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Issues Involved: Interpretation of circulars issued by the Central Board of Excise and Customs vis-a-vis decisions of the Supreme Court.
Judgment Summary: Issue 1: The reference was necessitated due to certain observations by a Constitution Bench in a previous case. The Assessee-Respondent argued that a specific paragraph in the Constitution Bench's decision favored their position, emphasizing the binding nature of circulars issued by the Board. The three-Judge Bench agreed with a previous case's view that clarified the invalidation of circulars conflicting with Supreme Court decisions. It was deemed necessary for a bench of similar strength to clarify the position, leading to the reference. Issue 2: The Union of India contended that the law declared by the Supreme Court is supreme and circulars cannot take precedence over judicial decisions. Conversely, the Assessee argued that once a circular is issued, it binds revenue authorities even if it contradicts Supreme Court rulings. The Court highlighted that circulars are binding on authorities but not on the Assessee, and the judiciary's interpretation of statutes prevails over executive circulars. Issue 3: While circulars are legally binding on authorities, when the Supreme Court or High Court pronounces on a legal matter, the courts' decisions supersede circulars. The Court emphasized that circulars contrary to statutory provisions hold no legal weight, and it is the judiciary's role to interpret laws, not the Executive's. Issue 4: Upholding a previous case's clarification on the matter, the Court emphasized the importance of allowing challenges to judicial decisions, rather than solely relying on circulars. Denying the right to appeal would undermine the rule of law and the binding nature of Supreme Court decisions under Article 141 of the Constitution. The reference was answered affirming the correctness of the previous case's view, with appeals by the revenue allowed and those by the Assessee dismissed. This judgment clarifies the hierarchy between circulars issued by the Board and judicial decisions, affirming the supremacy of the law declared by the Supreme Court and the High Courts. It underscores the importance of upholding the rule of law and the right to challenge legal interpretations, ensuring a fair and just adjudication process.
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