TaxTMI 
TaxTMI 
2026 (2) TMI 1267
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....Appellant ") and (ii) Shri. K. Muruganandam, partner of the firm (hereinafter referred to as "Appellant No.2"). 2. The Appellant is engaged in the manufacture of Aluminium Extruded Finned Tubes and Heat Exchangers (Spiral Type), which are used as components/parts in rice par-boiling machines and driers employed in rice mill machinery. During the relevant period, the Appellant classified the said goods under Central Excise Tariff Heading 8437, attracting Nil rate of duty, relying upon the binding clarification issued by the Central Board of Excise & Customs vide Circular No. 924/14/2010-CX dated 19.05.2010, wherein parts and accessories of rice mill machinery were opined to merit classification under Heading 8437. 3. Subsequently, the Board revisited the classification issue and issued Circular No. 982/06/2014-CX dated 15.05.2014, rescinding the earlier circular and clarifying that rice par-boiling machines and driers would merit classification under Heading 8419, attracting duty, and further indicating that necessary action may be taken in respect of past clearances. Based on intelligence, the Central Excise officers visited the Appellant 's premises on 02.09.2014 an....
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....r demand under Section 11D survives to the extent of duty collected but not deposited? Issue (i): Demand prior to 15.05.2014 8. It is undisputed that during April 2012 to 14.05.2014, the Appellant classified the impugned goods under Heading 8437, claiming Nil rate of duty, strictly on the basis of CBEC Circular No.924/14/2010-CX dated 19.05.2010. The said circular clarified that rice par-boiling machinery and parts/accessories thereof merit classification under Heading 8437. 9. It is well settled that circulars issued by the Central Board of Excise & Customs under Section 37B are binding on the Department. The Hon'ble Supreme Court in Ranadey Micronutrients v. CCE, 1996 (87) ELT 19 (SC) held that consistency and discipline in tax administration require that circulars issued by the Board must be followed by the Department, even if the Department subsequently forms a different opinion. Likewise, in CCE v. Usha Martin Industries, 1997 (94) ELT 460 (SC), the Apex Court held that Revenue authorities are bound by Board circulars and cannot argue against them. This principle was reaffirmed in Paper Products Ltd. v. CCE, 1999 (112) ELT 765 (SC), where it was held that so long as a....
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....al allowed the Appellant's appeal for the period when Circular dated 19.05.2010 was operative, holding that the Department cannot raise duty demand contrary to its own binding clarification. 14. Further, the Hon'ble Supreme Court in Suchitra Components Ltd. v. Commissioner of Central Excise, Guntur, 2007 (208) ELT 321 (SC), while construing the effect of circulars, held that a "beneficial" circular is to be applied retrospectively, whereas an "oppressive" circular (i.e., one adverse to the Appellant) is to be applied prospectively. The Court observed that when an administrative circular is issued which adversely affects the position of the Appellant, the right to claim enforcement of such circular arises only from the date of issuance of the show cause notice and not retrospectively. In the said case, the Apex Court reaffirmed the earlier ratio in Commissioner v. Mysore Electricals Industries Ltd., 2006 (204) ELT 517 (SC), that beneficial clarifications should be applied retrospectively but adverse clarifications should not be given retrospective effect merely because they are issued later in time. Therefore, a circular that adversely alters the duty liabilities of an Appellant,....
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....understanding. Thus, the general practice of assessment can be said to be non-payment of duty or payment at lower rate, as the case may be. In such situations, Board may issue circular clarifying that the general practice of assessment was erroneous and instructing field formations to correct the practice of assessment. Consequent upon such circular, issue of demand notice for extended period of time would be incorrect as it cannot be said that the Appellant was intentionally not paying the duty." 22. In the present case, the Department has failed to establish any positive act of suppression after 15.05.2014. Hence extended period is not invocable. Consequently, even the demand for the period 15.05.2014 to July 2014 is time barred. 23. Thus, the entire demand of Rs.99,47,758/- fails on merits for the pre-15.05.2014 period and on limitation for the post-15.05.2014 period, along with demand of consequential interest. Issue (iii): Penalties under Section 11AC and Rule 26 24. Once the duty demand itself does not survive, the question of penalty under Section 11AC automatically does not arise. Penalty provisions are consequential and cannot stand independent of an unsustaina....