Central Excise Tariff Act, 1985 – Central Excise Act, 1944 – s.35L(b) – Central Excise Rules, 1944 – rr.9B, 56, 173B – Appellant filed the classification list, including two products of Benzene and Toluene which was approved by the Assistant Collector – Products of Benzene and Toluene were classified under chapter sub-heading 2902.00 – Approval was challenged on the basis of the subsequent test reports which revealed that purity of the two products were less than 96 percent, thus warranting re-classification under chapter sub-heading 2707.10 and 2707.20 respectively – Copies of test reports were not furnished to the appellant – The test reports formed the sub-stratum of higher duty demand – Later, Assistant Collector passed an order directing provisional assessment of certain products, including products of the appellant – CESTAT in appeal upheld the demand of duty and treated the assessments provisional for the two products Benzene and Toluene for the months of January and February, 1993 – Challenge to: Held: Principles of natural justice required that copies of such test reports ought to have been furnished to the appellant – Informing the appellant only the gist of the test reports cannot be said to be in compliance with the principles of natural justice as the test reports formed the sub-stratum of higher duty demand raised by the department thus entailing adverse civil consequences on the appellant – With respect to R.56 of the Central Excise Rules, use of the word shall in sub-rule (2) is indicative of the mandatory nature of the provision – Officer who has taken the samples for testing has to communicate the result of such test to the manufacturer – On the other hand, sub-rule (4) contemplates that upon receipt of the test result if a manufacturer is aggrieved by the same, he may within 90 days of the date on which the result of the test is received by him, request the Assistant Commissioner that the samples be re-tested – Unless a copy of the test report is furnished to the manufacturer, he would not be in a position to seek re-test within the specified period – Therefore, a copy of the test report has to be furnished to the manufacturer – In such circumstances, extracting the gist of the test reports, that too in the show-cause notices, would clearly be in breach of r.56(2) and r.56(4) of the Central Excise Rules – Belated sampling and test reports casts shadow of doubt on the entire procedure adopted by the respondent – Therefore, orders re-classifying the products Benzene and Toluene under chapter sub-heading 2707.10 and 2707.20 respectively and levying consequential differential duty demand cannot be sustained in law – With respect to order of provisional assessment, r.9B is the relevant provision – In the instance case, essential requirements of r.9B were not complied with – There is no order of the proper officer u/r.9B directing that assessments for the months of January and February, 1993 for the two products Benzene and Toluene were provisional – Neither any bond in proper format was directed nor executed by the appellant – Thus, the order of CESTAT is set-aside. [Paras 37, 39, 40, 44.1, 48, 50]
Central Excise Rules, 1944 – r.9B – Essential requirements: Held: First and foremost, requirement of r.9B is that it is the assessee who has to request in writing the proper officer for provisional assessment in the event the assessee is unable to determine the value of excisable goods or the correct classification of goods – The second requirement is that the proper officer competent to make provisional assessment may direct after making necessary inquiry that duty leviable on such goods shall be assessed provisionally – Such directions the proper officer can issue only by passing a written order and not otherwise – Thirdly, the assessee must execute a bond in the proper form binding the assessee to pay the differential amount of duty as provisionally assessed and as may be finally assessed – However, r.9B also provides for an exception – If the proper officer is satisfied that the self-assessment made by the assessee is not in order, he may direct the assessee to resort to provisional assessment – In any event, for an assessment to be provisional in terms of r.9B, an order is required to be passed. [Para 45]
Central Excise Rules, 1944 – r.173B – Approval of classification list is not an empty formality – Discussed. [Para 40]
As published in the Supreme Court Reports, Supreme Court of India. Headnotes prepared by: Ankit Gyan. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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