COMMISSIONER OF CENTRAL EXCISE, NAGPUR versus S. GURUKRIPA RESINS PVT. LTD.

Citation: [2011] 8 S.C.R. 178 · Decided: 11-07-2011 · Supreme Court of India · Bench: D.K. JAIN · Disposal: Appeal(s) allowed

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Judgment (excerpt)

A 
B 
(2011] 8 S.C.R. 178 
COMMISSIONER OF CENTRAL EXCISE, NAGPUR 
v. 
S. GURUKRIPA RESINS PVT. LTD. 
(Civil Appeal No. 7627 of 2005.) 
JULY 11, 2011 
[D.K. JAIN AND H.L. DATTU, JJ.] 
Central Excise Act, 1944: 
c 
S.2(f) - Manufacture of goods- 'Process' in or in relation 
to 'manufacture' of goods with the aid of power - Connotation 
of - Explained - Manufacture of "Turpentine oil" and "Rosin" 
from the raw material known as 'crude turpentine' through the 
process of distillation - Water lifted with the aid of electric 
0 
motor from the well to ground level storage tank and again 
from ground level to overhead tanks for sprinkling water on 
condensers for the purpose of distillation - HELD: The 
operation of lifting water from the well to the higher levels is 
so integrally connected with the manufacture of "Turpentine 
E oil" and "Rosin" that without this activity it is impossible to 
manufacture the said goods and, therefore, the processing of 
the raw material in or in relation to manufacture of the final 
goods is carried on with the aid of power- Central Excise Tariff 
Act, 1985- First Schedule - Chapter Heading nos. 38.06 and 
38.05 - "Rosin" and "Turpentine oil" - Levy of excise duty. 
F 
CIRCULARS: 
Circulars - Binding effect of- Held: The Tribunal has · 
failed to notice and consider the effect and implication of 
G Circular No. 38138194-CX dated 27.5.1994, issued by the 
Central Board of Excise and Customs, withdrawing all 
instructions/guidelines/tariff advices issued in respect of the 
erstwhile First Schedule to the Central Excises and Salt Act, 
1944, which obviously included the 19.78 clarification issued 
H 
178 
COMMISSIONER OF CENTRAL EXCISE, NAGPUR v. 179 
S. GURUKRIPA RESINS PVT. LTD. 
by the Ministry of Finance by lettf:Jr No. B-36/11fl7-TRU dated A 
10th/16th January, 1978- Further- Circulars and instructions 
issued by the Central B9ard of Excise and Customs are no 
doubt binding in law on the authorities under the respective 
Statutes but .when the Supreme Court or a High Court 
declares the law on the question arising for consideration, it 
B 
would not be appropriate for the Courts or the Tribunal, as the 
case may be, to direct that the Board's Circular should be 
given effect to and not the view expressed in a decision of 
Supreme Court or a High Court - Precedent. 
PRECEDENT: 
Decision of superior court - Heid: A decision is an 
authority for what it actually and explicitly decides and no.t for 
what logically flows from it. 
The assessee was engaged in the manufacture and 
c 
D 
clearance of "Rosin" and "Turpentine Oil. The goods 
were classifiable under Chapter Heading Nos. 38.06 and 
38.05 respectively of the First Schedule to the Central 
Excise Tariff Act, 1985. The assessee filed the requisite 
E 
classification 
declarations 
with 
the 
Deputy 
Commissioner, Central Excise, classifying the finished 
goods i.e. "Rosin" under the Sub-heading 3806.19 and 
"Turpentine Oil" under Sub-heading 3805.19, both 
bearing 'nil' rate of duty, on the ground that the said 
F 
goods were being manufactured without the aid of 
power. The Deputy Commissioner accepted the 
classifications, but treated the goods as "in or in relation 
to the manufacture of Yfhich any process is ordinarily 
carried on with the aid of power", attracting rate of duty 
@ 16%. It was held that the assessee was using 5 Hp G 
electric motor for lifting water from the well to the storage 
tank at the ground level; and again 2 Hp .electric motor 
was used for lifting water from ground level to overhead 
water tanks placed at a height of 30' ft. for sprinkling water 
. on the condensers in order to get the final product, 
H 
180 
SUPREME COURT REPORTS 
[2011] 8 S.C.R. 
A namely, "Turpentine Oil" and "Rosin", by the process of 
distillation. The Commissioner (Appeals), affirmed the 
order. However, the appeals filed by the assessee, were 
allowed by the Customs, Excise and Service Tax 
Appellate Tribunal, placing reliance on the clarification 
B issued by the Ministry of Finance by letter No. B-36/11/ 
77 • TRU dated 10/16.1.978. The application filed by 
revenue for rectification of CESTAT order, pointing out 
that the decision of the Supreme Court in Rajasthan State 
Chemical Works1 was applicable to the facts of the instant 
C case and the circular dated 16.1.1978 had been rescinded 
by Circular No. 38/38/94-CX dated 27.5.1994, was rejected 
by the Tribunal. 
Allowing the appeals filed by the revenue, the Court 
D 
HELD: 1.1

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