Circular Quashed for Overstepping Authority in Reclassifying Fusible Interlining Cloth; Violated Excise Act & Constitution.

The HC declared Circular No. 433/66/98-CX.6 ultra vires, quashing it for violating Section 37B of the Central Excise Act and constitutional Articles 14, 19, and 265. The circular's attempt to reclassify fusible interlining cloth under Chapter Heading 59.03 was deemed illegal, as it exceeded the Board's authority and contravened statutory provisions. The writ petition was allowed, and no costs were awarded.

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Issues involved:
The judgment involves the declaration of Circular No. 433/66/98-CX.6 as ultra vires due to violations of Section 37B of the Central Excise Act, Note 2 of Chapter 59 of the Central Excise Tariff Act, and Articles 14, 19, and 265 of the Constitution of India.

Issue 1 - Classification of Fusible Interlining Cloth:
The petitioner manufactures textile products, including fusible interlining cloth coated with plastic. The circular in question raised doubts on the classification of this cloth under Chapter Heading 59.03 of the Central Excise Tariff Act. The circular attempted to reintroduce a classification that was omitted under the Finance Act, 1995. The petitioner argued that the circular exceeded the Board's power and violated constitutional provisions.

Issue 2 - Legality of the Circular:
The petitioner contended that the circular issued by the Board was beyond its authority and contravened Section 37B of the Excise Act and Articles 14, 19(1)(g), and 265 of the Constitution. The circular was challenged as having no impact on the adjudicatory process and was sought to be declared illegal and inoperative.

Judgment:
The High Court held that the circular was illegal and ultra vires, quashing it based on precedents that established the Board cannot impede the quasi-judicial powers of authorities under the Excise Act and the Tariff Act. The Court emphasized that the circular's issuance was against statutory provisions and attempted to reintroduce a classification that had been omitted under the Finance Act, 1995. The Court also rejected the argument that the writ petition was premature, citing previous decisions. As a result, the writ petition was allowed, the circular was quashed, and no costs were awarded.

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