
MIS RATAN MELTING & WIRE INDUSTRIES
(Civil Appeal No. 4022 of 1999)
OCTOBER 14, 2008
B
(K.G. BALAKRISHNAN, CJI, DR. ARIJIT PASAYAT,
'(
HARJIT SINGH BEDI, P. SATHASIVAM AND J.M.
PANCHAL, JJ)
Excise and Customs: c
Circulars issued by Central Board of Excise and Gus-
toms - HELD: Though are binding on authorities under the
respective statutes, but cannot prevail over the law laid down
on the subject by Supreme Court or High Court - It would not
be correct to say that once a circular is brought to notice of D
Court, Revenue is precluded from taking a ground in appeal
~ contrary to the Circular-In that event, there would be no scope
for adjudication by Court - That would be against the very
concept of majesty of law declared by Supreme Court and its
binding effect in terms of Article 141 of the Constitution - Con- E
stitution of India -Article 141.
The instant appeals were filed by Revenue challeng-
ing the order of the Customs, Excise and Gold Control
Appellate Tribunal. The appeals were listed before a three
--r Judge Bench. During the course of hearing it was con- F
ceded by the parties that the decision of the Supreme
Court 1 on which the Tribunal had placed reliance, was
overruled by the Constitution Bench in Dhiren Chemical's 2
case . The stand of the respondent-assessee, on the other
hand, was that observations made in Dhiren Chemicals G
case regarding the binding effect of circulars were in its
~' favour. The three Judge Bench, therefore, made the ref-
erence to the larger Bench 3 •
653 H
654 SUPREME COURT REPORTS [2008] 14 S.C.R.
A Answering the reference, allowing the appeals filed \-f-
by Revenue and dismissing those filed by assessees, the
Court
HELD: 1.1 Circulars and instructions issued by the
Central Board of Excise and Customs are no doubt bind-
B ing 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
C decision of this Court or the High Court. So far as the clari-
fications/circulars issued by the Central Government and
of State Governments are concerned they represent
merely their understanding of the statutory provisions.
They are not binding upon Courts. It is for the Court, and
D not for the Executive, to declare what the particular provi- \
sion of a statute says. Further, a circular which is con-
trary to the statutory provisions has really no existence
in law. As noted in the order of reference, the correct po-
sition vis-a-vis the observations in Dhiren ChemLcal's case
·E has been stated in Kalyani's case. [para 6-7] [658-B-E]
Kalyani Packaging Industry v. Union of India and Anr,,
2004 (6) sec 719 - upheld.
Collector of Central Excise v. Dhiren Chemical lndus-
F tries 2001 Supp. 5 SCR 607=2002 (2) SCC 127-referred to.
1.2 It would not be correct to say that once the circu-
lar is. brought to the notice of the Court the challenge by
the Revenue should be turned down and it cannot lodge
an appeal taking a ground contrary to the circular. In that
G event, there would be no question of a decision of this
Court on the point being rendered. Obviously, the asses- )':
see 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
H would mean that the valuable right of challenge would be
'
COMMIN. OF CENTRAL EXCISE, BOLPUR v. MIS RATAN 655
MELTING & WIRE INDUSTS.
,- denied to him and there would be no scope for adjudica- A
tion by the High Court or the Supreme Court. That would
be against the very concept of majesty of law declared by
this Court and its binding effect in terms of Article 141 of
the Constitution. [para 5 and 7) [658-B; 658-F-H]
CASE LAW REFERENCE B
y 2001 Supp. 5 SCR 607 referred to para 1
., 2004 (6) sec 119 upheld para 2
CIVILAPPELLATE JURISDICTION: Civil Appeal No. 4022 c
- of 1999
~ From the final Order No. E-72-99-B-1/2002 dated 22/1/
1999 of the Customs, Excise & Gold (Control) Appellate Tribu-
(
nal, New Delhi in Appeal No.E/4327/89-B-1
D
WITH
- C.A. Nos. 1469 of2002, 3197of2000, 3589-3592 of2005
and 4789 of 2000
.,... Mohan Parasaran, A.S.G., V. Shekar, Sudhir Malhotra,
E
Poojan Malhotra, Sanjeev Malhotra, M.P. Devanath, V.
