In Excise Appeal No. 10291 of 2015 -CESTAT- CESTAT (Ahmedabad) rules in favour of Rippen Radiators; No duty to be paid for clearances made prior to rescinding of Circular dated 19.05.2010
Members Ramesh Nair (Judicial) & C.L. Mahar (Technical) [10-08-2023]

Read Order: Rippen Radiators & Heat Exchangers Pvt. Ltd. v. Commissioner of Central Excise & ST, Ahmedabad-II

Chahat Varma

New Delhi, August 16, 2023: The Ahmedabad bench of the Customs, Excise and Service Tax Appellate Tribunal has ruled in favour of Rippen Radiators & Heat Exchangers Pvt. Ltd. (appellant) by stating that no duty was liable to be paid for clearances made prior to the rescinding of Circular dated 19.05.2010.

The central issue in the present case revolved around the classification of specific goods, namely parts of Drier/parboiling parts, including Heat Exchanges, Drier Fan, and Aluminium Fin Tubes, which were cleared by the appellant for use in Rice Mill machinery. The appellant argued that the goods should be classified under Chapter Heading 8437. However, the department classified the same goods under Chapter Heading 8419.

The two-member bench of Ramesh Nair (Judicial) and C.L. Mahar (Technical)  acknowledged that the classification of goods had been established under Chapter Heading 8419 by a Larger Bench decision. However, the bench noted that the timeframe in question spanned from 2011-12 to 2013-14. During this period, the Board Circular No. 924/14/2010-CX dated 19.05.2010 was in force, explicitly stating that the disputed goods fell under Chapter Heading 8437. Subsequently, this Circular was revoked through another Circular dated 15.05.2014.

The bench also stated that Circulars issued by CBEC/CBIC are binding on departmental officers. In light of this well-established principle, the bench emphasized two key points. Firstly, the issuance of a show cause notice based on the binding Circular dated 19.05.2010 was improper and unlawful. Secondly, during the relevant time span of 2011-12 to 2013-14, the Circular dated 19.05.2010 was in effect. The bench further added that there are various judgments of the Supreme Court which uphold the principle that any Circular that favours the taxpayer should be given due consideration and effect, regardless of any conflicting interpretations on the correct legal classification.

Therefore, the bench concluded that despite a later ruling by the Larger Bench classifying the goods under heading 8419, during the period when Circular dated 19.05.2010 was operative, the goods should be classified under heading 8437. Consequently, the bench concluded that no duty could be demanded, given the classification as per the prevailing Circular during that time.