Binding Board circular controlled excise classification of rice machinery; later rescission could not justify past duty demand.

Central excise classification of rice parboiling machinery and driers turned on whether Chapter Heading 8437 applied during the relevant clearance period. The Tribunal noted that Circular No. 924/14/2010-CX was then in force and specifically classified such machinery under Heading 8437, so departmental authorities were bound to follow it even though a later view supported Heading 8419. A subsequent rescinding circular could not govern past clearances made while the beneficial circular remained operative. On that basis, duty demand contrary to the binding circular was held unsustainable, and the associated interest and penalty could not be upheld.

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Issues: Whether the demand of central excise duty on parts of drier/parboiling machinery was sustainable when, during the relevant clearance period, Circular No. 924/14/2010-CX dated 19.05.2010 was in force classifying rice parboiling machinery and driers under Chapter Heading 8437.

Analysis: The goods were disputed on classification between Chapter Headings 8419 and 8437. Although the Larger Bench view supported classification under Heading 8419, the relevant period was prior to 15.05.2014, when Circular No. 924/14/2010-CX was operative and specifically treated rice parboiling machinery and driers as classifiable under Heading 8437. The later rescinding circular could not govern clearances already made. The binding character of Board circulars on departmental authorities was applied, and the Tribunal followed its earlier view that, for the period when the beneficial circular held the field, duty could not be demanded contrary to that circular.

Conclusion: The demand was not sustainable for the relevant period and the duty, interest, and penalty could not be upheld.

Final Conclusion: The impugned order was set aside and the appeals were allowed with consequential relief.

Ratio Decidendi: A binding Board circular governing the relevant clearance period must be applied by the revenue authorities, and a subsequent rescission cannot sustain duty demand for past clearances made while the beneficial circular remained in force.

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