Binding circular on escaped gas duty led to waiver of pre-deposit and stay of recovery.

A binding departmental circular governed cases where gases escaped into the atmosphere during the manufacturing process, including through a flare system or otherwise, and stated that no duty was required on such escaped gas. On that basis, the tribunal treated the circular as applicable to the assessee's facts and rejected the department's contrary reasoning. The dispute over pre-deposit of duty and penalty was therefore resolved in favour of the assessee, with waiver of the pre-deposit requirement, interim relief, and stay of recovery pending final hearing.

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Issues: Whether pre-deposit of duty and penalty was liable to be waived on the basis that the gases escaped into the atmosphere due to technological necessity and the Board circular covered the case in favour of the assessee.

Analysis: The appellant manufactured gases and a part of the gases was vented into the atmosphere because of the technological process. A Board circular specifically stated that no duty was required to be discharged where gas escaped into the atmosphere through flare system or otherwise. The circular was treated as binding on the authorities, and the contrary reasoning adopted by the department was held not applicable to the facts of the case.

Conclusion: The demand was held to be covered by the circular in favour of the assessee, and the requirement of pre-deposit of duty and penalty was waived.

Final Conclusion: Interim relief was granted and recovery was stayed, with the appeal directed to proceed to final hearing.

Ratio Decidendi: A binding departmental circular governing the factual situation must be followed, and where it shows that no duty is payable on gas escaping in the course of the process, pre-deposit of the disputed duty and penalty can be waived.

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