2018 (3) TMI 336 - AT - Central Excise

Tribunal allows appeal, citing lack of assessment order and show cause notice.

The tribunal set aside the impugned order and allowed the appeal, emphasizing that in the absence of a provisional assessment order and without issuing a ... Levy of duty on yarn manufactured and captively consumed - provisional assessment - scope of SCN - Held that: - for provisional assessment, there should be a proper order under rule 9B by the Revenue and the endorsement on RT-12 return to the effect that the assessment is provisional would not suffice for making the assessee liable for payment of duty. In fact the Revenue never directed the Appellants to execute the bond with any security or surety or such conditions that the Collector may approve for the provisional assessment of the goods under Rule 9B. In such case, the assessment was not provisional in terms of Rule 9B. The order under rule 9B towards provisional assessment has not been issued and in that case it cannot be said that the goods were assessed provisionally. Further, no SCN was issued by the Revenue in terms of Section 11A to the Appellant for recovery of duty - Once the Revenue did not issue any SCN u/s 11A, no demand could have been made from the Appellant. It is only under Section 11A that demands can be raised against assessee. The Revenue, having failed to issue any show cause notice, now cannot take the shelter of the bond executed by the Appellant in terms of the order passed by the Hon'ble Delhi Court. In absence of provisional assessment order, the demand of duty made against the Appellants is not sustainable. Appeal allowed - decided in favor of appellant. Issues Involved:1. Validity of the demand for excise duty without issuance of a show cause notice under Section 11A of the Central Excise Act.2. Whether the assessments were provisional under Rule 9B of the Central Excise Rules, 1944.3. The effect of the bond executed by the Appellants pursuant to the Delhi High Court order.Detailed Analysis:1. Validity of the Demand for Excise Duty Without Issuance of a Show Cause Notice:The Appellants argued that the impugned order was contrary to the Supreme Court's order dated 28.04.1988, which specified that the Revenue could realize dues only where Notices under Section 11A of the Central Excise Act had been served, and claims did not cover any period beyond six months from the respective dates of the notices. The tribunal found that no show cause notice was issued to the Appellant, leading to the conclusion that in light of the Supreme Court's order, no duty could be ordered to be paid by the Appellant. The tribunal emphasized that Section 11A contains provisions for the recovery of levies from the assessee by issuing a show cause notice, and without such a notice, no demand could be made.2. Whether the Assessments Were Provisional Under Rule 9B:The Revenue justified the demand on the ground that endorsements on the classification lists and RT-12 returns indicated that the duty on captively consumed yarn was assessed provisionally under Rule 9B. However, the tribunal noted that for an assessment to be provisional, there must be a proper order under Rule 9B. The tribunal referenced the case of J.K. Spinning & Weaving Mills Ltd, where it was held that an endorsement on RT-12 returns does not suffice to make the assessment provisional. The tribunal found that the Department never resorted to provisional assessment under Rule 9B nor completed the process or procedure laid down for provisional assessment. Thus, the assessments were not provisional as per Rule 9B.3. The Effect of the Bond Executed by the Appellants:The Revenue contended that the duty demand was covered by the bond executed by the Appellant in terms of the Delhi High Court order. The tribunal agreed with the Appellant's submission that the bond was merely an undertaking to abide by the court's verdict and not for provisional assessment under Rule 9B. The tribunal found that the bond executed was not under Rule 9B but was an interim measure directed by the court. The tribunal concluded that the Revenue could not use the bond to justify the demand without issuing a show cause notice under Section 11A.Conclusion:The tribunal set aside the impugned order and allowed the appeal, emphasizing that in the absence of a provisional assessment order and without issuing a show cause notice under Section 11A, the demand for duty was not sustainable. The tribunal's decision was based on the settled legal position and the express order of the Supreme Court dated 28.04.1988. The appeal was allowed with consequential reliefs to the Appellants.