Rule 9(2) duty demand must be tested on the correct issue, not shifted to remission after theft.

Duty recovery under Rule 9(2) of the Central Excise Rules, 1944 had to be examined on the basis of non-removal in accordance with the Rules. The Commissioner (Appeals) erred by shifting to Rule 49 and treating theft as an unavoidable accident, even though no remission application had been made. That approach did not address the actual dispute arising from the show cause notice and adjudication order. The appellate order was therefore unsustainable for deciding on an irrelevant issue, and the matter required reconsideration on the correct Rule 9(2) question.

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Issues: Whether the Commissioner (Appeals) was justified in setting aside the demand of duty confirmed under Rule 9(2) of the Central Excise Rules, 1944 by treating the theft of goods as an unavoidable accident under Rule 49 of the Central Excise Rules, 1944 when no remission application had been made.

Analysis: The demand in the show cause notice and the adjudication order was specifically founded on Rule 9(2) of the Central Excise Rules, 1944, which concerns recovery of duty in respect of goods not removed in accordance with the Rules. The Commissioner (Appeals), however, proceeded on an entirely different footing by applying the remission concept under Rule 49 and by holding the theft to be an unavoidable accident. Since no remission application had been made and the issue before the appellate authority was the sustainability of the duty demand under Rule 9(2), the finding on Rule 49 did not answer the dispute actually arising for decision.

Conclusion: The order of the Commissioner (Appeals) was unsustainable for misdirecting itself on an irrelevant issue, and the matter was required to be reconsidered on the correct question under Rule 9(2).

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