Binding Board circulars govern yarn classification, requiring Taspa yarn covered by the circular to be assessed as special yarn.

Board circulars on tariff classification bind departmental authorities until withdrawn or modified, so the Revenue cannot take a contrary stand on the same product. On the facts discussed, Taspa yarn made from duty-paid polyester and nylon yarn with slub effect was treated as covered by the circulars as core-yarn based special yarn and therefore classifiable under Heading 56.06. The controlling principle applied was that administrative instructions on classification govern departmental action, and goods falling within the circular description must be assessed accordingly.

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Issues: (i) Whether Taspa yarn manufactured from duty-paid polyester and nylon yarn with slub effect, during the relevant period, was classifiable under Heading 56.06 as special yarn when the Board circulars treated core-yarn based Taspa yarn as so classifiable; (ii) Whether the Revenue could take a stand contrary to the Board's binding circulars.

Issue (i): Whether Taspa yarn manufactured from duty-paid polyester and nylon yarn with slub effect, during the relevant period, was classifiable under Heading 56.06 as special yarn when the Board circulars treated core-yarn based Taspa yarn as so classifiable.

Analysis: The classification dispute turned on the nature of the yarn and the effect of the Board's circulars. The circular dated 26-4-1988 treated Taspa yarn as classifiable under Heading 56.06, and the later circular dated 10-10-1988 clarified that Taspa yarn consisting of core yarn remained classifiable under that heading, while yarn without core yarn would not be covered by the earlier instruction. The controlling principle applied was that departmental authorities are bound by Board circulars until they are withdrawn or modified. On the facts, there was no material to show that the yarn in question did not fall within the core-yarn based description accepted by the circulars.

Conclusion: Taspa yarn consisting of core yarn was classifiable under Heading 56.06 as special yarn, and the contrary view was incorrect.

Issue (ii): Whether the Revenue could take a stand contrary to the Board's binding circulars.

Analysis: The decision applied the rule that circulars issued by the Board are binding on departmental authorities, and the department cannot advance a position inconsistent with such circulars unless they are superseded or amended. The Supreme Court principle relied upon in the order reinforced that administrative instructions governing classification bind the Revenue.

Conclusion: The Revenue could not take a stand contrary to the binding circulars.

Final Conclusion: The classification adopted by the authorities was unsustainable, the impugned orders were set aside, and the assessees succeeded on the classification dispute.

Ratio Decidendi: A Board circular on tariff classification is binding on the departmental authorities until withdrawn or modified, and goods covered by that circular must be classified accordingly.

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