2006 (3) TMI 766 - HC - Central Excise

Summary

Issues:
1. Interpretation of the Supreme Court judgment regarding departure from Provisional Assessment Order without issuing a show cause notice.
2. Validity of the interim relief granted in the writ petition.
3. Compliance with the interim order by the revenue authority.
4. Reconsideration of deductions claimed by the assessee in the Provisional Assessment.
5. Setting aside of the original order by the Commissioner (Appeals) and its implications on the encashment of Bank Guarantee.
6. Disposition of the writ petition and the directives issued by the court.

Analysis:
1. The High Court analyzed the Supreme Court judgment in Collector of Central Excise, Patna vs. I.T.C. Limited, emphasizing the requirement of issuing a show cause notice before departing from a Provisional Assessment Order. The Court found that the Assistant Commissioner's action may constitute "Reassessment" as per Rule 173C(4), leading to the grant of interim relief in the writ petition to prevent any adverse consequences for the petitioners due to the departure from the provisional order.

2. The interim relief granted to the petitioners was limited to specific prayer clauses, allowing the revenue to withdraw the impugned order, issue a show cause notice, and conduct a fresh hearing for the finalization of the Provisional Assessment. This relief did not hinder the revenue's authority to follow due process but aimed to safeguard the petitioners' interests during the reassessment process.

3. The revenue authority, in compliance with the interim order, issued a show cause notice to the petitioners for reconsidering deductions claimed and finalizing the Provisional Assessment. Despite the original order being set aside by the Commissioner (Appeals), the Assistant Commissioner was directed to act in accordance with the interim order passed by the High Court, ultimately leading to the conclusion that the encashment of the Bank Guarantee by the respondents was unsustainable.

4. The Court disposed of the writ petition by directing the respondents to refund the encashed Bank Guarantee amount to the petitioners. Simultaneously, the petitioners were instructed to furnish a new Bank Guarantee, which would remain operative until the finalization of the Provisional Assessment and the expiration of the appeal period if the outcome is unfavorable to the petitioners. The Assistant Commissioner was given a timeline of one year to complete the finalization process.

5. The judgment concluded without imposing any costs on either party, emphasizing the resolution of the dispute regarding the encashment of the Bank Guarantee and the procedural compliance required for the finalization of the Provisional Assessment as per the show cause notice issued by the revenue authority.