Superseded trade notice cannot sustain show cause notices where later clarification changes job-work manufacturing liability.

Show cause notices based solely on Trade Notice 197/88 could not continue once Trade Notice 156/90 clarified that, in a principal-to-principal job-work arrangement, the job worker is the actual manufacturer and the raw material supplier is treated as manufacturer only where the job worker is a dummy unit or hired labour. The later trade notice superseded the earlier position, so proceedings founded exclusively on the superseded notice were unenforceable. The existing notices were brought to an end, while fresh proceedings under the clarified position were left open.

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Issues: Whether show cause notices issued on the basis of Trade Notice 197/88 could continue to be enforced after Trade Notice 156/90 clarified and superseded the earlier position on job work manufacturing liability.

Analysis: The notices were founded on the earlier trade notice that treated the principal supplier of inputs as the manufacturer in job-work situations. The later trade notice clarified that where the relationship is principal to principal, the job worker is the actual manufacturer, and only where the job worker is merely a dummy unit or hired labour can the raw material supplier be treated as the principal manufacturer. In effect, the later trade notice superseded the earlier one, so notices issued solely under the superseded circular position could not be proceeded with further.

Conclusion: The earlier trade notice stood superseded and the impugned show cause notices could not be enforced further; the issue was answered in favour of the petitioners, though fresh notices on the basis of the later trade notice were left open.

Final Conclusion: The writ petitions succeeded to the extent that the existing proceedings based on the superseded trade notice were brought to an end, while the department was left free to commence fresh proceedings under the clarified position.

Ratio Decidendi: A show cause notice founded exclusively on a superseded administrative trade notice cannot be enforced once the later notice has clarified the governing legal position.

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