1996 (5) TMI 91 - HC - Central Excise

Summary

Issues involved: Challenge to Circular/Order u/s 37B of Central Excise and Salt Act, 1944 by Central Board of Excise and Customs.

Judgment Summary:

Writ Petition No. 3903/95 (M/s. Kissan Chemicals v. Union of India and Others):
The petitioner, engaged in formulating pesticides, challenged the Circular stating that dilution of highly concentrated pesticides does not amount to manufacturing. The Customs Tribunal had previously held that dilution is a non-manufacturing activity. The Board issued a Notification contrary to the Tribunal's decision, classifying diluted pesticides as new products. The Court held that the Board cannot issue circulars contrary to Tribunal decisions without appealing, thus quashing the notifications.

The Division Bench of the Bombay High Court also emphasized that the Board cannot issue directions contrary to Tribunal decisions, and the Board should appeal if in disagreement. The Court reiterated that the Board's circular cannot render Tribunal decisions irrelevant.

The Department's argument of not appealing due to low duty amounts was refuted, emphasizing that the Tribunal's decision should have been challenged through proper legal channels. The Court highlighted that the Department's decision not to appeal cannot justify the issuance of a circular contradicting the Tribunal's decision.

In light of the above, the Court allowed the writ petitions, quashing the impugned notifications and subsequent proceedings, with no order as to costs.