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2007 Supreme(SC) 1461
Supreme Court Of India
JAI FIBRES LTD - Appellant
Versus
COMMISSIONER OF CENTRAL EXCISE, MUMBAI-III - Respondent
Appeal (Civil) 1950 Of 2006
Decided On : 11/15/2007
.
The main legal point established in the judgment is the prospective application of circulars and the interpretation of relevant legal principles from previous cases.
Headnote:
INTERPRETATION - Circular dated 24. 09. 1992 - Central Excise Tariff Act - 3920.32, 3923.90 - The court discussed the interpretation of a Circular dated 24. 09. 1992, which was published on 15. 10. 1992 in the Trade Circular by the Central Board of Excise and Customs. The relevant act sections discussed were 3920.32 and 3923.90 of the Central Excise Tariff Act. The court highlighted the interpretation of the circular, its prospective application, and the legal principles established in ITW Signode India Ltd. vs. Collector of Central Excise, [2003 (158) E. L. T. 403 (SC)], and H. M. Bags Manufacturer vs. Collector of Central Excise, [1997 (94) E. L. T. 3 (SC)]. The court's decision was influenced by the interpretation of the circular and the application of legal principles from the discussed cases.
Fact of the Case:
The appellant manufactured hdpe bags and classified them for excise duty payment under Chapter 63 of the Central Excise Tariff Act. A circular was issued to classify the bags under Chapter heading 39, leading to a demand for differential duty for a specific period.
Finding of the Court:
The court found that the circular had prospective application and the demand for duty prior to its issuance was not valid. The court also held that the decision in ITW Signode India Ltd. was not applicable to the current case.
Issues: The issues revolved around the classification of hdpe bags for excise duty payment and the retrospective application of the circular.
Ratio Decidendi: The court's decision was based on the prospective application of the circular and the interpretation of relevant legal principles from previous cases.
Final Decision: The impugned judgment was set aside, and the appeal was allowed with no order as to costs.
S. B. SINHA, J.
( 1 ) DELAY condoned.
( 2 ) INTERPRETATION of a Circular dated 24. 09. 1992, which was published on 15. 10. 1992 in the Trade Circular by the Central Board of Excise and Customs, is in question in this appeal which arises out of a judgment and order dated 9. 8. 2005 passed by the Central excise and Service Tax Appellate Tribunal in Appeal No. E/3137/99 (Mumbai) and e/co/389/99 (Mumbai), whereby and whereunder an appeal preferred by the respondent herein from a judgment and order dated 30th June, 1999 passed by the commissioner of Central Excise (Appeals), Mumbai, was allowed.
( 3 ) THE basic fact of the matter is not in dispute. The appellant herein manufacture hdpe bags. They used to classify the said bags for the purpose of payment of excise duty under Chapter 63 of the Central Excise Tariff Act (hereinafter referred as 'the act' ). The period for which the excise duty was payable is 1. 4. 1992 to 15. 10. 1992. Excise duty was paid accordingly. It is also not in dispute that different High Courts took different views as to whether the duty is payable under Chapter Heading 63. 54 or Chapter heading 39 of the Act.
( 4 ) IT is furthermore not in dispute that a Division Bench of the High Court of Madhya pradesh in Raj Pack Well Ltd. vs. Union of India, [1990 (50) ELT 201], took the view that the HDPE bags should be classified under Chapter heading 39 of the Central excise Tariff Act, 1985 and not under Chapter heading 63 thereof. Indisputably, again the Central Board of Excise and Customs upon noticing that the appeal against the aforesaid decision of the Division Bench of the High Court is pending before this court for final decision, issued a circular on 24. 9. 1992, the relevant portion whereof is as under:
"now, therefore, in exercise of the powers conferred under Section 37-B of the Central Excises and Salt Act, 1944 (1 of 1944) (henceforth referred to as the Act) and for the purpose of ensuring uniformity in the classification of the said goods, the Central Board of Excise and Customs hereby orders that HDPE strips and tapes of a width not exceeding 5 mm shall be henceforth classified under sub-heading 3920. 32 and sacks made therefrom under sub-heading 3923. 90 of the Tariff. "
(Emphasis supplied)
( 5 ) RELYING on or on the basis of the said circular letter, a show cause notice was issued upon the appellants herein by the respondents to pay the differential duty under chapter 39 for the period 1. 4. 1992 to 15. 10. 1992.
( 6 ) THE cause having been shown, the Assistant Commissioner of Central Excise by an order dated 21. 10. 1997 dropped the proceedings. Revenue being not satisfied therewith preferred an appeal thereagainst before the Commissioner of Central excise under Section 35e (4) of the Central Excise and Salt Act, 1944. By a judgment and order dated 30th June, 1999 the said appeal was dismissed. Feeling aggrieved, revenue preferred an appeal before the Tribunal which, as noticed hereinbefore, has been allowed by reason of the impugned judgment.
( 7 ) THE Tribunal in its judgment relied upon a three-Judge Bench decision of this Court in ITW Signode India Ltd. vs. Collector of Central Excise, [2003 (158) E. L. T. 403 (SC)] for arriving at its decision that in view of the amendment of Section 11a of the central Excise Act, the validity whereof had been upheld, the revenue was within its jurisdiction to get the differential duty which has not been recovered.
( 8 ) MR. Madhav Rao, learned counsel appearing on behalf of the appellant would, in support of its appeal, submit that the Tribunal went wrong in passing the impugned judgment in so far as it failed to take into consideration a decision of this Court in h. M. Bags Manufacturer vs. Collector of Central Excise, [1997 (94) E. L. T. 3 (SC)], in its correct perspective, wherein it has clearly been opined that the word "henceforth" used by the Board must lead to the conclusion that only prospective effect thereto could be given and not a retrospec
