CHAPTER 3

ASSESSMENT, CLASSIFICATION, VALUATION, PROVISIONAL ASSESSMENT,
MANNER OF DUTY PAYMENT, ACCOUNT CURRENT, SCRUTINY

Part IV

PROVISIONAL ASSESSMENT
I. Introduction

1.1 Provisional assessment is resorted to in the event the duty can not be determinedat the point of clearance of the goods.

2. Guidelines and procedure for provisional assessment:

2.1 Wherever an assessee finds that final assessment is not possible, (in situationsmentioned in rule 7 of the Central Excise (No.2) Rules, 2001 (hereinafter referred to as thesaid Rules) he will make a detailed request in writing to the Divisional Deputy/AssistantCommissioner of Central Excise, indicating:-

(a) Specific grounds/reasons, and the documents or informations, for want ofwhich final assessment cannot be made.

(b) Period for which provisional assessment is required.

(c) The rate of duty or the value or both, as the case may be, proposed to beapplied by the assessee, for Provisional Assessment.

(d) Undertakes to appear before the Assistant/Deputy Commissioner of CentralExcise within 7 days or such date fixed by him, and furnish all relevantinformation and documents within the time specified by the Assistant/DeputyCommissioner of Central Excise in his order, so as to enable the proper officer tofinalise the provisional assessment.

2.2 On receipt of the request, the Deputy/Assistant Commissioner of Central Excisewill examine it, if necessary, in consultation with the concerned Range Officer, toascertain whether provisional assessment is necessary at all. If the reasons/ grounds arenot sufficient, he may ask the assessee to appear before him on an appointed day andtime, and if he is satisfied that provisional assessment is not necessary, he may pass areasoned order rejecting the same and also ordering the rate of duty or the value, to beapplied by the assessee.

2.3 Where the Deputy/Assistant Commissioner of Central Excise is satisfied with thegenuineness of the assessee’s request he will issue a specific order directing provisionalassessment clearly stating:-

(a) The grounds on which Provisional Assessment has been ordered.

(b) The rate and /or value, as the case may be, at which duty has to beprovisionally paid.

(c) The amount of differential duty for which bond is to be executed covering theperiod, if any, during which assessee paid duty provisionally under thedeeming provisions, after applying the rate and/ or value specified in (b)above.

(d) The amount of security or surety as may be fixed by Assistant Commissionerkeeping in view the instructions issued by the Board from time to time.

2.4 The assessee is required to mark the E.R.1 (monthly/quarterly return)anddocuments covered under Provisional Assessment as "PROVISIONALLY ASSESSED" videOrder No.......... dated .............." . There is a declaration in E.R.1 where assessee have tomention the goods under ‘provisional assessment’.

2.5 Notwithstanding ‘self-assessment’, all cases of provisional assessment has to befinalised by the Deputy/Assistant Commissioner of Central Excise, within a maximumperiod of 6 months. All the cases where provisional assessment cannot be finalised within6 months must be submitted to Commissioner with the request letter of the assessee(through Deputy/Assistant Commissioner of Central Excise) indicating the reasons for non-finalisationand amount of differential duty for future clearances, before the expiry of theabove-said period. If the Commissioner is satisfied with the reasons, he may extend theperiod, or otherwise direct the method to be adopted for finalisation of the assessment.For extending the period beyond one year from the date of provisional assessment, therequest letter of the assessee should be put up to the Chief Commissioner in the samemanner through Commissioner with his comments. The time limit of finalising theprovisional assessment shall be applicable even to cases ordered for provisionalassessment prior to 1 st July, 2001.

2.6 Finalisation of provisional assessment means finalisation of an issue/ground andthereafter finalisation of each E.R.1s. The amount will be communicated to the assessee at the earliest. The amount of each differential duty shall be paid along with interest atthe rate of twenty four percent per annum from the first day of the month succeedingthe month for which such amount is determined, till the date of payment thereof.

2.7 In the event the assessee will be in a position to ascertain the duty himself. Hemay, pay the duty on his own at the earliest and in that case he will not have to incurinterest on account of time taken by the Department to finalise assessment andcommunicate the amount.

2.8 Where any refund becomes due to the assessee, order shall be passed for suchrefund, but disbursement shall be subject to further verification about incidence of suchduty. The assessee will be required to submit proof to the Assistant/deputy Commissionerof Central Excise that the duty incidence was borne by him (assessee). If the assesseefails to produce such proof/evidence, the Assistant/deputy Commissioner of CentralExcise will pass an order for depositing the amount in Consumer Welfare Fund in theprescribed manner. Otherwise, the refund shall be give along with interest at the rate offifteen percent per annum from the first day of the month succeeding the month forwhich such refund is determined, till the date of refund.

2.9 Though it is incumbent upon the assessee to ensure that the bond amount andcorresponding securities are sufficient, the Divisional as well as the Range Officer will alsokeep a strict vigil on such cases with the help of Provisional Assessment Register .

2.10 The Assistant/deputy Commissioner of Central Excise will be held responsible toensure that bonds for proper amount i.e., 3 times of the estimated differential duty aretaken, in case of general bonds and that these are backed by proper (25%) security/bank guarantee of the bond amount.

2.11 The format of bond for provisional assessment has been specified in Ntf. No. 56/2001-CE(N.T.), dt. 3.7.2001 (Annexure-7).

3. Initiation of Provisional Assessment by Department

3.1 Rule 7 of the said Rules does not provide for the Department, suo moto, issuingdirections for resorting to provisional assessment. Therefore, when the Central ExciseOfficers, during scrutiny or otherwise, find that self-assessment in not in order the assesseemay be asked for all necessary document, records or other information for issue of dutydemand for differential duty, if any, after conducting inquiry. Where the assessee fails toprovide the records or information and Department is unable to issue demand, ‘BestJudgement’ method may be used to raise demand based on collateral evidences. Theburden will be on the assessee to provide information for appropriate re-determination ofduty, if any.

4. Application of new provisions

4.1 The provisions of Provisional Assessment relating to interest clause and statutorytime limit are prospective. In other words, these provisions shall be applicable only tothose cases of provisional assessment, which are ordered on or after 1 st July, 2001.

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