Binding departmental circulars bar reopened duty demands where valuation followed then-operative instructions and the notice scope was exceeded.

Departmental circulars and instructions bind the revenue so long as they remain operative, and duty demand cannot be sustained where the assessee adopted valuation and payment methods in line with the then-prevailing directions, even if the department later revised its view. The commentary also notes that appellate orders may be set aside where they travel beyond the scope of the show cause notice, because such deviation vitiates the adjudication. On that reasoning, the duty demand and consequential confirmation were treated as unsustainable, and the assessee's challenge succeeded.

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Issues: (i) Whether the demand of duty was sustainable when the assessee's valuation and payment were made in accordance with the then-prevailing departmental instructions and revised circulars; (ii) Whether the orders of the lower authorities were vitiated for traversing beyond the show cause notice.

Issue (i): Whether the demand of duty was sustainable when the assessee's valuation and payment were made in accordance with the then-prevailing departmental instructions and revised circulars.

Analysis: The assessee altered its duty payment methodology only because the Range Superintendent acted on CBEC instructions and then later changed the stand after a further revision of view. In such circumstances, the departmental authorities could not ignore the binding effect of the circulars and reopen the matter merely because the administrative view changed. The demand could not survive against payments made under the then-operative directions.

Conclusion: The demand was not sustainable and this issue was decided in favour of the assessee.

Issue (ii): Whether the orders of the lower authorities were vitiated for traversing beyond the show cause notice.

Analysis: The appellate tribunal found merit in the submission that the impugned orders went beyond the scope of the notice.

Conclusion: The lower orders were held to be bad in law on this ground as well, in favour of the assessee.

Final Conclusion: The duty demand and consequential confirmation did not survive, and the appeal succeeded.

Ratio Decidendi: Departmental authorities are bound by their circulars and instructions so long as they hold the field, and a duty demand cannot be sustained by reopening a settled valuation position merely because the department later changes its view.

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