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1991 Supreme(Cal) 295
High Court of Calcutta
Ruma Pal, J.
Birla Jute And Industries Ltd. – Appellant
Versus
Assistant Collector Of C.Ex. – Respondent
Writ Petition Matter 3741 of 1990
Decided On : Jun 12, 1991
R.N. Bajoria, S.K. Bagaria, N.C. Roy Chaudhary, P.K. Dutta
The Central Excise Officers are statutorily bound to abide by the instructions of the Board regarding classification if Section 37B of the Central Excises and Salt Act, 1944 is not to be reduced to a dead letter. At the same time it cannot be lost sight of that several decisions have held that Central Excise Officers acting quasi-judicially must exercise their independent judgment.
Headnote:
CENTRAL EXCISE - CLASSIFICATION - YARN CONSISTING OF 70% ACRYLIC FIBRE AND 30% ARTIFICIAL STAPLE FIBRE OF CELLULOSIC ORIGIN - CLASSIFICATION UNDER SUB-HEADING 5504.32 OR 5504.39 OF THE SCHEDULE TO THE CENTRAL EXCISE TARIFF ACT, 1985 - EFFECT OF CIRCULAR ISSUED BY THE CENTRAL BOARD OF EXCISE AND CUSTOMS UNDER SECTION 37B OF THE CENTRAL EXCISES AND SALT ACT, 1944 - SCOPE OF INTERFERENCE BY THE COURT UNDER ARTICLE 226 OF THE CONSTITUTION.
Fact of the Case:
The petitioner company manufactures yarn consisting of 70% acrylic fibre and 30% artificial staple fibre of cellulosic origin. Since 1985 the Yarn was classified under Tariff Heading 55.04 under 5504.32 of the Schedule to the Central Excise Tariff Act, 1985. The respondents now contend that the yarn is classifiable under Sub-heading 5504.39 of the Schedule to the Act.
Finding of the Court:
The court held that the circular issued by the Central Board of Excise and Customs under Section 37B of the Central Excises and Salt Act, 1944 is binding on the Central Excise Officers and they cannot take a stand contrary to the directive/instruction issued. However, the instructions are not binding on the assessee who may question the correctness of the same before a quasi-judicial authority and before a Court. Both the quasi-judicial authority and a fortiori, the Court, can question the correctness of the instructions. An assessee has on the other hand the right to claim and the court may compel compliance with such instructions as are for the benefit of the assessee by the Central Excise Authorities. The court also held that the instructions regarding classification cannot be said to be such an instruction which required prospective implementation. The instruction is a decision on the doubt regarding the classification of the yarn. The decision clears the doubt. In effect the ambit of the relevant Sub-headings of the Schedule to the Act were construed with reference to the yarn. Such a decision is really classificatory. A classification results in a situation as if the Sub-heading as classified always was. Therefore this contention of the respondents must also be rejected.
Issues: 1. The effect of the said circular on the question of classification of the yarn; 2. Classification of the yarn; 3. Scope of interference by the Court under Article 226 of the Constitution into question of classification under the Act.
Ratio Decidendi: 1. The Central Excise Officers are statutorily bound to abide by the instructions of the Board regarding classification if Section 37B is not to be reduced to a dead letter. At the same time it cannot be lost sight of that several decisions noted above have held that Central Excise Officers acting quasi-judicially must exercise their independent judgment. 2. There is a distinction between a decision in a particular assessment by a quasi-judicial authority and a decision on principle by the Board. While an instruction issued under Section 37B cannot be binding upon a quasi-judicial authority under the Act, the departmental officers conducting the lis before such quasi-judicial authority cannot take a stand contrary to the directive/instruction issued. 3. The instructions which may be binding on the Central Excise Officers are not binding on the Assessee who may question the correctness of the same before a quasi-judicial authority and before a Court. Both the quasi-judicial authority and a fortiori, the Court, can question the correctness of the instructions. 4. An assessee has on the other hand the right to claim and the court may compel compliance with such instructions as are for the benefit of the assessee by the Central Excise Officers. 5. The instructions regarding classification cannot be said to be such an instruction which required prospective implementation. The instruction is a decision on the doubt regarding the classification of the yarn. The decision clears the doubt. In effect the ambit of the relevant Sub-headings of the Schedule to the Act were construed with reference to the yarn. Such a decision is really classificatory. A classification results in a situation as if the Sub-heading as classified always was.
