Binding nature of Board circulars :

It is well settled in law today that Board Circulars are not binding on the Supreme Court, High Court or the Tribunal. Departmental clarifications are also not binding on the assessee. These judicial bodies as well as the assessee can take a view different from that taken in the Board Circular. Since Board Circulars are for the purpose of administration, it cannot be binding on an officer who is exercising quasi-judicial function as is seen from proviso to Section 37B as also the decision of the Supreme Court in Orient Paper Mills Ltd. v. U.O.I. 1978 (2) E.L.T. J345 (SC).

However, from the recent Supreme decisions, which are emanating, it seems as if the Departmental officers cannot take a stand contrary to beneficial Board Circulars. In Ranadey Micronutrients v. CCE 1996 (87) E.L.T. 19, the Supreme Court held that even if it be contended that a circular is not issued under section 37B, circulars issued have to be treated as if issued under the said Section and the Department will be estopped from arguing that the circular is not valid.

The Supreme Court also held that such circulars are not advisory in character but binding on central excise officers. The Supreme Court went on to add that the Department cannot take a plea that the circular is contrary to the statute since consistency and discipline is more important than winning or losing a case. This far reaching decision seems to suggest that in a given case even if the Tribunal wants to take a different view from a circular, it would be difficult for the Department to justify its stand since a beneficial Board Circular exists.

The Board cannot issue a circular to restrict power of appellate authority nor can be issued to interfere with its discretion in exercise of its appellate functions even while passing interim orders.