COMMISSIONER OF CENTRAL EXCISE, BOLPUR Versus M/s RATAN MELTING & WIRE INDUSTRIES - 2008 (10) TMI 5 - SUPREME COURT OF INDIA

The view express in teh case of Kalyani Packaging Industry v. Union of India and Anr. sustained

"We have noticed that para 9 (para 11 in SCC) of Dhiren Chemical case (2004 (6) SCC 722) is being misunderstood. It, therefore, becomes necessary to clarify para 9 (para 11 in SCC) of Dhiren Chemical case (2004 (6) SCC 722). One of us   (Variava, J.) was a party to the judgment of Dhiren Chemical case and knows what was the intention in incorporating para 9 (para 11 in SCC). It must be remembered that law laid down by this Court is law of the land. The law so laid down is binding on all courts/tribunals and bodies. It is clear that circulars of the Board cannot prevail over the law laid down by this Court. However, it was pointed out that during hearing of Dhiren Chemical case because of the circulars of the Board in many cases the Department had granted benefits of exemption notifications. It was submitted that on the interpretation now given by this Court in Dhiren Chemical case the Revenue was likely to reopen cases. Thus para 9 (para 11 in SCC) was incorporated to ensure that in cases where benefits of exemption notification had already been granted, the Revenue would remain bound. The purpose was to see that such cases were not reopened. However, this did not mean that even in cases where the Revenue/Department had already contended that the benefit of an exemption notification was not available, and the matter was sub judice before a court or a tribunal, the court or tribunal would also give effect to circulars of the Board in preference to a decision of the Constitution Bench of this Court. Where as a result of dispute the matter is sub judice, a court/tribunal is, after Dhiren Chemical case, bound to interpret as set out in that judgment. To hold otherwise and to interpret in the manner suggested would mean that courts/tribunals have to ignore a judgment of this Court and follow circulars of the Board. That was not what was meant by para 9 of Dhiren Chemical case

Binding precedent: administrative circulars cannot override the Court's authoritative interpretation; courts must apply that law. Administrative circulars cannot prevail over the law laid down by the highest court; courts and tribunals must apply the Court's authoritative interpretation. A protective rule preserved benefits already granted under exemption notifications from reopening, but did not permit adjudicative bodies to follow circulars in preference to the Court's decision where entitlement was contested and proceedings were pending.