Provisional assessment cannot support a duty demand notice issued before finalisation; the notice was held unsustainable.

A show cause notice demanding duty was held unsustainable when issued during the pendency of provisional assessment under the Central Excise Rules. The goods had been cleared provisionally against bond and bank guarantee, and the assessment was finalised only later with payment of differential duty. In line with settled precedent, the notice could not validly be issued before finalisation of the provisional assessment, so the demand failed at the threshold. The impugned order was set aside and consequential relief followed.

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Issues: Whether a show cause notice demanding duty could be issued during the pendency of provisional assessment under the Central Excise Rules, and whether the impugned demand could survive when the assessment was finalised thereafter.

Analysis: The goods were cleared under provisional assessment, supported by bond and bank guarantee, and the assessment was later finalised with payment of differential duty. The show cause notice, however, had been issued while the provisional assessment was still pending. In such circumstances, settled precedent treated the issuance of the notice during the pendency of provisional assessment as impermissible. The validity of the demand therefore failed at the threshold.

Conclusion: The show cause notice was held to be bad in law and unsustainable.

Final Conclusion: The impugned order was set aside and the appeal was allowed with consequential relief.

Ratio Decidendi: A demand notice issued during the pendency of provisional assessment is not sustainable where the assessment has not yet been finalised in accordance with the statutory procedure.

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