Balachandran, V. Sridharan, Gajinder Jain, Alok Yadav, Pramod
B. Agarwala, Rahul Kaushik, D.L. Chidananda, Gaurav Dhingra,
B.V. Bairam Das, (for P. Parmeswaran) for the Appearing Par-
ties.
F
,_J The Judgment of the Court was delivered by
DR. ARIJIT PASAYAT, J. 1. On a reference made by a
Bench of three Judges in Commissioner of Central Excise,
Bolpur v. v. Ratan Melting and Wire Industries, Calcutta (2005
(3) SCC 57), these matters were placed before this Bench. The G
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 con-
ceded by the parties that the decision of this Court in Collector H
656 SUPREME COURT REPORTS [2008] 14 S.C.R.
I
\__,'
A 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 sub-
sequent decision of the Constitution Bench in Dhiren
Chemical's case (supra). But learned counsel for the asses- -'
s see-respondent submitted that paragraph 11 of Dhiren
Chemical's case (supra) operates in its favour. It reads as un-
der: -{
"We need to make it clear that regardless of the
interpretation that we have placed on the said phrase, if
C 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."
2. It was noted by the three-Judge Bench that the effect of
0
the aforesaid observations was noted in several decisions. In
Kalyani Packaging Industry v. Union of India and Anr. (2004 \
(6) sec 719), it was noted as follows:
"We have noticed that para 9 (para 11 in SCC) of Dhiren
E . 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
F 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.
G 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
H
........... ·
COMMIN. OF CENTRAL EXCISE, BOLPUR v. MIS RATAN 657
MELTING & WIRE INDUSTS.
9 (para 11 in SCC) was incorporated to ensure that in A
cas.~s 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 B
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 c
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
0
what was meant by para 9 of Dhiren Chemical case."
3. The three-Judge Bench agreed with the view expressed
in Kalyani's case (supra) and observed that the view about in-
validation was sufficient to clarify the observations in paragraph
11 of Dhiren Chemical's case (supra). On taking note of the E
fact that Dhiren Chemical's case (supra) was decided by a
bench of five Judges it was felt appropriate that a bench of simi-
lar strength should clarify the position. That is why reference
was made.
4. Learned counsel for the Union of India submitted that the F
law declared by this Court is supreme law of the land under Ar-
ticle 141 of the Constitution of India, 1950 (in short the 'Constitu-
tion'). The Circulars cannot be given primacy over the decisions.
5. Learned counsel for the assessee on the other hand G
submitted that once the circular has been issued it is binding
on the revenue authorities and even if it runs counter to the de-
cision of this Court, the revenue authorities cannot say that they
are not bound by it. The circulars issued by the Board are not
binding on the assessee but are binding on revenue authori- H
658 SUPREME COURT REPORTS [2008] 14 S.C.R.
·~
A ties. It was submitted that once the Board issues a circular, the
revenue authorities cannot take advantage of a decision of the
Supreme Court. The consequences of issuing a circular are
that the authorities cannot act contrary to the circular. Once the
circular is brought to the notice of the Court, the challenge by
B the revenue should be turned out and the revenue cannot lodge
an appeal taking the ground which is contrary to the circular.
6. Circulars and instructions issued by the Board are no
doubt binding in law on the authorities under the respective stat-
utes, but when the Supreme Court or the High Court declares
C 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
D 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
E no existence in law.
7. As noted in the order of reference the correct position
vis-a-vis the observations in para 11 of Dhiren Chemical's case
(supra) has been stated in Kalyani's case (supra). If the sub-
missions of learned counsel for the assessee are accepted, it .
F would mean that there is no scope for filing an appeal. In that 1.._ _
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
G 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
H Constitution.
COMMIN. OF CENTRAL EXCISE, BOLPUR v. MIS RATAN 659
MELTING & WIRE INDUSTS.
8. The reference is accordingly answered holding that the A
correct view has been expressed by Kalyani's case (supra) as
noted in the reference order.
9. The appeals filed by the revenue are allowed while those
filed by the assessee stand dismissed.
B
R.P. Appeals disposed of.
-
I
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