2002 (11) TMI 163 - AT - Central Excise

Tribunal rules Assessing Authority cannot use securities for earlier period's duty without demand

The tribunal held that the Assessing Authority cannot appropriate securities meant for a subsequent period to satisfy duty liability for an earlier period ... Securities Issues:1. Appropriation of securities for subsequent period in finalizing provisional assessment.Analysis:The appeal raised the issue of whether the Assessing Authority can appropriate securities furnished for a subsequent period in finalizing provisional assessment without any duty demand for that period. The Assistant Commissioner had finalized provisional assessments for two periods, and while passing the order for the first period, appropriated cash securities meant for the subsequent period without any demand against the assessee for that period. The appellant argued that this action was unjustifiable, citing a Kerala High Court decision and Section 59 of the Indian Contract Act, 1872. The Revenue did not dispute the sufficiency of cash securities for the first period. The Commissioner (Appeals) and the Departmental Representative upheld the Assessing Authority's action. However, the appellate tribunal found merit in the appellant's contention, stating that the appropriation from securities meant for a subsequent period was unwarranted.The tribunal emphasized that the assessee had provided adequate cash deposits/securities to cover the duty liability for the first period, and there was no justification for appropriating securities meant for the subsequent period. The tribunal also noted that the direction to file a refund claim given in the order for the subsequent period was unnecessary, as Rule 9B of the Central Excise Rules, 1944, allowed for adjustment of provisionally assessed duty against the finally assessed duty without requiring the assessee to claim a refund separately. The tribunal concluded that the Assessing Authority should not have appropriated securities meant for the subsequent period to satisfy the duty liability for the earlier period. Consequently, the tribunal set aside the order of the Commissioner (Appeals) and allowed the appeal brought by the assessee.