Warehoused goods removed after expiry: duty rate set by payment date u/s15(1)(c), circular bound Department

The dominant issue was whether, on expiry of the warehousing period, the goods were subject to "deemed removal" so as to attract duty at the rate applicable on that date, or whether residual s.15(1)(c) of the Customs Act applied. The SC held that Board circulars issued under s.37B of the Central Excise Act are binding on the Department, and the circular then in force required application of s.15(1)(c) where goods are removed after expiry of the warehousing period, fixing the duty rate as on the date of payment. The later withdrawal of the circular did not affect its binding force for the relevant period; the Department could not appeal contrary to it. Consequently, the Tribunal's orders were set aside and the appellate authority's order was restored.

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Issues:
Appeal against judgments and orders of Customs, Excise and Gold (Control) Appellate Tribunal based on circular dated 12-7-89 issued by Central Board of Excise & Customs; Extension of bonded warehouse period; Department's appeal against Collector of Customs (Appeals) judgment; Validity and binding nature of circulars issued by the Board under Section 37B of Central Excise Act, 1944.

Analysis:
The case involves an appeal against judgments and orders of the Customs, Excise and Gold (Control) Appellate Tribunal based on a circular issued by the Central Board of Excise & Customs. The appellant contended that the circular dated 12-7-89, along with a previous court decision, should invalidate the Tribunal's decisions. The goods in question were sent to a bonded warehouse for three months, with the period set to expire on 2-12-1991. The appellant sought an extension by filing an application on 18th November, 1991, which was deemed rejected. Despite subsequent requests for extension, the Department asked the appellant to clear the goods on 23rd December, 1991. The appellant did not comply, leading to a final assessment order in April 1992 that did not grant the benefit of certain notifications.

The Department appealed the Collector of Customs (Appeals) judgment, which had granted the benefit of exemption notifications based on the Board's circular. The Tribunal allowed the Department's appeal, citing a previous court decision. However, the Supreme Court found that the issue was already addressed in a prior judgment concerning the validity and binding nature of circulars issued by the Board under Section 37B of the Central Excise Act, 1944. The Court emphasized that circulars issued under Section 37B are binding on the Department, and the Department cannot take a stand contrary to these instructions. The Court highlighted the importance of consistency and discipline in following such circulars.

In light of the clear pronouncements by the Court on the binding nature of circulars, the Supreme Court held that it was not open to the Department to challenge the Collector of Customs (Appeals) judgment. Despite the withdrawal of the circular in question, the Court found that the Collector of Customs (Appeals) judgment was not illegal or erroneous at the relevant time. Therefore, the Court allowed the appeals, setting aside the Tribunal's judgments and orders, and restored the judgment and order passed by the Collector of Customs (Appeals) due to the peculiar facts and circumstances of the case.

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