Provisional assessment and statutory notice are both required before excise duty recovery on captively consumed yarn.

Duty on captively consumed yarn could not be sustained because the department had neither validly made a provisional assessment under the prescribed excise procedure nor issued a show cause notice under the statutory recovery provision. An endorsement on classification lists and RT-12 returns that assessment was provisional was not enough by itself; a proper provisional assessment order and compliance with the rule were required. Recovery also had to proceed through the statutory notice mechanism, and a bond executed under interim court directions did not independently authorise demand. The demand therefore failed.

---

---

Issues: Whether duty could be demanded on captively consumed yarn without a provisional assessment order under Rule 9B of the Central Excise Rules, 1944 and without a show cause notice under Section 11A of the Central Excise Act, 1944.

Analysis: The endorsement on classification lists and RT-12 returns that the assessment was provisional did not by itself make the assessment provisional. A valid provisional assessment required a proper order under Rule 9B and compliance with the prescribed procedure, which was not undertaken. The Court also found that no show cause notice was issued under Section 11A, although recovery of central excise duty had to be made through that statutory mechanism. In the absence of both a valid provisional assessment and a notice under Section 11A, the demand could not be sustained, and the bond executed pursuant to the interim court order did not independently authorize recovery.

Conclusion: The duty demand was unsustainable and the assessee succeeded.

Ratio Decidendi: Excise duty cannot be recovered unless the department either validly resorts to provisional assessment under the prescribed rule or issues a notice under the statutory recovery provision; a mere endorsement of provisional assessment on returns or a bond executed pursuant to court directions is insufficient.

---