Provisional assessment in a classification dispute delayed limitation for differential duty, leaving the demand within time.

Clearances made pending a classification dispute, accompanied by bonds undertaking payment of differential duty and supported by departmental correspondence, were treated as provisional assessment even without a separate formal written order. The limitation period for demanding differential duty therefore ran from finalisation of the assessment, not from each clearance. As the earlier letter did not amount to finalisation and the later finalisation was not shown to be delayed unreasonably, the demand was held to be within time. The confirmation of differential duty was upheld and the assessee's challenge failed.

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Issues: (i) whether the clearances of lamp holders during the relevant period were made under provisional assessment; and (ii) whether the demand for differential duty was barred by limitation or vitiated by delay in finalisation of the assessment.

Issue (i): whether the clearances of lamp holders during the relevant period were made under provisional assessment.

Analysis: The surrounding circumstances showed that the classification of lamp holders was disputed, the department had sought clarification, the appellants had executed bonds undertaking to pay differential duty, and the clearances were allowed pending final clarification. The absence of a separate written order did not displace the factual position that the assessments were provisional in nature. The material on record, including the correspondence and bonds, was sufficient to establish provisional assessment under the applicable rule.

Conclusion: The clearances were made under provisional assessment, against the assessee.

Issue (ii): whether the demand for differential duty was barred by limitation or vitiated by delay in finalisation of the assessment.

Analysis: Since the clearances were provisional, the period of limitation had to be reckoned from finalisation of the assessment and not from each individual clearance. The letter of 4-10-1977 did not amount to finalisation of the earlier clearances, and the finalisation on 13-12-1978 was not shown to be beyond a reasonable time in the facts of the case. The demand was therefore not barred by time.

Conclusion: The demand was within time and the challenge on limitation failed, against the assessee.

Final Conclusion: The order confirming the differential duty was upheld and the appeal failed.

Ratio Decidendi: Where the surrounding facts establish that clearances were allowed only pending classification dispute and against an undertaking to pay differential duty, the assessment is provisional even without a separate formal written order, and limitation for demand runs from finalisation of such provisional assessment.

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