REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 7177 OF 2005

M/s. Sandur Micro Circuits Ltd. …..Appellant

Versus

Commissioner of Central Excise, Belgaum …. Respondent

With CIVIL APPEAL NO.                OF 2008

(Arising out of SLP (C) No. 16719 of 2006)

With CIVIL APPEAL NO.                OF 2008

(Arising out of SLP (C) No. 16947 of 2006)

With CIVIL APPEAL NO. 6897 OF 2005

J U D G M E N T

Dr. ARIJIT PASAYAT, J.

1. Leave granted in SLP (C) Nos. 16719 of 2006 and 16947

of 2006.  

2. In all these appeals common questions are involved and

are directed against the judgment and final order passed by

the Customs,  Excise  and Service  Tax Appellate  Tribunal  (in

short the ‘Tribunal).  Since in appeals filed by the appellants

common  question  of  law  is  involved,  there  is  no  need  to

elaborately  deal  with  the  factual  aspects.   Question  is  the

effect  of  a  circular  issued  by  Central  Board  of  Excise  and

Custom  (in  short  the  ‘Board’)  i.e.  Circular  No.  42  of  1997

dated 19.9.1997. The CESTAT held that the Notification No.

2/95-CE  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 there is no manner of doubt that the

appellant’s  claim  of  liability  to  pay  50%  of  the  aggregated

customs duty on the goods cleared to the Domestic Tariff Area

(in short the ‘DTA’) is not legally tenable.  It was held that the

Circular was in direct conflict with the Notification No. 2/95.

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3. Learned counsel for the appellant in each case submitted

that the Circular was issued on the basis of representations

made  by  various  assessees  and  therefore  the  Notification

cannot stand on the way of relief being granted.

4. Learned counsel  for the respondent on the other hand

submitted that the Notification  which is statutorily issued has

overriding  effect  because  the  Notifications  are  issued  in

exercise of powers conferred by sub-section (1) of Section 5A

of the Central Excises and Salt Act, 1944 (in short the ‘Act’).   

5. The issue relating to effectiveness of a Circular contrary

to a Notification statutorily issued has been examined by this

Court in several cases.  A Circular cannot take away the effect

of Notifications statutorily issued.  In fact in certain cases it

has  been  held  that  the  Circular  cannot  whittle  down  the

Exemption  Notification  and  restrict  the  scope  of  the

Exemption Notification or hit it down.  In other words it was

held  that  by  issuing  a  circular  a  new  condition  thereby

restricting  the  scope  of  the  exemption  or  restricting  or

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whittling  it  down  cannot  be  imposed.   The  principle  is

applicable to the instant cases also, though the controversy is

of different nature.

6. The appeals fail and are dismissed.

………………………………….J. (Dr. ARIJIT PASAYAT)

……………………………..……J. (Dr. MUKUNDAKAM SHARMA)

New Delhi, August 13, 2008

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