The Customs, Excise & Service Tax Appellate Tribunal, Ahmedabad any Circular which is beneficial to the assessee should be given effect irrespective to the different correct legal position of classification.
Facts
The issue involved in the present case is classification of goods i.e. Parts of Drier/ parboiling parts namely Heat Exchanges, Drier Fan and Aluminium Fin Tubes cleared by the appellant for Rice Mill machinery. The department has classified the said goods under Chapter Heading 8419 which attracted duty at the appropriate rate whereas the appellant plea was that the said goods were not chargeable to duty as the same were classifiable under Chapter heading 8437 of the Central Excise Tariff Act, 1985.
Submissions
Advocate Vikrant Kackaria, appearing on behalf of the appellant, submitted that demand in the case pertains to period 2011-12 to 2012-13 thus the entire demand is for the period prior to 15.05.2014 i.e. the date of rescinding of the Circular. Since the issue is no more res-integra and decided by the Hon’ble Supreme Court as well as the Tribunal that no demand can be confirmed for the period during which the Circular was in vogue and hence the entire demand of Central Excise along with interest and penalty needs to be dropped.
Rajesh Nathan, Assistant Commissioner, (AR) appearing on behalf of the Revenue submitted that since the show cause notice was issued subsequent to rescinding of Circular, in the present case, the show cause notice was validly issued and Circular will apply.
Decision
The two member bench of Ramesh Nair Member (Judicial) and C L Mahar Member (Technical) said that it is a settled legal position that the Board Circular issued by CBEC/CBIC is binding on the departmental officers. In view of this settled legal position, the show cause notice ought not to have been issued by following the binding Circular. Therefore, the issuance of show cause notice itself is illegal and incorrect.
The bench added that it is a settled position under various Supreme Court Judgments that any Circular which is beneficial to the assessee should be given effect irrespective to the different correct legal position of classification. Therefore, even though subsequently the Larger Bench has decided the classification under heading 8419 but by virtue of Circular during the currency of the said Circular the goods is classifiable under heading 8437 and consequently no duty could have been demanded on this very issue.
It was observed by the Tribunal that even though the Larger Bench has decided the merits of classification under heading 8419 but despite that the issue that when the Board Circular was in force which classified the goods under heading 8437 shall prevail as per various Supreme Court decisions discussed by the Larger Bench in the decision.
The bench further observed that the period involved is 2011-12 to 2013-14 and during this period the circular dated 15.05.2014 was not in force but during the relevant period the Circular dated 19.05.2010 was prevailing and according to which the goods were classifiable under Chapter heading 8437.
It was held that in view of the Circular dated 19.05.2010 the appellant was not liable to pay any duty for the clearances made prior to rescinding the Circular dated 19.05.2010.
Case title: Rippen Radiators & Heat Exchangers Pvt Ltd v/s Commissioner of Central Excise & ST, Ahmedabad
Citation: EXCISE Appeal No. 10291 of 2015-DB
