2011 (7) TMI 425 - AT - Central Excise

Tribunal Upholds Commissioner's Decision on Provisional Assessment Amid Ongoing Legal Challenge

The Tribunal upheld the Commissioner(Appeals) decision to allow provisional assessment due to the ongoing legal challenge to the Board's circular, ... Manufacturer or not - Manufacture of Polyester Staple Fibre (PSF) from PET scrap and PET waste bottles - Provisional assessment - The dispute regarding dutiability of said goods is under the active consideration of Hon'ble High Court, the provisions of Rule 7 of Central Excise Rules, 2002 providing provisional assessment are applicable - The dispute regarding dutiability of said goods is under the active consideration of Hon'ble High Court, the provisions of Rule 7 of Central Excise Rules, 2002 providing provisional assessment are applicable - Admittedly, the issue is sub-judice before Hon'ble High Court of Delhi, who has observed that any steps taken in pursuance of the said circular shall be subject to the result of this writ petition - As such, it can be safely concluded that the rate of duty is not final - the appellate authority was justified in holding that the provisional assessment should be resorted to - The appeal filed by the Revenue is, accordingly, rejected. Issues:Adjournment request by the Assessee, Provisional assessment under Rule 7 of Central Excise Rules, 2002, Validity of Board's circular, Finality of Tribunal's order on dutiability of goods.Analysis:1. Adjournment request by the Assessee:The appeal was filed by the Revenue against the order passed by the Commissioner(Appeals). The Assessee requested for provisional clearances based on Rule 7 of Central Excise Rules, 2002, after the Central Excise officers seized the stock of Polyester Staple Fibre (PSF) manufactured from PET scrap and PET waste bottles following a circular issued by CBEC. The Assistant Commissioner rejected the request for provisional assessment, citing the binding nature of the circular on classification. The Unit then appealed to the Commissioner(Appeals) who allowed provisional assessment after execution of bond and bank guarantee as per CBEC Manual.2. Provisional assessment under Rule 7 of Central Excise Rules, 2002:The Revenue challenged the Commissioner(Appeals) order, arguing that the provisional assessment provision applies only when the rate of duty is undetermined. They contended that since the Board's circular determined the classification, there was no dispute on the rate of duty. However, the Tribunal upheld the Commissioner's decision, emphasizing that the matter was sub-judice before the Hon'ble High Court of Delhi, and the rate of duty was not finalized. Therefore, provisional assessment was justified until the court's decision.3. Validity of Board's circular:The Commissioner(Appeals) referenced the Tribunal's decision on the dutiability of PSF from PET scrap and PET waste bottles, which the Revenue had accepted without appeal, rendering it final. The circular issued by CBEC under Section 37B was challenged by the appellant in the Hon'ble High Court of Delhi through a writ petition. The High Court observed that actions based on the circular would be subject to the writ petition's outcome. Considering the ongoing dispute, the Commissioner held that provisional assessment was appropriate until the court's final decision.4. Finality of Tribunal's order on dutiability of goods:The Tribunal rejected the Revenue's appeal against the Commissioner(Appeals) order, stating that since the matter was pending before the Hon'ble High Court of Delhi, the rate of duty was not conclusively determined. The Tribunal found no merit in the Revenue's argument against provisional assessment, as the outcome of the writ petition would impact the duty rate. Therefore, the appeal was dismissed, and the Stay Petition was disposed of accordingly.In conclusion, the Tribunal upheld the Commissioner(Appeals) decision to allow provisional assessment in light of the ongoing legal challenge to the Board's circular, emphasizing the unsettled nature of the duty rate pending the High Court's final decision.