Court quashes circular impacting assessments, emphasizes adherence to Section 37B proviso

The High Court of Judicature at Madras, through the judgment by Kanakaraj, J., allowed writ petition 18534 of 1990, quashing the Superintendent's letter dated 6-11-1990. Writ petitions 18533 of 1990 and 40 of 1991 challenging the circular were partially allowed. The judgment emphasized strict adherence to the proviso to Section 37B by assessing authorities to prevent circulars or orders from impacting specific assessments. Paragraph 6 of the impugned circular was quashed, directing assessing authorities to disregard it in final decisions. No costs were awarded in these writ petitions.

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Issues: Challenge to notice issued by Superintendent of Central Excise for classification list under Central Excise Taxation Act, validity of circular issued by Central Board under Section 37B, legality of subsequent communication by Superintendent of Central Excise, challenge to circular's impact on assessing authorities, interpretation of proviso to Section 37B.

The judgment by Kanakaraj, J. of the High Court of Judicature at Madras addresses multiple writ petitions challenging the notice issued by the Superintendent of Central Excise directing the filing of a classification list for hypo-solution under Heading 37.07 of the Central Excise Taxation Act. The challenge is based on a circular issued by the Central Board under Section 37B of the Central Excises and Salt Act, 1944. The petitioners argue that the circular restricts the assessing authorities and renders any objections futile, as they would be bound by the circular's directives. The circular states that converting hypo into hypo-solution amounts to manufacture, necessitating classification under Heading 37.07. The judgment references a previous case where it was held that circulars cannot be challenged in writ proceedings, and the matter must be adjudicated by the authorities. A Division Bench later clarified that while circulars cannot be challenged directly, subsequent communications by the Superintendent of Central Excise can be questioned through a regular show cause notice to the assessees.

As per the judgment, the Division Bench ruling guides the decision in the present case. Writ petition 18534 of 1990 is allowed, quashing the Superintendent's letter dated 6-11-1990. However, writ petitions 18533 of 1990 and 40 of 1991 challenging the circular are partially allowed. The judgment clarifies that the proviso to Section 37B must be strictly followed by assessing authorities, ensuring that no circular or order affects a specific assessment. Paragraph 6 of the impugned circular is quashed, emphasizing that assessing authorities should disregard it before making final decisions. The judgment highlights the importance of adhering to the proviso to Section 37B in assessment procedures, while also emphasizing that there will be no order as to costs in these writ petitions.

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