Exemption for expanded units: base production includes stock transfers and consignment transactions, and contrary circulars cannot control assessment.

An expanded unit claiming exemption under Section 4-A was entitled to exemption only on production in excess of base production, and base production included quantities attributable to stock transfer and consignment transactions. The Full Bench's interpretation of the applicable notification was binding, so the contrary view in the circular dated 25.1.2003 could not govern the assessment. The assessment and allied proceedings were therefore required to be decided in accordance with the Full Bench ruling, and the impugned circular was not followed.

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Issues: Whether the impugned circular could control the assessment of units claiming exemption under Section 4-A on expansion, diversification and modernisation, and whether base production for the purpose of exemption included stock transfer and consignment transactions.

Analysis: The Full Bench had already answered the reference by holding that, under the applicable notification, an expanded unit is entitled to exemption on the quantity in excess of base production and that base production includes the quantity relatable to stock transfer and consignment transactions. The writ court, following that binding exposition of law, held that the assessment and allied proceedings had to be decided accordingly and that the contrary view reflected in the circular dated 25.1.2003 could not be followed.

Conclusion: The circular was not to be followed, and the petitioner's proceedings were to be decided in accordance with the law laid down by the Full Bench; the writ petition was allowed.

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