Sandur Micro Circuits Ltd. v. Commissioner of Central Excise, Belgaum

Case Details & Bench

Court: High Court
Hon'ble Judges: Dr. Arijit Pasayat
Dr. Mukundakam Sharma
Judgment Date: 2008-08-13
Court Decision / Holding: Appeals dismissed.
Final Disposition: Appeals dismissed according to the Court's ruling.

Parties to the Case

Appellants / Petitioners

Sandur Micro Circuits Ltd.

Respondents

Commissioner of Central Excise, Belgaum

Case Synopsis & Summary

This is a Supreme Court decision concerning the interaction between a statutory exemption notification issued under section 5A of the Central Excises and Salt Act, 1944 and a binding circular issued by the Central Board of Excise and Customs. Notification No. 2/95-CE dated 4 January 1995, as amended by subsequent notifications, provides exemption with respect to duties on goods cleared to the Domestic Tariff Area. Circular No. 42 of 1997, dated 19 September 1997, was issued on the basis of representations from various assessees. The CESTAT had held that the notification itself has overriding effect over the circular, making the assessee liable only for 50% of the aggregated customs duty on goods cleared to the DTA, and therefore the relief sought via the circular was not legally tenable. The appellants argued that the circular should not override the statutory notification, and that relief be granted in light of the circular. The respondents contended that a statutory notification under s.5A has overriding effect and cannot be whittled down by a circular. The Supreme Court dismisses the appeals, reaffirming the principle that circulars cannot negate or alter statutory notifications, and that the notification overrides the circular.

Provisions of Law Cited

Central Excises and Salt Act, 1944 - Section 5ACentral Excises and Salt Act, 1944 - Section 5A(1)

Legal Doctrines & Maxims

Circular cannot take away the effect of statutory Notifications.
Circular cannot whittle down the Exemption Notification or restrict the scope of the Exemption Notification.
Notifications under Section 5A have overriding effect over Circular.

Submissions & Arguments

Contentions of Appellants / Petitioners

The appellant contends that Circular No. 42 of 1997 was issued on the basis of representations made by various assessees, and therefore the statutory Notification No. 2/95-CE should prevail over the circular. They seek relief in line with the circular’s temporary concessions, arguing that the circular should not be used to defeat the relief granted by the notification.

Contentions of Respondents

The respondents submit that the notification under s.5A is statutory and circulars issued by the Board cannot override such statutory provisions. The central argument is that the notification has overriding effect and cannot be whittled down or negated by a circular; hence the appeals should be dismissed.

Extracted Judgment Text

Exact text extracted from official judgment records.

.. "" .... . · ## [2008]12 S.C.R. 76 A ## _MIS._ SANDUR MICRO CIRCUITS LTD. II. COMMISSIONER OF CENTRAL EXCISE, BELGAUM (Civil Appeal No. 7177 of 2005) B . AUGUST 13; 2008 ## [DR. ARIJIT PASAYAT. AND DR. MUKUNDAKAM SHARMA, JJ.] _Central Excises and Salt Act, 1944_ - s. _5A_ - _Notification_ c _under- Circular. issued by Central Board of Excise and Cus-_ · _toms· in direct conflict with the statutory Notification_ - _Effectiveness of the circular- Held:· The circular cannot take away the effect of the Notification._ Circular No.42 of 1997 dated 19-9-1997 issued by the 0 Central Board of Excise and Customs was in direct conflict with a Notification statutorily issued under s.5A(1) of the Ceratral Excises and Salt Act, 1944, viz. No. 2/95-CE dated 4-1-1995 as ~~e.~.~~d ... py NQtifice~tions Nos. 21/97- · CE dated 11-4-1997: 100/95-CE dated 2-6-1995 and 7/96E CE dated 1-7-1996. . The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the Notification had overriding effect over the Circular and hence the assessee's claim of liability to pay 50% of th~ aggregated customs duty on F the goods cleared to the Domestic Tariff Area (DTA) was not legally tenable. ln·.the instant appeals, the asses.see•appellants sub- · mitted that the Circular having been issued on basis of . G representations made by various assessees, the Notification would riot stand on the way of relief being granted to them on basis of the said circular. H Dismissing the appeals, the Court ' 76 ' , • • _.r • • •_ .· . ' . _·;i_ . · .• . .. . # **SANDUR MICRO CIRCUITS V. C. C. E, BELGAUM** MALWA COTTON & SPINNING MILLS l:TD. _v._ VIRSA 77 **77** ||78 SUPREME COURT REPORTS [2008] 12 S.C.R.||_I_| |---|---|---|---| ||||'i=| |A C EST AT held that the Notification No. 2/95-C E dated 4.1 .1995|A C EST AT held that the Notification No. 2/95-C E dated 4.1 .1995|.{|| ||as amended by Notifications Nos.21/97 -CE dated 11.4.1997.||| ||100/95-CE dated 2.6.1995 and 7/96-CE dated 1.7.1996 shall||| ||have overriding effect over the Circular. It held that thereisno||| ||mannerofdoubt that the appellant's claimofliability to pay 50%||| |8|ofthe aggregated customs duty on the goods clea·red to the||| ||Dom~sticTariff Area (in short the 'DTA')isnot legally tenable. It was held that the Circular wasindirect conflict with the Notifica-|)--|| ||tion No. 2/95.||t'| ||3.Learned counsel for the appellant in each case submit-||| |c|ted that the Circular was issuedonthe basis of representations||| ||made by variousas~esseesand therefore the Notification can-||| ||not stand on the way of relief being granted.||| ||4. Learned counsel for the respondent on the other hand||| |0|submit~edthat the Notificatioh which is statutorily issued has overriding effect because the Notifications arei~suedin exer-||| ||ciseofpowers conferred by sub-section (1)ofSection 5Aof|~|t::| ||the Central Excises and Salt Act, 1944 (in short the 'Act').||| ||5.The issue relating to effectivenessofa Circular con-||| |E|trary to a Notification statutorily issued has been .examined by||| ||this Courtinseveral cases. A Circular cannot take away the||| ||effectofNotifications statutorily issued.Infact ·incertain cases||| ||it has been held that the Circularcannot whittle down the Ex-||| ||emption Notification and restrict the scopeofthe Exemption||| |F|Notification or hit it down. In other words it was held that by issu-||| ||ing a circular a new condition thereby restricting the scopeof|_J.__|| ||the exemption or restricting or whittling it down cannot be im- ·||| ||posed. The principle is applicable to the instant cases also,||| ||though the controversy. is of different nature.||| |G|6. The appeals fail and are dismissed.||| ||B.B.B. Appeals dismissed.|;....||