2010 (9) TMI 944 - Commissioner - Central Excise

Issues:
- Appellant's eligibility for provisional assessment under Rule 7 of Central Excise Rules, 2002
- Dispute regarding dutiability of goods manufactured by the appellant
- Challenge to Circular issued by CBEC
- Differential treatment of manufacturers of Polyester Staple Fibre (PSF)
- Adherence to Circulars by Departmental Authorities
- Equitable treatment of appellant compared to other manufacturers

Analysis:

1. Eligibility for Provisional Assessment:
The appellant, engaged in manufacturing Polyester Staple Fibre (PSF) from PET scrap and PET waste bottles, sought provisional assessment under Rule 7 of Central Excise Rules, 2002. The Assistant Commissioner rejected this request citing the classification decision by the Board. However, the Commissioner noted that the appellant's goods were not dutiable as per a previous Tribunal decision, and the Department had not challenged this decision. Referring to various Supreme Court judgments, the Commissioner held that the appellant was eligible for provisional assessment, especially since the Department had accepted the earlier Tribunal decision.

2. Dispute on Dutiability:
The appellant contended that the goods were not dutiable based on the Tribunal decision, and they had filed a Writ Petition challenging the Circular issued by CBEC. The Commissioner acknowledged the ongoing dispute and the admission of the Writ Petition by the High Court. Therefore, the Commissioner directed the Assistant Commissioner to allow provisional assessment until the High Court's decision, emphasizing the appellant's right to challenge the Circular and the dutiability of the goods.

3. Challenge to Circular Issued by CBEC:
The Circular issued by CBEC classifying PSF from PET scrap and PET waste bottles under a specific heading was challenged by the appellant in a Writ Petition before the High Court. The Commissioner recognized the validity of this challenge and directed that the final assessment of goods would be subject to the outcome of the Judicial Pronouncement. The appellant was granted provisional assessment pending the High Court's decision, ensuring their right to challenge the Circular.

4. Differential Treatment of Manufacturers:
The appellant raised concerns about being singled out for duty payment while other manufacturers were not similarly treated. The Commissioner noted the unequal treatment and the lack of action against another unit manufacturing similar goods. This inequity led the Commissioner to grant provisional assessment to the appellant, emphasizing fairness and equitable treatment among manufacturers.

5. Adherence to Circulars by Departmental Authorities:
The Commissioner acknowledged that Departmental Authorities must follow Circulars, but assessees have the right to challenge them in judicial forums. The appellant's challenge to the Circular before the High Court warranted provisional assessment until the legal dispute was resolved. The Commissioner emphasized the appellant's right to challenge and the Department's obligation to adhere to judicial outcomes.

6. Equitable Treatment of Appellant:
Considering the lack of action against another manufacturer and the appellant's readiness to comply with provisional assessment requirements, the Commissioner found it unjust to demand full duty payment from the appellant. The Commissioner directed the Assistant Commissioner to allow provisional assessment, ensuring the appellant's fair treatment and protection until the High Court's decision.

In conclusion, the Commissioner allowed the appeal, setting aside the impugned Order and granting provisional assessment to the appellant, subject to the execution of Bond and Bank Guarantee as per the CBEC Manual. The final assessment would be determined based on the outcome of the Writ Petition before the High Court, ensuring the appellant's right to challenge the Circular and the dutiability of their goods.

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