Court clarifies Circular & trade notice not binding for MODVAT benefits. Individual claims assessed independently. Future challenge permissible.

The court held that Circular No. 6/92-CX. 6 and trade notice No. 50/92 were not binding directives but meant for information and guidance, clarifying that they did not have the force to disallow legitimate benefits under the MODVAT scheme. The court emphasized that individual claims under the scheme should be assessed independently of the circular. As a result, the court declared that challenging the circular's validity in the future was permissible. The writ petitions were disposed of without costs.

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Issues:
Challenge to the validity of Circular No. 6/92-CX. 6 and trade notice No. 50/92 under Article 14 and 19(l)(g) of the Constitution of India, Sections 37 and 37B of the Central Excises and Salt Act, 1944, and various Rules.

Analysis:
The writ petitions were filed seeking a declaration that Circular No. 6/92-CX. 6 and trade notice No. 50/92 were ultra vires certain provisions of the Constitution and the Central Excises and Salt Act, 1944, along with specific Rules. An interim stay was granted on the operation of the circular and trade notice. The main contention was that these circulars did not have statutory force and were not binding on enforcing authorities. The respondents argued that the circular was clarificatory and not binding, emphasizing that it was not issued under Section 37B of the Act. The court noted that the circular was meant for information and guidance, not as a directive to disallow MODVAT credit. Consequently, the court found adjudication on the validity of the circular unnecessary as it did not have binding force on authorities to disallow legitimate benefits under the MODVAT scheme. The court clarified that individual claims under the scheme should be considered on their merits independent of the circular. The writ petitions were disposed of with a declaration that challenging the circular's validity in future actions was permissible. No costs were awarded in this matter.

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