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TMI Blog2005 (3) TMI 161X X X X Extracts X X X X X X X X Extracts X X X X ..... and sold sugar used sugarcane purchased from other cultivators as well as grown in its own farms. It claimed deduction of agricultural income from its total income by valuing the sugarcane grown in its own farm at market value and deducting therefrom the agricultural expenses. In appeal the Tribunal directed the Income Tax Officer to ascertain the average transport charges from the purchasing centres to the assessee s factory and after adding to it the rate of purchase in order to ascertain the market value give any relief that may be due to the assessee. The said order was challenged by way of Reference Application by Revenue but the Reference was withdrawn and the order of the Tribunal became final. On the assessee applying to the Income Tax Officer to give effect to the directions of the Tribunal, the officer wrote to the assessee that no relief could be given to it. The assessee challenged the same in appeal and it was held by the Appellate Authority that the officer had acted arbitrarily and in clear violation of the directions given by the Tribunal, but proceeded to consider the correctness of the Tribunal s order and held that there was no manifest injustice done to the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnected with a shaft passing through both and such a shaft is connected to an electrical motor through V belt and pulley mechanism. Thus according to the petitioner it is not an electric appliance as understood in common parlance as well as in technical sense understood in engineering circles. 2. On 28th February, 1986 when the Central Excise Tariff Act, 1985 (Tariff Act) came into operation the machines, like one manufactured by the petitioner, were covered under Heading No. 84.37 which reads as under : "84.37 Machines for cleaning, sorting or grading seed, grain or dried 'leguminous vegetable' machines used in milling industry or for the working of cereals or dried leguminous vegetables, other than farm type machinery". The petitioner has been classifying domestic flour mill under the said Heading of Tariff Act. However, on 31st May, 1990 the Central Board of Excise and Customs (CBEC) issued Circular bearing No. 11/90-CX. 4 whereby it was declared that flour mills, with or without electric motors were properly classifiable under Heading No. 85.09 of the Tariff Act. 3. The circular came to be challenged before this Court by way of Writ -Petition bearing Spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so as to crush and grind cereals and grains. A shaft passes through the hole of the stone that rotates i.e. the upper emery stone. Below the lower stone, a big mechanical pulley is fitted. The big pulley is also fitted at the lower end with the shaft. There is an arrangement to connect the big pulley by V-Belt to the pulley fitted on the electric motor. However, the electric motor is not fitted with the whole appliance, but may be attached by the customers or at the request of the customers, by the dealers. The electric motor is the prime mover, which give power to the Domestic Electric Flour Mill. The weight normally ranges between' 40 Kgs. to 70 Kgs. per Flour Mill. From the above, it is seen that there is no specific mechanism by which the above disputed equipment could be operated by hand manually, without electric power. This disputed item under consideration cannot be operated without power. Further, there is nothing on record to show that the "gharghanti" supplied/cleared without motors and those fitted with electric motors were two different classes of goods. From the above it is seen that the mechanism of the disputed goods is similar to the mechanism of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f remand. That even otherwise, respondent No. 2 having accepted, on merits, that the product manufactured by the petitioner was falling within the description/classification of goods specified in the later Circular dated 5th December, 1994, respondent No. 2 thereafter could not have proceeded to apply the earlier Circular of 31st May, 1990. In this connection reliance has been placed on decision of the Apex Court in case of Ranadey Micrornutrients v. Collector of Central Excise, 1996 (87) E.L.T. 19 (S.C.) to contend that in almost identical fact situation the Apex Court has in no uncertain terms stated that : "15 The argument that the later circular has only prospective"15. operation and that it cannot apply to these appeals because the Tribunal had already decided them must also be rejected. It is not open to the Revenue to raise a contention that is contrary to a binding circular issued by the Board. It cannot but urge the point of view made binding by the later circular." 6.1. That in the aforesaid case of Ranadey Micronutrients, before the Apex Court, the language used by the later circular stated that "Board's earlier Circular No. 26/99-CX.3, dated 26-6-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. Thirdly, it was submitted that the law as on the date when the goods were manufactured would be applicable i.e. on the day when the charge under provision of the Act was fastened when the goods were manufactured. Lastly, it was submitted that as could be seen from earlier round of proceedings before this Court, a challenge in similar set of circumstances was not entertained by the Court and the petitioners were relegated to the Tribunal in light of availability of alternative remedy by way of a statutory appeal. He therefore urged that the impugned order was not required to be interfered with in any manner and it would be open to the petitioner to challenge the same by way of appeal before the Tribunal. 8. The question is not as to whether a particular circular is or is not applicable to the facts of the case that is incidental. In a case where a superior forum had issued direction, can it be said that it is open to the inferior Tribunal to disregard the same in any manner whatsoever. The controversy is no longer res integra. In the case of Bhopal Sugar Industries Ltd. v. Income Tax Officer, Bhopal - 1960 40 ITR 618, the Supreme Court was called upon to decide this point. In th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... injustice resulted from such refusal. It must be remembered that the order of the Tribunal dated April 22, 1954, was not under challenge before the Judicial Commissioner. That order had become final and binding on the parties, and the respondent could not question it in any way. As a matter of fact the Commissioner of Income-tax had made an application for a reference, which application was subsequently withdrawn. The Judicial Commissioner was not sitting in appeal over the Tribunal and we do not think that, in the circumstances of this case, it was open to him to say that the order of the Tribunal was wrong and, therefore, there was no injustice in disregarding that order. As we have said earlier, such a view is destructive of one of the basic principles of the administration of justice." 8.1 The aforesaid decision was rendered in 1960. Three decades down the line the Apex Court has reiterated the principle in the case of Union of India v. Kamlakshi Finance Corporation Ltd. - 1991 (55) E.L.T. 433 (S.C.) in the following terms : "It cannot be too vehemently emphasised that it is of utmost importance that, in disposing of the quasi judicial issues before them, Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ability or otherwise of the said Circular dated 5th December, 1994. 11. In the present case the Tribunal had remanded the matter to respondent No. 2 on 26th July, 2000 by making specific reference to the later Circular of 5th December, 1994 and decide the factual position qua the said Circular. In other words, applicability of Circular was not to be decided by respondent No. 2, but he was directed to ascertain the fact as to whether the product referred to, and considering the entry mentioned in the said Circular the product manufactured by the petitioner would fall within the said entry. In these circumstances also there was no occasion for the respondent No. 2 authority to disregard the said circular after holding that the same was applicable in the facts of the case considering the product manufactured by the petitioner. 12. The contention relating to Circular not being retrospective in operation and the law being applicable as on the date of manufacture of the product cannot be accepted for the simple reason that the same was not an issue and once the proceedings were pending, and the Circular of 5th December, 1994 had superseded all earlier directions, on the date when the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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