Rule 9(2) central excise demand fails where the notice is issued to a non-manufacturer of the excisable goods.

Duty under Rule 9(2) of the Central Excise Rules could not be demanded from a person who was not the manufacturer of the excisable goods concerned. The demand related to polyester staple fibre procured as replenishment material for an export-linked obligation, but the show cause notice wrongly proceeded against the appellant even though the goods were manufactured by another entity. As Rule 9(2) governs removal of excisable goods from the factory of production, the demand on the appellant was legally unsustainable, leaving the department free only to proceed, if permissible in law, against any bond furnished.

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Issues: Whether duty could be demanded from the appellant under Rule 9(2) of the Central Excise Rules in respect of polyester staple fibre procured from another manufacturer as replenishment material for export-linked obligation.

Analysis: The permission granted for procurement of indigenous polyester staple fibre under the relevant exemption scheme was not the basis of the demand. The show cause notice proceeded under Rule 9(2) even though the appellant was not the manufacturer of the raw material. Rule 9(2) governs removal of excisable goods from the factory of production, and the goods in question were manufactured by Reliance Industries Ltd., not by the appellant. In these circumstances, the duty demand on the appellant was legally unsustainable; the department was left at liberty to proceed against any bond furnished, if permissible in law.

Conclusion: The duty demand on the appellant under Rule 9(2) was untenable in law and could not be sustained.

Final Conclusion: The appeal succeeded and the impugned order was set aside with consequential relief.

Ratio Decidendi: Duty under Rule 9(2) of the Central Excise Rules cannot be demanded from a person who is not the manufacturer of the excisable goods in respect of which the demand is raised.

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