Binding Board circulars govern classification disputes, and rescission operates prospectively unless the later circular says otherwise.

A Board circular issued under Section 37B binds revenue authorities in classification disputes and cannot be ignored while it remains operative. In the dispute over classification of filter fabrics between Heading 52.05 and Heading 59.09, the earlier 1988 and 1993 circulars were treated as controlling instructions for the prior period. The 1997 rescinding circular operated prospectively only, because it contained no retrospective language. Accordingly, classification for periods before 17-4-1997 had to be tested under the earlier circulars, while later periods could be considered under the revised position.

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Issues: (i) Whether the Board circular issued under Section 37B binds the department in the classification dispute; (ii) Whether the rescission of the earlier circulars in 1997 operates retrospectively so as to permit reassessment of the goods' classification for periods prior to 17-4-1997.

Issue (i): Whether the Board circular issued under Section 37B binds the department in the classification dispute.

Analysis: The dispute concerned classification of filter fabrics between Heading 52.05 and Heading 59.09. The governing principle applied was that a circular issued under Section 37B has binding force on the revenue authorities. The earlier Board circulars of 1988 and 1993 were treated as controlling instructions, and the departmental authorities could not depart from them while they remained operative.

Conclusion: The circular under Section 37B was binding on the department, and the departmental authorities were required to follow it.

Issue (ii): Whether the rescission of the earlier circulars in 1997 operates retrospectively so as to permit reassessment of the goods' classification for periods prior to 17-4-1997.

Analysis: The 1997 circular rescinded the earlier circulars only from the date of issue. No language in the rescinding circular indicated retrospective effect. Accordingly, for the period prior to 17-4-1997, the earlier circulars continued to govern classification, while the later period could be treated under Heading 59.09. The orders for the earlier periods, which had not applied the binding circulars, were therefore liable to be set aside and the matter remanded for fresh consideration.

Conclusion: The rescission was prospective only, and the classification for the prior period had to be tested on the basis of the earlier circulars.

Final Conclusion: The revenue's appeals were dismissed, while the assessee's appeals were allowed by way of remand for fresh adjudication in accordance with the binding circulars and the directions issued.

Ratio Decidendi: A Board circular issued under Section 37B binds the department while in force, and its rescission operates prospectively unless the later circular expressly provides otherwise.

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