Provisional assessment duty liability survives finalisation, but penalty cannot be imposed before assessments attain finality.

Provisional assessments under Rule 9B must be finalised under that rule, and any differential duty found payable on finalisation remains recoverable from the assessee. Where the assessee does not dispute the duty quantum on merits, the assessed differential duty is sustained. However, the penal consequences and short-levy recovery provisions do not apply in the same manner to provisional assessments before finality is reached, so penalty was held unsustainable and set aside. The result was that the duty demand stood, but the penalty component was annulled, giving partial relief to the assessee.

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Issues: (i) whether the duty demand arising from assessments made provisional under Rule 9B of the Central Excise Rules, 1944 could be sustained and recovered on finalisation; and (ii) whether penalty could be imposed where the assessments were provisional.

Issue (i): whether the duty demand arising from assessments made provisional under Rule 9B of the Central Excise Rules, 1944 could be sustained and recovered on finalisation.

Analysis: The clearances were treated as provisionally assessed under Rule 9B, and such assessment had to be finalised under the same rule. Once finalised, the assessee was bound to pay any differential duty that remained payable, and the department could not treat the provisional character of assessment as eliminating the duty liability itself. Since the assessee did not dispute the quantum of duty on merits, the demand represented the correctly payable amount.

Conclusion: The duty demand was upheld and remained payable by the assessee.

Issue (ii): whether penalty could be imposed where the assessments were provisional.

Analysis: The statutory scheme governing provisional assessment excludes the application of short-levy recovery provisions and penal consequences in the same manner as final assessments. Because the assessments had not attained finality when the demand arose, the penal provisions invoked in the impugned proceedings could not be applied to that extent.

Conclusion: The penalty was not sustainable and was set aside.

Final Conclusion: The demand for duty was sustained, but the penal component was annulled, resulting in a partial relief to the assessee.

Ratio Decidendi: In provisional assessment cases, duty liability is to be determined on finalisation under the governing rule, but penalty provisions applicable to short-levy on final assessments do not automatically apply merely because the assessment was provisional.

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