2007 (1) TMI 6 - SC - Central Excise

CBEC Circular 39/99 upholds brand-rate drawback for re-rolled steel and processed fabrics; departmental circulars binding on revenue

UNION OF INDIA Versus ARVIVA INDUSTRIES (I) LTD.

SC held that CBEC Circular No. 39/99-Cus. (25 June 1999) validly extended brand-rate drawback to exporters of re-rolled steel products and processed ... Departmental Clarification - Effects of Circular issued by CBEC - Binding Or Not - HELD THAT:- In this particular case, the Board's Circular No. 39/99-Cus., dated 25th June, 1999 extends the benefit of Brand Rate of Drawback to compensate exporters for the re-rolled steel products and processed fabrics. The High Court has rightly come to the conclusion that the circulars issued by the Board are binding on the department. An effort was made by the learned Solicitor General to get this case referred to a larger Bench. We do not accept this contention in view of number of decisions and especially the Constitution Bench decision in Dhiren Chemical Industries (I) [2001 (12) TMI 3 - SUPREME COURT]. As per Supreme Court in several cases that circulars issued are binding on the Revenue - CBEC circular extending Brand rate of drawback to exporters of impugned goods. Issues:Interpretation of the binding nature of Circulars issued by the Central Board of Excise & Customs on the revenue department.Analysis:The Supreme Court granted leave in special leave petitions and agreed with the High Court's view that Circulars issued by the Central Board of Excise & Customs are binding on the department. The Court cited various decisions to support this, emphasizing the binding nature of Circulars issued under specific sections of relevant Acts on the revenue department. However, a different view in Hindustan Aeronautics Ltd. was deemed contrary to a subsequent Constitution Bench decision, thus not considered good law. The Court highlighted that the revenue department cannot take a stand contrary to the Circulars issued by the Board, as established in previous judgments.Further Analysis:The Court referenced Circular No. 39/99-Cus., dated 25th June, 1999, extending benefits to exporters for specific products. It affirmed the binding nature of Circulars issued by the Board on the department, rejecting the contention to refer the case to a larger Bench. The judgment dismissed Civil Appeals without costs and directed transferred cases to respective High Courts for fresh decisions based on the law laid down in the current judgment, emphasizing expeditious resolution.