2025-VIL-25-SC-CE
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CENTRAL EXCISE Supreme Court Cases

Central Excise - Classification, Non-supply of Test Report, Violation of Natural Justice, Provisional Assessment – Appellant filed classification list under Rule 173B of the Central Excise Rules, 1944, effective from November 3, 1989, classifying various products including Benzene and Toluene under Chapter 29. The classification list was approved by the Assistant Collector on April 26, 1990 - Later, Department drew samples of Benzene and Toluene in October 1990 and based on the test reports, Dept sought to re-classify them under Chapter 27, thereby demanding higher excise duty - Whether the re-classification of Benzene and Toluene from Chapter 29 to Chapter 27, based on the test reports dated January 29, 1991, is sustainable when the test reports were not provided to the appellant – HELD - The test reports were the basis for the re-classification, but the Department only provided the gist of the reports to the appellant, instead of furnishing the full copies. This violated the principles of natural justice and Rule 56(2) of the Central Excise Rules, which mandates that the officer conducting the test must communicate the result to the manufacturer - Without being provided the full test reports, the appellant was deprived of its right to challenge the results and seek a re-test within the stipulated period under Rule 56(4). The belated sampling and test reports, coupled with the non-furnishing of the reports, cast a shadow of doubt on the entire procedure adopted by the department. Therefore, the orders re-classifying the products and levying differential duty demand cannot be sustained – The order of Tribunal is set aside and assessee appeal is allowed - Whether the assessments of Benzene and Toluene were rightly treated as provisional by Tribunal – HELD - For an assessment to be considered provisional, there must be an order under Rule 9B of the Central Excise Rules and the assessee must have executed a bond, which was not done in the present case. Mere endorsement by the Superintendent on the RT-12 returns cannot make the assessments provisional. Further, it is implausible that the assessments which were regular till December 1992 could suddenly become provisional from January 1993 - an order under Rule 9B and payment of duty on a provisional basis are essential requirements to establish provisional assessments – The portion of Tribunal order that the assessment in respect of Benzene and Toluene for the months of January and February, 1993 were provisional, is set aside.
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