Provisional Assessment is resorted to in the event duty can not be determined at the point of clearance of the goods Introduction, Guidelines and procedure for provisional assessment, Initiation of Provisional Assessment by Department.


Introduction
Guidelines and procedure for provisional assessment
Initiation of Provisional Assessment by Department
Application of new provisions

Part IV
PROVISIONAL ASSESSMENT

  1. Introduction

    1.1 Provisional assessment is resorted to in the event the duty can not be determined at 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 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:-
    1.  Specific grounds/reasons, and the documents or information's, for want of which final assessment cannot be made.
    2. Period for which provisional assessment is required.
    3. The rate of duty or the value or both, as the case may be, proposed to be applied by the assessee, for Provisional Assessment.
    4. 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.

    2.2 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.

    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:-
    1. The grounds on which Provisional Assessment has been ordered.
    2. The rate and /or value, as the case may be, at which duty has to be provisionally paid.
    3. 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.
    4. 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.

    2.4 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’.

    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 thereof.

    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 amount.

    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 (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, 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.
  4. 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.
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