Provisional assessment and composite valuation: duty must await valid finalisation, and invoice value cannot include non-excisable elements.

Provisional assessment under Rule 9B(5) continued until a valid final assessment was made by the proper officer; communications calling for further data did not amount to finalisation, so duty could not be demanded as if the assessment were concluded. In a composite supply arrangement, suppression and undervaluation were not established where the assessee had disclosed consolidated commercial invoicing and the authorities failed to separate excisable goods manufactured in the factory from bought-out items and service elements before adopting the full invoice value. The assessable value had to be confined to the excisable goods actually manufactured and cleared, with non-excisable components excluded.

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Issues: (i) Whether the assessments remained provisional and the show cause notice was premature for want of a valid final assessment under Rule 9B(5); (ii) Whether suppression, undervaluation, and inclusion of commercial invoice value and service charges in the assessable value were established.

Issue (i): Whether the assessments remained provisional and the show cause notice was premature for want of a valid final assessment under Rule 9B(5).

Analysis: The provisional assessment ordered in 1991 continued until a final assessment in the manner required by Rule 9B(5) was made. The communications relied upon by the Revenue did not amount to a final assessment order by the proper officer; they only contemplated finalization and called for further data. Rule 9B(5) required adjustment of provisional duty against duty finally assessed, with consequential payment or refund, and that statutory step had not been completed for the relevant period. In the absence of a valid final assessment, the clearances covered by the notice remained provisionally assessed, and the subsequent notice could not be treated as based on a concluded assessment.

Conclusion: The assessments had not been validly finalized under Rule 9B(5), and the show cause notice was premature.

Issue (ii): Whether suppression, undervaluation, and inclusion of commercial invoice value and service charges in the assessable value were established.

Analysis: The record showed that the assessee had disclosed the practice of issuing consolidated commercial invoices for customer convenience and that such invoices covered not only goods manufactured at the relevant factory but also items supplied by other units, bought-out items, and incidental services under a composite contract. The authorities did not separate excisable goods manufactured and cleared from non-excisable or non-dutyable components before demanding duty on the entire commercial invoice value. The finding of deliberate suppression was therefore unsustainable, and the valuation adopted by the Commissioner did not correctly isolate the assessable value of goods manufactured in the factory in question.

Conclusion: Suppression and undervaluation were not established, and the full commercial invoice value could not be adopted as the assessable value without proper exclusion of non-excisable components.

Final Conclusion: The demand and penalties could not stand, and the matter required fresh finalization of assessments in accordance with the provisional assessment framework and proper valuation principles.

Ratio Decidendi: Where provisional assessment continues without a valid final assessment under Rule 9B(5), duty cannot be demanded on the footing of a concluded assessment, and in a composite supply contract the assessable value must be confined to excisable goods actually manufactured and cleared, excluding non-excisable goods and separable service elements.

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