Binding departmental circulars govern classification until rescinded, so earlier relief applied to par-boiling machinery clearances made before the change.

Departmental circulars binding on the revenue govern classification for their operative period, and a later rescinding circular applies prospectively. Here, Circular No. 924/14/2010-CX of 19.05.2010 treated rice par-boiling machinery as classifiable under Heading 8437, while the later circular of 15.05.2014 changed the classification to Heading 8419 only from that date. Accordingly, clearances made before 15.05.2014 remained covered by the earlier beneficial circular, making the duty demand for that period unsustainable and the consequential penalties inapplicable.

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Issues: Whether, for the period prior to 15.05.2014, the demand of duty on par-boiling machines classified by the assessee under Heading 8437 of the Central Excise Tariff Act, 1985 could be sustained in view of Circular No. 924/14/2010-CX dated 19.05.2010, and whether the consequent penalties could survive.

Analysis: The circular dated 19.05.2010 was in force during the relevant period and specifically treated rice par-boiling machinery as meritably classifiable under Heading 8437. The later circular dated 15.05.2014 rescinded the earlier circular and directed classification under Heading 8419, but the later circular could operate only from its date. The settled principle applied was that departmental circulars are binding on the revenue authorities so long as they remain in force, and a beneficial circular governs the period of its operation. On that basis, the assessee was entitled to the benefit of the earlier circular for clearances made before 15.05.2014.

Conclusion: The demand of duty for the period prior to 15.05.2014 was held to be unsustainable, and the consequential penalties also could not survive.

Ratio Decidendi: A departmental circular binding the revenue during its operative period governs classification and assessment for that period, and a later rescinding circular applies prospectively unless the earlier circular is otherwise invalidated.

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