2005 (7) TMI 263 - AT - Central Excise

Provisional assessment - Provisional assessment - Demand - Levy of duty and classification - Limitation

Summary

Issues Involved:
1. Provisional Assessment
2. Requirement of Show Cause Notice under Section 11A
3. Compliance with Rule 9B of the Central Excise Rules, 1944
4. Legality of Differential Duty Demand

Issue-wise Detailed Analysis:

1. Provisional Assessment:
The primary issue was whether the assessments during the period May 1981 to May 1984 were provisional. The appellants had filed a writ petition challenging the levy of excise duty on yarn captively consumed. The Delhi High Court stayed the recovery of the disputed duty, subject to the appellants furnishing a bond and a bank guarantee for 50% of the duty. The appellants executed a bond in Form B-13, which is prescribed for provisional assessments. The bond was accepted, and provisional assessments were made on RT-12 returns filed by the appellants. The Commissioner (Appeals) and Member (Technical) both held that the assessments were provisional, relying on the fact that the appellants had opted for provisional assessment by executing the bond and not objecting to the Superintendent's endorsement on the RT-12 returns. The Member (Judicial), however, disagreed, stating that there should be a specific provisional assessment order in terms of Rule 9B to constitute assessments as provisional.

2. Requirement of Show Cause Notice under Section 11A:
The appellants contended that the differential duty demand was invalid as no show cause notice under Section 11A of the Central Excise Act, 1944, was issued. The Commissioner (Appeals) and Member (Technical) held that since the assessments were provisional, the requirement of issuing a show cause notice under Section 11A did not arise. They relied on the Supreme Court's decision in J.K. Cotton Spinning & Weaving Mills and other relevant case laws, which stated that in cases of provisional assessment, the demands are not required to be raised under Section 11A. The Member (Judicial) disagreed, stating that the present case could not be treated as one of provisional assessment and, therefore, the issue of a show cause notice was necessary.

3. Compliance with Rule 9B of the Central Excise Rules, 1944:
The appellants argued that there was no specific order from the proper officer directing provisional assessment as required under Rule 9B. They relied on various judicial decisions and Board's Circular No. 13/90-CX dated 25-5-1990. The Member (Technical) and the third Member (T) held that the execution of the B-13 bond and the endorsement on the RT-12 returns constituted compliance with Rule 9B. They stated that the requirement of an order for provisional assessment was satisfied in this case, as the appellants had themselves requested provisional assessment and executed the bond accordingly.

4. Legality of Differential Duty Demand:
The differential duty demand of Rs. 63,57,102.76 was upheld by the Commissioner (Appeals) on the grounds that the assessments were provisional and the duty was rightly demanded upon finalization of the assessments. The Member (Technical) agreed with this view, stating that the assessments were provisional, and hence, no show cause notice under Section 11A was necessary. The Member (Judicial) disagreed, stating that the present case could not be treated as one of provisional assessment and, therefore, the differential duty demand without a show cause notice was bad in law.

Majority Decision:
The majority decision, including the opinion of the third Member (T), concluded that the assessments during the period in dispute were provisional, and no notice under Section 11A of the Central Excise Act, 1944, was required to be issued to the appellants. Consequently, the impugned order was upheld, and the appeal was rejected.