Exemption notifications cannot be narrowed by circulars, while show-cause notices supported by independent material may still proceed.

An administrative circular cannot add a restrictive condition to a statutory exemption notification governing intravenous fluids when that condition is absent from the earlier notification; the circular was therefore invalid. However, show-cause notices issued on the basis of that circular were not quashed because they also relied on the nature of the goods and seized material, and the entitlement to exemption still required adjudication on the available facts. The writ court therefore left the notice proceedings to continue in accordance with law, uninfluenced by the circular.

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Issues: (i) Whether the circular issued by the department could add a restrictive condition to the earlier exemption notification governing intravenous fluids; (ii) Whether the show-cause notices issued on the basis of the circular were liable to be quashed at the threshold.

Issue (i): Whether the circular issued by the department could add a restrictive condition to the earlier exemption notification governing intravenous fluids.

Analysis: The exemption notification in force during the relevant period granted nil duty to intravenous fluids without limiting the benefit to fluids used only for sugar, electrolyte or fluid replenishment. The later circular sought to read such a restriction into the notification, although that restriction appeared only in the subsequent notification. An administrative circular cannot whittle down or enlarge the scope of a statutory exemption notification by adding words or conditions not found in it.

Conclusion: The circular was not tenable in law and was liable to be set aside.

Issue (ii): Whether the show-cause notices issued on the basis of the circular were liable to be quashed at the threshold.

Analysis: The notices did not rest solely on the circular; they also referred to the nature and contents of the products and the material seized by the authorities. At the stage of show-cause notice, the question whether the goods were entitled to exemption still required adjudication on the available material, and the writ court would not pre-empt that process merely because the circular itself was invalid.

Conclusion: The show-cause notices were sustained and were to be adjudicated in accordance with law, uninfluenced by the circular.

Final Conclusion: The challenge succeeded only to the extent of invalidating the departmental circular, while the proceedings initiated by the show-cause notices were permitted to continue for adjudication on merits.

Ratio Decidendi: An administrative circular cannot impose a new restriction on a statutory exemption notification, but a show-cause notice supported by independent material is not liable to be quashed merely because it also refers to such a circular.

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