2014 (12) TMI 272 - AT - Central Excise

Valuation of goods - Determination of assessable value - suo moto order of provisional assessment by the department - Held that - Sub-rule (1) of Rules 7 of the Central Excise Rule, 2002 states that where the assessee is unable to determine the value of the excisable goods or determine of the rate of duty applicable thereto, he may request the Assistant Commissioner of Central Excise in writing giving reasons for payment of duty on provisional basis and the Assistant Commissioner may order allowing payment of duty on provisional basis at such rate or on such value as may be specified by him. If such permission is granted, the rule provides for execution of a Bond by the assessee with such surety or security as the said Assistant Commissioner may specify. The Rule further provides that where the provisional assessment has been sought, the Assistant Commissioner of Central Excise shall pass order for final assessment as soon as may be. when the Central Excise officers, during the scrutiny or otherwise, find that self-assessment is not in order, the assessee may be asked for all necessary documents, records or other information for issue duty demand for differential duty, if any, after conducting proper inquiry and in case the assessee fails to provide the records/information, best judgment method may be adopted to demand the duty. Thus, both the Rule and instructions issued thereon provides for assessment of duty finally in a case where assessee is unable to determine the correct amount of duty or correct rate of duty and also does not opt for provisional assessment - Decided against Revenue.

Summary

Issues:
1. Validity of the order of provisional assessment by the department under Rule 7 of the Central Excise Rule, 2002.

Analysis:
The appeal was filed by the Revenue against the Order-in-Appeal passed by the Commissioner of Central Excise (Appeals), Pune I, which set aside the order of provisional assessment by the Assistant Commissioner of Central Excise, Pune-I Division. The lower appellate authority held that Rule 7 of the Central Excise Rule, 2002 does not authorize the department to order provisional assessment; rather, it deals with provisional assessment at the request of the assessee. The Revenue challenged this decision before the Appellate Tribunal.

The Appellate Tribunal examined Rule 7 of the Central Excise Rule, 2002, which allows an assessee to request the Assistant Commissioner of Central Excise for payment of duty on a provisional basis if unable to determine the value of excisable goods or the applicable duty rate. The rule mandates the execution of a Bond by the assessee with specified surety or security. Additionally, the rule requires the Assistant Commissioner to pass a final assessment order promptly once provisional assessment is sought. The CBEC Manual clarifies that Rule 7 does not empower the department to unilaterally resort to provisional assessment. Instead, if self-assessment by the assessee is found incorrect, the department may demand differential duty based on proper inquiry or resort to the 'best judgment' method if necessary documents are not provided by the assessee.

Consequently, the Appellate Tribunal found no fault in the lower appellate authority's decision. The Tribunal upheld that both the Rule and related instructions allow for final duty assessment when the assessee cannot determine the correct duty amount or rate and does not opt for provisional assessment. Thus, the appeal by the Revenue was dismissed as legally unsustainable.

This judgment clarifies the scope and limitations of provisional assessment under Rule 7 of the Central Excise Rule, emphasizing that the department cannot unilaterally order provisional assessment but must follow prescribed procedures when an assessee is unable to determine duty values or rates.