procedure for provisional assessment
Provisional Assessment by Department
Application of new provisions
1.1 Provisional assessment is resorted to in the event the duty can not be
determined at the point of clearance of the goods.
- Guidelines and procedure for provisional assessment:
2.1 Wherever an assessee finds that final assessment is not
possible, (in situations mentioned in rule 7 of the Central Excise (No.2)
Rules, 2001 (hereinafter referred to as the said Rules) he will make a
detailed request in writing to the Divisional Deputy/Assistant Commissioner
of Central Excise, indicating:-
2.2 On receipt of the request, the Deputy/Assistant Commissioner of
Central Excise will examine it, if necessary, in consultation with the
concerned Range Officer, to ascertain whether provisional assessment is
necessary at all. If the reasons/ grounds are not sufficient, he may ask
the assessee to appear before him on an appointed day and time, and if
he is satisfied that provisional assessment is not necessary, he may
pass a reasoned order rejecting the same and also ordering the rate of
duty or the value, to be applied by the assessee.
- Specific grounds/reasons, and the documents or information's,
for want of which final assessment cannot be made.
- Period for which provisional assessment is required.
- The rate of duty or the value or both, as the case may be, proposed
to be applied by the assessee, for Provisional Assessment.
- Undertakes to appear before the Assistant/Deputy Commissioner of
Central Excise within 7 days or such date fixed by him, and furnish all
relevant information and documents within the time specified by the
Assistant/Deputy Commissioner of Central Excise in his order, so as to
enable the proper officer to finalise the provisional assessment.
2.3 Where the Deputy/Assistant Commissioner of Central Excise is
satisfied with the genuineness of the assessee’s request he will issue a
specific order directing provisional assessment clearly stating:-
2.4 The assessee is required to mark the E.R.1 (monthly/quarterly
return)and documents covered under Provisional Assessment as
"PROVISIONALLY ASSESSED" vide Order No.......... dated .............." .
There is a declaration in E.R.1 where assessee have to mention the goods
under ‘provisional assessment’.
- The grounds on which Provisional Assessment has been ordered.
- The rate and /or value, as the case may be, at which duty has to be
- The amount of differential duty for which bond is to be executed
covering the period, if any, during which assessee paid duty
provisionally under the deeming provisions, after applying the rate and/
or value specified in (b) above.
- The amount of security or surety as may be fixed by Assistant
Commissioner keeping in view the instructions issued by the Board from
time to time.
2.5 Notwithstanding ‘self-assessment’, all cases of provisional
assessment has to be finalised by the Deputy/Assistant Commissioner of
Central Excise, within a maximum period of 6 months. All the cases where
provisional assessment cannot be finalised within 6 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-finalisation and amount of differential duty for future
clearances, before the expiry of the above-said period. If the
Commissioner is satisfied with the reasons, he may extend the period, 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, the request letter of the assessee should be put
up to the Chief Commissioner in the same manner through Commissioner
with his comments. The time limit of finalising the provisional
assessment shall be applicable even to cases ordered for provisional
assessment prior to 1st July, 2001.
2.6 Finalisation of provisional assessment means finalisation of an
issue/ground and thereafter 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 at the rate of
twenty four percent per annum from the first day of the month succeeding
the month for which such amount is determined, till the date of payment
2.7 In the event the assessee will be in a position to ascertain the
duty himself. He may, pay the duty on his own at the earliest and in
that case he will not have to incur interest on account of time taken by
the Department to finalise assessment and communicate the amount.
2.8 Where any refund becomes due to the assessee, order shall be passed
for such refund, but disbursement shall be subject to further
verification about incidence of such duty. The assessee will be required
to submit proof to the Assistant/deputy Commissioner of Central Excise
that the duty incidence was borne by him (assessee). If the assessee
fails to produce such proof/evidence, the Assistant/deputy Commissioner
of Central Excise will pass an order for depositing the amount in
Consumer Welfare Fund in the prescribed manner. Otherwise, the refund
shall be give along with interest at the rate of fifteen percent per
annum from the first day of the month succeeding the month for which
such refund is determined, till the date of refund.
2.9 Though it is incumbent upon the assessee to ensure that the bond
amount and corresponding securities are sufficient, the Divisional as
well as the Range Officer will also keep 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 to ensure that bonds for proper amount i.e., 3 times of the
estimated differential duty are taken, in case of general bonds and that
these are backed by proper (25%) security/ bank guarantee of the bond
2.11 The format of bond for provisional assessment has been specified in
Notification No. 56/2001-Central Excise (N.T.) dated 3.7.2001
- Initiation of Provisional Assessment by Department
3.1 Rule 7 of the said Rules does not provide for the Department, suo
moto, issuing directions for resorting to provisional assessment.
Therefore, when the Central Excise Officers, during scrutiny or
otherwise, find that self-assessment in not in order the assessee may be
asked for all necessary document, records or other information for issue
of duty demand for differential duty, if any, after conducting inquiry.
Where the assessee fails to provide the records or information and
Department is unable to issue demand, ‘Best Judgement’ method may be
used to raise demand based on collateral evidences. The burden will be
on the assessee to provide information for appropriate re-determination
of duty, if any.
- Application of new provisions
4.1 The provisions of Provisional Assessment relating to interest clause
and statutory time limit are prospective. In other words, these
provisions shall be applicable only to those cases of provisional
assessment, which are ordered on or after 1st July, 2001.