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TMI Blog2011 (9) TMI 116X X X X Extracts X X X X X X X X Extracts X X X X ..... r Staple Fibre manufactured out of PET scrap and waste bottles. - Paragraph 10 of the circular states that the decision of the Tribunal in GPL Polyfils Ltd (2005 -TMI - 93334 - CESTAT, NEW DELHI). would be relevant to the facts of that particular case and is not a binding precedent in other matters. It stipulates that even if the facts and the process are identical, other assessees cannot rely upon the decision in GPL Polyfils Ltd. before the Revenue authorities. - Held that:- Paragraph 10 of the impugned circular is struck down - The Assessing Officer and the authorities under the Act shall independently apply their mind and consider the judgment of tribunal in GPL Polyfills Ltd. (2005 -TMI - 93334 - CESTAT, NEW DELHI) and keep in mind the observations and ratio of Supreme Court in C.K. Gangadharan and Anr. (2008 -TMI - 4694 - SUPREME COURT). The Assessing Officer/authorities will not be bound by the impugned circular. The circular can be referred for guidance but not as a binding mandate; - Writ Petition (Civil) No. 5454/2010 - - - Dated:- 30-9-2011 - Dipak Misra, Sanjiv Khanna, JJ. S. Ganesh, Sr. Adv. with Vibha Datta Makhija, Prabhat Kumar and Philemon Nongbri, Advs. for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use 2(f) of the Central Excise Act, 1944 (Act, for short) to controvert the first contention. To draw support, the respondents have referred to Plasmac Machine Mfg. Co. Pvt. Ltd. vs. Collector of Central Excise, 1991(51) ELT 161 (SC); Elson Machines Pvt. Ltd. vs. CCE, 1998(38) E.L.T. 571 (SC); Faridabad CT Scan Centre vs. D.G. Health Services, 1997(95) ELT 161 (SC); B.J. Akkara, Col. (Retd.) vs. Govt. of India, 2007(207) ELT 3 (SC); Sharp Industries Ltd. vs. Commissioner of Central Excise, (2005) 7 SCC 676; Rajasthan State Electricity Board and Ors. vs. Laxman Lal and Ors., 1991 Supp (2) SCC 531; State of Maharashtra vs. Digambar, (1995) 4 SCC 683; Union of India vs. Delhi Cloth and General Mills Co. Ltd., AIR 1963 SC 791; Sterling Foods vs. State of Karnataka, AIR 1986 SC 1809; Aditya Mills Ltd. vs. Union of India, 1988 (37) ELT 471 (SC) and Collector of Central Excise, Bombay vs. K.W H Heliplastics, 1998 (97) ELT 385 (SC). It is submitted that the order of the Tribunal in GPL Polyfils Ltd. (supra), is per incuriam and cannot be treated as a precedent. On the question of the circular and the right of the Board to issue circulars, it is submitted that the same has been validly issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gateways, may yet differ with the view expressed and refer the matter to a Bench of superior strength or in some cases to a Bench of superior jurisdiction. * * * 22. A decision can be set aside in the same lis on a prayer for review or an application for recall or under Article 32 in the peculiar circumstances mentioned in Rupa Ashok Hurra v. Ashok Hurra. As we have said, overruling of a decision takes place in a subsequent lis where the precedential value of the decision is called in question. No one can dispute that in our judicial system it is open to a court of superior jurisdiction or strength before which a decision of a Bench of lower strength is cited as an authority, to overrule it. This overruling would not operate to upset the binding nature of the decision on the parties to an earlier lis in that lis, for whom the principle of res judicata would continue to operate. But in tax cases relating to a subsequent year involving the same issue as an earlier year, the court can differ from the view expressed if the case is distinguishable or per incuriam. The decision in State of U.P. v. Union of India related to the year 1988. Admittedly, the present dispute relates to a s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28-29) "28. In the aforementioned situation, the Division Bench of the Calcutta High Court manifestly erred in refusing to consider the contentions of the appellants on their own merit, particularly, when the question as regards difference in the grant of scale of pay on the ground of different educational qualification stands concluded by a judgment of this Court in Debdas Kumar. If the judgment of Debdas Kumar is to be followed, a finding of fact was required to be arrived at that they are similarly situated to Debdas Kumar which in turn would mean that they are also holders of diploma in Engineering. They admittedly being not, the contention of the appellants could not be rejected. Non-filing of an appeal, in any event, would not be a ground for refusing to consider a matter on its own merits. (See State of Maharashtra v. Digambar.) 29. In State of Bihar v. Ramdeo Yadav wherein this Court noticed Debdas Kumar by holding:- (Ramdeo Yadav case, SCC p. 494, para 4) '4. Shri B.B. Singh, the learned counsel for the appellants, contended that though an appeal against the earlier order of the High Court has not been filed, since larger public interest is involved in the interpret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ving not assailed the correctness of the order in one case, it would normally not be permissible to do so in another case on the logic that the Revenue cannot pick and choose. There is also another aspect which is the certainty in law. 12. If the assessee takes the stand that the Revenue acted mala fide in not preferring appeal in one case and filing the appeal in other case, it has to establish mala fides. As a matter of fact, as rightly contended by the learned counsel for the Revenue, there may be certain cases where because of the small amount of revenue involved, no appeal is filed. Policy decisions have been taken not to prefer appeal where the revenue involved is below a certain amount. Similarly, where the effect of decision is revenue neutral, there may not be any need for preferring the appeal. All these certainly provide the foundation for making a departure. 13. In answering the reference, we hold that merely because in some cases the Revenue has not preferred appeal that does not operate as a bar for the Revenue to prefer an appeal in another case where there is just cause for doing so or it is in public interest to do so or for a pronouncement by the higher court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bottles, to issue the following instructions. 2. It has been brought to the notice of the Board that divergent practices are being adopted in respect of classification of the "Polyester Staple Fibre" manufactured out of PET scrap and waste bottles. Whereas in some jurisdictions the said product has been classified under the Chapter 39 as article of plastic, in other jurisdictions the same has been classified under Chapter Heading 55032000. 