Binding Board circulars barred duty demand on empty barrels and packing cases; later withdrawal applied only prospectively.

Duty on empty barrels and packing cases was treated as not payable where contemporaneous Board instructions clarified that empty containers were not dutiable. The later withdrawal of that clarification was confined to prospective effect and could not govern a closed period. Board circulars were binding on the Department, which could not adopt a contrary position. In the absence of a tariff classification showing old and used barrels and plywood boxes to be excisable manufactured goods, duty could not be recovered by invoking the deemed manufacturer concept. Emptying the contents did not amount to manufacture of scrap containers, so the demand was unsustainable.

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Issues: Whether duty was leviable on empty barrels and packing cases cleared from the factory after Modvat credit had been taken on the inputs, and whether the departmental demand could be sustained in view of binding Board instructions and the relevant tariff treatment.

Analysis: The demand was rejected because the departmental and Board instructions then in force clarified that duty was not required to be paid on empty containers. The later withdrawal of that clarification could operate only prospectively and could not govern a period that had already concluded. Circulars issued by the Board are binding on the Department, which cannot take a contrary stand. The removal of old and used barrels and plywood boxes, in the absence of a proper tariff classification showing them to be excisable manufactured goods, could not justify recovery of duty by treating the clearances as if they were removals of inputs under the deemed manufacturer concept. Emptying the contents did not result in manufacture of scrap containers.

Conclusion: The duty demand was not sustainable and the appeal was allowed.

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