2018 (3) TMI 625 - HC - Central Excise

Finalisation of Provisional assessment - appellant s contention is that the show cause notice was with respect to two separate block periods of 6 months each and the provisional assessment has to be carried out for that block period setting off the gains against the losses - Held that - since the returns have to be filed after the last date of a particular month and the duties with respect to that month have to be paid before the 5th or 7th of the next month. There can never be intended a provisional assessment for a block period of six months, going by the periods stipulated in sub-Rule (3); which is only the period prescribed for completion of the final assessment as per the provisional returns filed by the assessee - there is no reason to interfere with the finalisation of provisional assessments on the claim raised of an assessment for a block period of six months. Two different block periods of four months and two months were taken only to satisfy the six month period as prescribed under sub-Rule (3) of Rule 7 for finalisation of the provisional assessment, which period commences from the date of supply of the details. The assessee s contention cannot be sustained since there could be no clubbing of the various months falling within the period of provisional assessment, as permitted under Rule 7(1). There can be no remand of the provisional assessment as finalised for the period from 1.2.2007 to 31.7.2007 - appeal allowed in part.

Summary

Issues:
1. Challenge to Ext.P13 order for provisional assessments for two periods.
2. Interpretation of Rule 7 of the Central Excise Rules, 2002 regarding provisional assessments.
3. Compliance with show cause notices for separate block periods.
4. Finalization of provisional assessments for different block periods.
5. Departure from show cause notices in finalization of assessments.
6. Remand for re-calculation of duty liability based on loss/gain for separate periods.
7. Set off of gains against losses in provisional assessments.

Issue 1: Challenge to Ext.P13 order for provisional assessments for two periods
The writ petition challenged the Ext.P13 order for provisional assessments made for two periods based on show cause notices. The assessments were finalized under Rule 7 of the Central Excise Rules, 2002, for the periods specified in the notices. The appellant contended that the assessments were not in line with the statutory mandate of a six-month block period for provisional assessments under Rule 7.

Issue 2: Interpretation of Rule 7 of the Central Excise Rules, 2002 regarding provisional assessments
The appellant argued that Rule 7 required provisional assessments to be carried out for a block period of six months, setting off gains against losses. However, the court held that Rule 7 only prescribed a six-month period for final assessment based on provisional returns filed monthly. The court rejected the argument for a block assessment and upheld the finalization of provisional assessments for the specified periods.

Issue 3: Compliance with show cause notices for separate block periods
The appellant contended that the finalization of assessments should adhere to the separate block periods mentioned in the show cause notices. The court found that the assessments were made in accordance with the periods specified in the notices, ensuring compliance with the six-month period for final assessment under Rule 7.

Issue 4: Finalization of provisional assessments for different block periods
The court reviewed the finalization of provisional assessments for different block periods and found that the assessments were conducted as per the information provided by the assessee. The court upheld the orders finalizing the assessments for the respective periods.

Issue 5: Departure from show cause notices in finalization of assessments
The appellant argued against departing from the show cause notices in finalizing the assessments. The court noted that the assessments were based on the information supplied by the assessee for the specified periods, in line with the requirements of Rule 7.

Issue 6: Remand for re-calculation of duty liability based on loss/gain for separate periods
The court addressed the remand made for re-calculation of duty liability based on loss/gain for separate periods. The appellant's argument against departing from the show cause notice was accepted, and the court emphasized the importance of adhering to the notice in finalizing assessments.

Issue 7: Set off of gains against losses in provisional assessments
The court rejected the appellant's contention for setting off gains against losses in provisional assessments, emphasizing that such set-offs could result in granting double benefits to the assessee. The court modified the order to reject the claim for set off and confirmed the finalization of provisional assessments for the specified periods.

In conclusion, the court partly allowed the writ appeal, modifying the judgment to reject the remand of the provisional assessment and confirming the finalization of assessments for the periods in question.