3. The matter has been examined. Polyester is "Long-chain polymers chemically composed of at least 85 per cent by weight of an ester and a dihydric alcohol and a terephthalic acid." Federal Trade Commission defines Polyester Fibre: A manufactured fibre in which the fibre forming substance is any long-chain systhetic polymer composed of at least 85% by weight of an ester of a substituted aromatic carboxylic acid, including but not restricted to substituted terephthalic units,- 4. Normally PSF is manufactured by using main inputs like PTA and MEG. The name "polyester" refers to the linkage of several monomers (esters) within the fiber. Esters are formed when alcohol reacts with a carboxylic acid. The momomer ester then is polymerized und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bre are as follows:- Apparel:- Every form of clothing Home Furnishings:- Carpets, curtains, draperies, sheets and pillow cases, wall coverings, and upholstery Other Uses:- hoses, power belting, ropes and nets, thread, tire cord, auto upholstery, sails, floppy disk liners, and fiberfill for various products including pillows and furniture 9. From the above facts it is quite evident that the product under consideration is nothing but a textile material and hence will be classified as textile material under Section XI and not as article of plastic in Chapter 39. 10. Tribunal decision in case of GPL Polyfils Ltd [2005 (183) ELT 27 (T)] would be relevant to the particular facts as in the said case and hence cannot have binding precedents in other matters. 11. To ensure uniformity in the manner of classification of the Polyester Staple Fibre obtained from PET scrap and waste bottles it is clarified that this product is correctly classifiable under heading 55032000. 12. Based on the above clarification pending cases may be disposed of. 13. Receipt of this order may please be acknowledged. 14. Hindi version will follow. Madan Mohan Under Secretary to the Governmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve effect to the provisions of the Act and to provide "fair and just administration" in the matter of imposition and collection of tax. This is where it becomes the incumbent duty of the Board to grant administrative relief in appropriate cases. In such exercise, incidentally the Board has to consider the effect of the items enumerated in the entry. Therefore, it is not open to the State Government to contend that the Board in this case had entered into an area which is earmarked for the legislature/executive. In our view, the said circular grants administrative relief to the business. It was entitled to do so. Therefore, it cannot be said that the Board had acted beyond its authority in issuing the said circular. One more reason needs to be stated. Whenever such binding circulars are issued by the Board granting administrative relief(s) business arranges its affairs relying on such circulars. Therefore, as long as the circular remains in force, it is not open to the subordinate officers to contend that the circular is erroneous and not binding on them. 26. In Union of India v. Azadi Bachao Andolan a circular was issued by CBDT under Section 119 of the Income Tax Act, 1961. It wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circulars are to be respected by the officers working under the supervision of the Board. These circulars are binding on all the authorities administering the Tax Department. The power of the Board to issue such circular is traceable to Section 3(1-A)(c) of the Act. The said circular is statutory in nature. Therefore, it is binding on the Department though not on the courts and the assessees...." 12. In Padinjarekkara Agencies Ltd. v. State of Kerala, (2008) 3 SCC 59, the Supreme Court has relied upon the above mentioned case and held as under:- "13. .......It is no doubt true that the AO is bound by the directions issued by the Commissioner even with regard to the terms used in the exemption notification(s). However, as held in our earlier judgment in Kurian Abraham (P) Ltd., circulars/orders issued by the Commissioner are not binding on the assessee. Therefore, dehors the directives given by the Commissioner, it is open to the assessee to claim the benefit of exemption/concession on the basis of various exemption notification(s) issued by the Government from time to time. We express no opinion on the interpretation of those notification(s). Suffice it to state that the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lyamides, polyesters, polyurethances or polyvinyl derivatives; or (b) By chemical transformation of natural organic polymers (for example, celluclose, casein, proteins or algae), such as viscose rayon, cellulose acetate, cupro or alginates." It remains undisputed that none of these processes, had been undertaken by the assessee in respect of their fibre so as to bring the same within the ambit of this Chapter 54 or even Chapter 55 which are part of the First Schedule. The learned Commissioner (Appeals) has, in our view, rightly dropped the duty demand against the assessees on this ground. 5. ...............The Chapter Note 1, reproduced above, sets out the definition of man-made fibres for the purpose of bringing the same within the ambit of the First Schedule of the CETA. It gives an exhaustive and self-contained/self-defined, definition and for bringing the "man-made fibres" within the scope of the First Schedule of the CETA, the processes detailed in this Chapter note, must be undertaken by an assessee." 15. The actual process involved and the chemical reaction involved etc. are technical and factual aspects and we do not see any reason why we should go into the said dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... astics Private Limited v. Union of India, (2009) 3 SCC 365:- "30. The proviso to Section 151-A makes it abundantly clear that the Customs Officer who has to make a particular assessment is not bound by such orders or instructions or directions of the Board. An assessing authority under the Act being a quasi-judicial authority has to act independently in exercise of his quasi-judicial powers and functions. Section 151-A does not in any manner control or affect the independent exercise of quasi-judicial functions by the assessing authority. XXXX 32. The question now is whether the impugned Standing Order in any manner interferes with the independent quasi-judicial function to be discharged in the assessment of duty by the assessing officer. Whatever be the language employed in the Standing Order which may suggest that the said instructions are in the nature of a mandate or command, the High Court has read down the impugned Standing Order purely as instructions or guidelines and not as a mandate or command for being obeyed in each individual case of assessment before them. 33. The High Court further held that the Standing Order is to be taken only as assistance in exercise of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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