2004 (2) TMI 462 - AT - Central Excise

Tribunal overturns bank guarantee order due to adjudicated demand notices

The Tribunal set aside the order requiring the appellant to provide a bank guarantee and execute a B-13 bond for provisional assessment, as demand notices ... Provisional assessment - B-13 bond - Bank guarantee - demand show cause notice - provisional assessment to safeguard Revenue pending enquiries - payment at maximum rate of duty leviableProvisional assessment - demand show cause notice - provisional assessment to safeguard Revenue pending enquiries - B-13 bond - Bank guarantee - payment at maximum rate of duty leviable - Whether provisional assessment and requirement to execute B-13 bond and furnish Bank guarantee were permissible after demand proceedings had been initiated and adjudicated. - HELD THAT: - The Tribunal accepted the appellant's contention that provisional assessment is a protective measure employed while Revenue conducts further enquiries or forms a final view. Where demand show cause notices have been issued and the matter adjudicated, provisional assessment is not appropriate. Similarly, when the Assistant Commissioner has directed payment at the maximum rate of duty leviable, there is no occasion for the Revenue to resort to provisional assessment requiring a B-13 bond or Bank guarantee. The Tribunal relied on the principle in Aluplex Industries v. CCE that provisional assessment is intended to safeguard Revenue during intervening enquiries, and applied that principle to set aside the order directing bond and bank guarantee in the present case. [Paras 2, 3]Impugned order directing execution of B-13 bond and furnishing of Bank guarantee for provisional assessment set aside; appeal allowed.Final Conclusion: The Tribunal held that once demand proceedings were initiated and adjudicated (and with direction to pay duty at the maximum rate), provisional assessment requiring B-13 bond and Bank guarantee was unwarranted; the impugned order was set aside and the appeal allowed. Issues:The requirement of bank guarantee and B-13 bond for provisional assessment.Analysis:The appellant challenged the order directing them to provide a bank guarantee and execute a B-13 bond for provisional assessment. The Revenue issued show cause notices demanding duty, which were confirmed by the original authority but overturned in favor of the appellants by the Commissioner (Appeals). The Revenue appealed to the Tribunal, with the appeals pending. The appellant argued that since demand notices were already issued, provisional assessment was unnecessary. Citing a precedent, the appellant contended that provisional assessment aims to safeguard revenue during further inquiries, which was not needed when the maximum duty rate was already directed to be paid. The Tribunal agreed that since demand notices were adjudicated, there was no basis for provisional assessment. Consequently, the impugned order was set aside, and the appeal was allowed.