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Issues: Whether demands for excise duty could be sustained under Rule 9(2) of the Central Excise Rules, 1944 in a case where the goods had already been cleared under a bona fide belief that they were not excisable and no prior procedure fixing the time, place and manner of payment under Rule 9(1) had been prescribed.
Analysis: Rule 9(2) was held to operate only where there is removal of goods in contravention of Rule 9(1). The scheme of Rule 9(1) read with Rules 47, 52 and 52(A) contemplates a pre-existing excise levy machinery, including specification of the time, place and manner of payment and the procedure for clearance. Where the departmental authorities had not earlier brought the goods within the levy nor prescribed the required procedure, and the goods were cleared under a bona fide impression that they were not excisable, mere subsequent non-payment of duty could not amount to a contravention attracting Rule 9(2). The demands, therefore, could not be justified by invoking that rule.
Conclusion: The demands were not sustainable under Rule 9(2) and were quashed in favour of the petitioners.
Final Conclusion: The writ petitions succeeded because the excise demands lacked a valid legal basis under the rule relied upon, and the impugned demands stood annulled.
Ratio Decidendi: Rule 9(2) of the Central Excise Rules, 1944 applies only to removal of goods in breach of a prior, prescribed excise-clearance procedure under Rule 9(1); it cannot be invoked for the first-time levy of duty after bona fide clearance without such prescribed procedure.
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