Binding circulars control EOU duty adjudication, requiring Development Commissioner consultation before confirming demand and penalty.

Departmental authorities are bound by a binding circular governing adjudication of an EOU's alleged failure to meet exemption conditions, including prior consultation with the Development Commissioner before duty is confirmed. The circular required a definite conclusion on liability before issuance or confirmation of demand, and the Tribunal treated this procedure as applicable even to indigenous goods covered by the exemption arrangement. Because the demand and penalty were confirmed without following that consultation process, the adjudication was held premature. The matter was remanded for fresh readjudication in accordance with the circular.

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Issues: Whether the duty demand and penalty could be sustained without following the Board's circular requiring consultation with the Development Commissioner before issuance and confirmation of the demand, and whether the matter required remand for fresh adjudication.

Analysis: The exemption was availed by an EOU subject to fulfillment of specified export conditions. The departmental circular directed that, where non-fulfilment of export obligation or violation of exemption conditions was alleged, the customs/excise authorities should coordinate with the Development Commissioner and confirm duty only after a definite conclusion was reached on the unit's liability. The Tribunal held that the department was bound by the circular and that the instruction applied equally to indigenous goods covered by the exemption arrangement. Since the impugned demand had been confirmed without following this procedure, the adjudication was found premature.

Conclusion: The demand and penalty were not sustained, and the matter was remanded for readjudication after consultation with the Development Commissioner in terms of the circular.

Ratio Decidendi: Departmental authorities are bound by binding circulars governing the manner of adjudication, and where such circular requires prior consultation with the Development Commissioner on an EOU's alleged failure to fulfill exemption conditions, duty demand cannot be finally confirmed until that procedure is followed.

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