Cinder not excisable under prevailing precedent; contrary circular could not sustain the show-cause notice

Cinder arising as waste from burning coal in boilers was treated as not excisable, so a circular treating it as an excisable commodity could not override the prevailing judicial position. The Court relied on prior tribunal rulings, the un-stayed and un-set-aside Gujarat High Court view, and the principle that a non-speaking dismissal can attract merger, making the appellate decision operative. It also reaffirmed that departmental authorities must follow binding judicial precedent and cannot proceed on the basis of a contrary administrative circular. The circular dated 7 April 1998 was therefore held invalid in the prevailing legal position, and the show-cause notice issued under it was quashed.

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Issues: Whether the Board's circular dated 7 April 1998 treating cinder as an excisable commodity could be acted upon, and whether the consequent show-cause notice and proposed adjudication could be sustained.

Analysis: The challenge turned on whether cinder, arising as waste in the course of burning coal in boilers, amounted to manufacture and therefore attracted excise duty. The Court relied on prior tribunal decisions holding that cinder was not excisable, on the binding effect of the Gujarat High Court's contrary-to-Department view which had not been stayed or set aside, and on the principle that a non-speaking dismissal of an appeal attracts merger, making the appellate decision operative. It further held that departmental authorities were bound by judicial discipline and could not ignore binding tribunal and high court rulings in favour of a contrary administrative circular.

Conclusion: The circular dated 7 April 1998 was held not to be valid in the prevailing legal position, and the show-cause notice issued pursuant to it was quashed. The respondents were restrained from proceeding further on that basis.

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