Final Decision: The writ application is allowed. The impugned notice dated 20-2-1990, orders dated 28-2-1990 and 30-8-1990 and demands raised on the basis thereof are set aside. The respondents are directed to act in accordance with the Circular No. 25/90 CX. 1 dated 26-11-1990 as far as the yarn manufactured by the petitioner company is concerned and to continue to classify the same under Sub-heading 5504.32 of the Schedule to the Act. There will be no order as to costs.
Ruma Pal, J.
1. THE petitioner company manufactures yarn. THE yarn consists of 70% acrylic fibre and 30% artificial staple fibre of cellulosic origin. Since 1985 the Yarn was classified under Tariff Heading 55.04 under 5504.32 of the Schedule to the Central Excise Tariff Act, 1985 (hereinafter referred to as the Act.) THE respondents now contend that the yarn is classifiable under.Sub-heading 5504.39 of the Schedule to the Act. THE relevant headings read as under :
"55.04 - Yarn (including sewing thread) of synthetic staple fibres. Yarn in which acrylic or modacrylic staple fibre predominates by weight: 5504.32 - Yarn not containing or containing not more than one sixth by weight of other synthetic staple fibres, calculated on the total fibre content. 5504.39 - Others."
2. ON 21-12-1989 a show cause notice was issued for revision of the classification list whereunder the yarn had been classified under 5504.32 seeking to reclassify the yarn under 5504.39. The petitioner replied to the show cause notice but the Assistant Collector confirmed the re-classification of the yarn under 5504.39 by his order dated 28-2-1990. The petitioner preferred an Appeal from the order dated 28-2-1990 and also filed an application for stay. While the appeal and application were pending a second show cause notice was issued in respect of a classification list filed by the petitioner for the period effective from 30-10-1989. Demands were raised by the respondents on the petitioners on the basis of the order dated 28-2-1990. The petitioner company filed this application under Article 226 challenging inter alia the order dated 28-2-1990, the demands raised on the basis thereof and the second show cause notice.
3. ON 21-8-1990 the following order was passed by a learned Judge of this court:
"The learned counsel appearing for the respondents, on instructions from his clients, has given an undertaking on behalf of his clients that no attempt shall be made to realise the demands in terms of the order dated 2nd March, 1990 or no step will be taken in connection thereof, until the said appeal is disposed of. Under the circumstances, I am not inclined to pass any interim order. However, the respondent No. 2 is directed to hear the appeal on 24th August, 1990 as far as practicable and shall dispose of the same by passing necessary orders with utmost expeditiously. If the appeal goes against the petitioner, the order shall be kept in abeyance for a week from the date of passing of the order and the petitioner shall be at liberty to file a supplementary affidavit incorporating all the subsequent facts. The petitioner shall also be at liberty to collect the blended yarn in accordance with law. In respect of subsequent periods, the respondents shall be at liberty to issue show cause notices but shall not take any further step until the disposal of this writ application and this includes the notice dated 20th February, 1990".
ON 30-8-1990 the petitioners' appeal was dismissed. This order has also been challenged by way of a supplementary affidavit.
4. IN the meantime at a conference of the Collectorate of Central Excise and Customs held on 7th and 8th June 1990 the issue regarding classification of Acrylic-Viscose Blended Yarns was considered. The minutes of the conference which have been brought on record by a second supplementary affidavit filed by the petitioner records (in so far as it is material) as follows :
"The conference further observed that from the description of the heading it might be seen that there was only a restriction on the usages of other synthetic Staple Fibre to the extent of 1/6 of the weight calculated on the total fibre contents; otherwise there was no other restriction as regard to the use of other Staple Fibre. Had it been the intention of the Government not to include such yarn manufactured with predominance of Acrylic Fibre along with other textile materials (other than Synthetics Fibre) upto the specified limit, the same could ha
