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4. On 16th October, 1980, the Delhi High Court delivered a judgment in the case of J.K. Cotton Spg. Wvg. Mills (8 E.L.T. 837) holding that under Rule 9 & 49 of the Central Excise Rules, 1944 (1944 Rules for short) excise duty is not leviable on the yarn manufactured and cleared for captive consumption in a continuous uninterrupted and integrated process of manufacture.

5. In the light of the said judgment, the appellant filed a Writ Petition bearing No. 1063 of 1981 in the Delhi High Court seeking a declaration that excise duty is not leviable on the yarn manufactured and cleared by them for captive consumption within their factory premises. On Page 2170 8th May, 1981, the Delhi High Court passed an interim order in the said Writ Petition to the effect that till the disposal of the petition no excise duty shall be recovered from the appellant on the yarn cleared for captive consumption, subject to the appellant furnishing a bond for the disputed duty and a bank guarantee for 50% of the disputed duty.

The interim orders shall stand modified as above.
The appeals will stand disposed of accordingly, with no order as to costs.

13. As the liability to pay the excise duty on the yarn cleared for captive consumption was finally upheld by the Apex Court, the Range Superintendent proposed to finalise the provisional assessment made in respect of the yarn cleared for captive consumption during the period from May, 1981 to May, 1984. The appellant objected to the finalisation of the provisional assessment inter alia on the ground that in the absence of any show cause notice issued under Section 11A of the 1944 Act within six months from the date of amendment of Rule 9 and 49 of the 1944 Rules, recovery of excise duty would be barred by limitation.

33. The question, therefore, to be considered is, firstly, whether circumstances for making provisional assessment existed in the present case and secondly, whether a provisional assessment order was made before clearance of the yarn for captive consumption ?

34. With rererence to the first contention, the argument of the appellant is that none of the circumstances for making provisional assessment set out in Rule 9B existed in the present case. Moreover, classification list and the price list were already approved, and therefore, there was no scope for making provisional assessment. There is no merit in this contention because under Rule 9-B(1)(c) of the 1944 Rules, even after the assessee has produced all the necessary documents and furnished full information for the assessment of duty it was open to the assessing officer to make provisional assessment either on a written request made by the assessee or if the proper officer deemed it necessary to make further inquiry. In the present case, admittedly there was a dispute pending before the Delhi High Court regarding the excisability of the yarn cleared for captive consumption. Pending final decision of the Delhi High Court, it was open to the appellant to seek and to the proper officer to allow clearance of yarn for captive consumption on provisional assessment basis. In fact, in the B-13 Bond it is recorded that the appellant had sought provisional assessment. Even if the contention of the appellant that the B-13 Bond was executed at the instance of the excise authorities, is accepted, in view of the fact that a dispute was pending before the Delhi High Court, it was open to the proper officer to insist on clearing the yarn for captive consumption on provisional assessment basis.

35. The next question to be considered is, whether a provisional assessment order was in fact made before clearance of yarn for captive consumption on provisional assessment basis ? It is not in dispute that during the period from May, 1981 to May, 1984 the appellant had cleared the yarn for captive consumption by executing B-13 Bond which is applicable to provisionally assessed goods. It is pertinent to note that the Delhi High Court by its interim order had not directed the appellant to execute B-13 Bond. Apart from B-13 Bond, there are various types of Bonds specified in Appendix I to the 1944 Rules, which could be executed by the appellant. The fact that the appellant claims to have executed the B-13 Bond at the instance of the revenue clearly shows that as per the directions given by the proper officer, the clearances have been effected on provisional assessment basis by executing B-13 Bond.