Provisional assessment cannot support a premature excise demand notice; finalisation must come first before any demand or penalty.

A demand notice under Section 11A of the Central Excise Act, 1944 is premature while provisional assessment remains pending, because short levy or non-levy can be determined only after finalisation under Rule 9(b)(5) of the Central Excise Rules, 1944. Revenue material may be used for completing the provisional assessment, but not to sustain an immediate demand or linked penalty before finalisation. An adjudication order founded on such a premature notice cannot independently stand. The proper course is to finalise the provisional assessments expeditiously, after giving the assessee written notice and an opportunity to respond and be heard.

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Issues: (i) Whether the show cause notice issued during the pendency of provisional assessment was without authority of law; (ii) whether the impugned Order-in-Original could survive after the show cause notice was held unsustainable; (iii) what directions were required for expeditious finalisation of the provisional assessments.

Issue (i): Whether the show cause notice issued during the pendency of provisional assessment was without authority of law.

Analysis: Provisional assessments for the relevant period were still pending. The settled legal position is that a notice under Section 11A of the Central Excise Act, 1944 for duty short levy or non-levy can arise only after finalisation of assessment under Rule 9(b)(5) of the Central Excise Rules, 1944. The material available to Revenue could be used for finalisation of assessment, but a demand notice issued before such finalisation was premature. The same principle applied equally to the proposed penal consequences linked with that notice.

Conclusion: The show cause notice was without authority of law and was set aside.

Issue (ii): Whether the impugned Order-in-Original could survive after the show cause notice was held unsustainable.

Analysis: The Order-in-Original was founded on and proceeded from the premature show cause notice. Once the notice itself could not survive, the adjudicatory order based upon it could not independently remain valid.

Conclusion: The impugned Order-in-Original was also set aside.

Issue (iii): What directions were required for expeditious finalisation of the provisional assessments.

Analysis: Since the assessment exercise itself was still pending, the proper course was to direct the jurisdictional Assistant Commissioner to finalise the provisional assessments expeditiously under Rule 9(b)(5) of the Central Excise Rules, 1944. The authority could rely on the Revenue material already referred to, provided the assessees were informed in writing and given an opportunity to respond and be heard.

Conclusion: The jurisdictional Assistant Commissioner was directed to finalise the provisional assessments expeditiously in accordance with law.

Final Conclusion: The appeal succeeded, the impugned notice and order were quashed, and the provisional assessments were directed to be completed afresh in accordance with law, leaving any demand or penal action to be considered only after such finalisation.

Ratio Decidendi: A notice under Section 11A of the Central Excise Act, 1944 cannot validly be issued while provisional assessment remains pending, and any demand or penal action based on such a notice must await finalisation of assessment under Rule 9(b)(5) of the Central Excise Rules, 1944.

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