COMMISSIONER OF CENTRAL EXCISE, MUMBAIversusM/S. HINDUSTAN SPINNING & WVG. M. LTD. AND ANR.

                        [2009] 6 S.C.R. 478


A       COMMISSIONER OF CENTRAL EXCISE, MUMBAI
                                 v.
     M/S. HINDUSTAN SPINNING & WVG. M. LTD. AND ANR.
                (Civil Appeal No. 5848 of 2006)
                          APRIL 16, 2009
B
           [DR. ARIJIT PASAYAT AND ASOK KUMAR
                        GANGULY, JJ.]


        Circulars/Government orders/Notificafi.on:
c
       Question as to whether circulars issued by authorities
  were binding on Courts/Tribunal was referred to larger Bench
  in Rattan Metting's case - Present matter was kept for
  disposal after decision of Rattan Metting's case in reference
0 - Reference answered in that case - Present matter remanded
  to Tribunal for decision in view of applicability and/or
  relevance of Rattan Metting's case - Appeal and interim
  application disposed of.

       Commissioner of Central Excise, Bolpur v.Ratan Melting
E & Wire Industries (2008) 13 SCC 1; Commissioner of Central
  Excise, Bolpur v. Ratan Melting and Wire Industries, Calcutta
  (2005) 3 SCC 57; Collector of Central Excise v. Dhiren
  Chemical Industries (2002) 2 SCC127; Collector of Central
  Excise v. Usha Martin Industries (1997) 7 SCC 47; Kalyani
F Packaging Industry v. Union of India and Anr. (2004) 6 SCC
    719, referred to.

                        Case Law Reference:

        (2008) 13 sec 1         referred to          Para 2
G
        (2005) 3 sec 57         referred to          Para 3

        (2002) 2 sec 121        referred to          Para 3

        (1997) 1 sec 47         referred to          Para 3
H                              478
     COMMNR. OF CENTRAL EXCISE, MUMBAI v.                 479
       HINDUSTAN SPINNING & WVG. M. LTD.

    (2004) 6SCC 719           referred to           Para 3        A
    CIVIL APPELLATE JURISDICTION : Civil Appeal No.
5848 of 2006.

    From the Judgment & Order dated 25.7.2005 of the High
Court of Customs. Excise and Service Tax Appelate Tribunal,       B
West Zonal Bench at Mumbai in _Appeal No. E/3568/2004. E
1510/04.

    Mohan Par~saran, ASG, Ashok K. Shrivastava, N.K.
Bajpai, Anil Katiyar and B. Krishna Prasad for the Appellant.     c
    Darius B. Shroff, B.V. Panjuani, Ajay Kumar Jha, Sameer
Parekh, Rukhmani Bobde, Divya Sinha, Parthir Gsowami,
Parekh & Co., V. Sridharan, Prakash Shah, Jay Savla,
Arundhati Das and Rajpal Singh for the Respondents.
                                                                  D
    The Judgment of the Court was delivered by

     DR. ARIJIT PASAYAT, J. 1. Heard learned counsel for
the parties.

     2. By order dated 12.12.2006 this court had directed that    E
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, Bo/pur v. Ratan       F
Melting & Wire Industries [2008 (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        G
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     H
    480       SUPREME COURT REPORTS                  [2009] 6 S.C.R.
                                                                          r
A 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
B (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
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."

D        4. It was noted by the three-Judge Bench that the effect of
    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
E
         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
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
H       case the Revenue was likely to reopen cases. Thus para

                                                                              r
        COMMNR. OF CENTRAL EXCISE, MUMBAI v. HINDUSTAN 481

    .    SPINNING & WVG. M. LTD. [DR. ARIJIT PASAYAT, J.]

            9 (para 11 in SCC) was incorporated to ensure that in          A
            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              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
            Bo~rd in preference to a decision of the Constitution Benc:h
            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 what     D
            was meant by para 9 of Dhiren Chemical case."

            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 E
        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.
                                                                       F
            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,    G
            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           H
    482       SUPREME COURT REPORTS                    [2009] 6 S.C.R.
                                                                                 ~




A         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
B         has really no existence in law.

          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 submissions of learned counsel for the assessee are
c         accepted, it would mean that 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-a-vis the circular. It has to be the revenue
D         authority who has to question that. To lay content with the
                                                                            11
          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
E         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
F         (supra) as noted in the reference order."

         1o. 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 Me/ting's
    case (supra).
G
          11. All contentions are left open to the parties.                 •
         12. The Civil appeal and all interim applications are
    disposed of accordingly.
H D.G.                                           Appeal disposed of.