Duty demand and penalty need proof of clandestine removal; filed price lists alone did not justify excise recovery.

Duty demand could not be sustained under rule 10, rule 9(2) or section 11A for the relevant period because clearances were made on filed price lists and the record did not show clandestine removal or suppression of facts; section 11A was also unavailable for that period. Penalty under rule 173Q was likewise not attracted, as the mere erroneous approval of a price list did not establish penal liability without proof of an attempt to clear goods without payment of duty. The legal principle stated is that recovery and penalty provisions require their statutory basis and supporting facts, and cannot be invoked on the facts described where clandestine conduct is not established.

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Issues: (i) Whether the demand for duty could be sustained under rule 10, rule 9(2) and section 11A for the relevant period. (ii) Whether penalty under rule 173Q was attracted on the facts of the case.

Issue (i): Whether the demand for duty could be sustained under rule 10, rule 9(2) and section 11A for the relevant period.

Analysis: The clearances were made on the basis of filed price lists and the record did not support any case of clandestine removal or suppression of facts. Rule 10 could not be applied in the circumstances. Rule 9(2) was also inapplicable because the matter did not involve clandestine clearances. Section 11A was ruled out for the relevant period as it was not then in force.

Conclusion: The duty demand for the period in question could not be sustained under rule 10, rule 9(2) or section 11A, and the order was legally untenable to that extent.

Issue (ii): Whether penalty under rule 173Q was attracted on the facts of the case.

Analysis: The filing of price lists and the absence of any proved attempt to clear goods without payment of duty negatived the basis for invoking rule 173Q. Incorrect approval of a price list could not by itself establish penal liability for clandestine clearance.

Conclusion: Penalty under rule 173Q was not sustainable and was set aside.

Final Conclusion: The demand and penalty were held unsustainable for the relevant period, with any further action confined to the procedure applicable to clearances covered by the bond.

Ratio Decidendi: A duty demand cannot be sustained under inapplicable recovery provisions where clearances were made on filed price lists without clandestine removal or suppression, and penal action under the excise rules requires more than an erroneous price-list approval.

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