Provisional customs assessment remains open until final assessment; bank guarantee encashment alone cannot bar refund relief.

A customs assessment kept provisional for multiple purposes remains provisional until a true final assessment of classification, valuation and duty liability is completed under Section 18 of the Customs Act, 1962; encashment of bank guarantees does not by itself finalise the assessment. Where an exemption notification requires production of a clearance or certificate without prescribing a time-limit, compliance is to be made within a reasonable time, and delay not attributable to the importer does not defeat the exemption. On that footing, treating the bank guarantee encashment as final duty payment was premature, the refund claim was not barred by limitation, and consequential refund relief followed.

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Issues: (i) whether the customs assessment remained provisional notwithstanding encashment of the bank guarantees and partial compliance with one of the conditions for exemption; (ii) whether the refund claim was barred by limitation or could be treated as premature.

Issue (i): whether the customs assessment remained provisional notwithstanding encashment of the bank guarantees and partial compliance with one of the conditions for exemption

Analysis: The goods had been assessed provisionally for more than one purpose, namely project import treatment and the exemption condition requiring clearance/certificate from the Ministry of Environment and Forests. A provisional assessment does not become final merely because one purpose for which it was kept provisional is addressed. Finalisation under Section 18 of the Customs Act, 1962 requires a true final assessment of classification, valuation and duty liability, not merely a direction to encash a bank guarantee. The encashment orders did not amount to finalisation of the provisional assessment.

Conclusion: The assessment continued to be provisional and was not finally assessed by the encashment orders.

Issue (ii): whether the refund claim was barred by limitation or could be treated as premature

Analysis: The exemption notification did not prescribe any express time-limit for production of the required clearance and certificate. In the absence of a stipulated period, the requirement had to be complied with within a reasonable time, and the delay in issuing the certificate was not attributable to the importer. Since the assessment had not been finally concluded, the claim could not be treated as time-barred on the basis of the encashment date. The demand on the bank guarantees was therefore premature and without legal justification.

Conclusion: The refund claim was not barred by limitation and the recovery was premature.

Final Conclusion: The appellate order rejecting the refund was unsustainable, the importer succeeded, and refund with consequential relief followed in law.

Ratio Decidendi: Where an assessment is kept provisional for multiple purposes, it remains provisional until final assessment is completed in accordance with Section 18 of the Customs Act, 1962, and a refund claim cannot be defeated by treating premature encashment of a bank guarantee as final duty payment.

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