2007 (5) TMI 415 - AT - Central Excise

Summary

Issues Involved
1. Whether the assessments for the period 2001-02 and 2002-03 are deemed to be provisional.
2. Whether the assessee is entitled to abatement from assessable value for equalized freight, free service charges, and turnover tax.
3. Validity of show-cause notices issued based on the premise that assessments were final.

Detailed Analysis

1. Provisional Nature of Assessments for 2001-02 and 2002-03
The core issue was whether the assessments for the periods 2001-02 and 2002-03 should be treated as provisional. The assessee argued that they had consistently followed a provisional assessment procedure under Rule 9B of the Central Excise Rules, 1944, which continued under Rule 7 of the Central Excise Rules, 2001/2002. They contended that the amounts for equalized freight, free service charges, and turnover tax were not known at the time of clearance, necessitating provisional assessments. The lower authorities, however, did not treat these assessments as provisional due to the absence of a formal request and order for provisional assessment for the said periods.

The Tribunal found merit in the assessee's argument, noting that the bond and bank guarantee furnished under Rule 9B were allowed to continue beyond 1-4-2001. The Tribunal held that the provisions of Rule 7 were materially similar to those of Rule 9B, and thus, the assessments should be deemed provisional. It was emphasized that the proper officer had no discretion to deny provisional assessment where the amounts claimed for abatement were not known at the time of clearance.

2. Entitlement to Abatement
The Tribunal addressed the issue of whether the assessee was entitled to abatement from the assessable value for equalized freight, free service charges, and turnover tax. The assessee had been claiming these abatements consistently, and the Tribunal found that the amounts were indeed not known at the time of clearance, justifying the provisional assessments. Therefore, the Tribunal concluded that the assessee was entitled to claim these abatements.

3. Validity of Show-Cause Notices
The show-cause notices issued by the department were based on the premise that the assessments for the disputed periods were final. Since the Tribunal held that the assessments were provisional, the foundation of these show-cause notices was demolished. Consequently, the Tribunal quashed all the show-cause notices and the proceedings initiated pursuant to them. The jurisdictional Assistant Commissioner/Deputy Commissioner was directed to finalize the assessments in accordance with the law and principles of natural justice by 30th September 2007.

Conclusion
The Tribunal allowed the assessee's appeal, holding that the assessments for 2001-02 and 2002-03 were provisional under Rule 7 of the Central Excise Rules, 2001/2002. The Tribunal quashed the show-cause notices and remanded the matter for finalization of assessments. The operative portion of the order was pronounced in open court on 22-5-2007.