Prospective classification circular: reclassification of HDPE bags could not support duty recovery for the earlier period.

A circular directing reclassification of HDPE bags under Chapter 39 operated only prospectively because it used the expression "henceforth" and was issued to secure uniformity in classification. The statutory amendment to Section 11A of the Central Excise Act, 1944 did not give that circular retrospective effect or authorise recovery of duty for an earlier period. The earlier ruling treating such a circular as prospective was followed, and the later revenue-backed decision was distinguished on its facts. Accordingly, differential duty for the period before issuance of the circular could not be demanded.

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Issues: Whether the circular issued by the Central Board of Excise and Customs directing classification of HDPE bags under Chapter 39 operated prospectively only, so that no differential duty could be demanded for the period prior to its issuance.

Analysis: The circular was issued under the power to secure uniformity in classification and expressly used the expression "henceforth". The circular itself showed that the reclassification was intended to operate from a future date and not retrospectively. The Court distinguished the validating effect of the amendment to Section 11A of the Central Excise Act, 1944, holding that the statutory power to recover short-levied duty did not convert a prospectively operating circular into one with retrospective effect. The earlier decision holding that such a circular had prospective force was treated as binding, and the later decision relied on by the revenue was found to be in a different factual setting.

Conclusion: The circular could not justify recovery of duty for the period before its issuance, and the demand for the earlier period was unsustainable.

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