Special duty under simplified excise procedure prevails over limitation and general exemption claims for pre-existing stock.

Rule 173RG was treated as a self-contained levy for stock held on the relevant date under the simplified excise procedure, so the duty liability arose directly under that rule and was not displaced by Rules 9, 9A, 10 or 10A. On that basis, limitation arguments tied to Rule 10 and the need for a formal show cause notice were rejected. Notification No. 71/78-C.E. was also held not to override the specific duty liability imposed by Rule 173RG, because a general exemption under Rule 8 could not defeat the special obligation created for pre-simplified-procedure stock.

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Issues: (i) Whether the duty on pre-simplified-procedure stock was governed exclusively by Rule 173RG of the Central Excise Rules, 1944 so that Rule 10 and limitation for issue of show cause notice were inapplicable; (ii) Whether Notification No. 71/78-C.E. could exempt uncleared pre-simplified-procedure stock from duty under Rule 173RG.

Issue (i): Whether the duty on pre-simplified-procedure stock was governed exclusively by Rule 173RG of the Central Excise Rules, 1944 so that Rule 10 and limitation for issue of show cause notice were inapplicable.

Analysis: Rule 173RG required payment of duty on stock lying in the factory on the relevant date within the stipulated period and at the prescribed rate. The liability arose directly from that rule and not from Rules 9, 9A, 10 or 10A. Since the assessee had opted for the simplified procedure with knowledge of this condition, the Department was not required to issue a formal demand or show cause notice to create the liability. The later demand was only a reminder for payment of the outstanding dues and the assessee's request for piecemeal payment was treated as an administrative indulgence, not as a waiver of the statutory liability.

Conclusion: Rule 173RG was held to be self-contained for pre-simplified-procedure stock, and the plea of limitation under Rule 10 failed.

Issue (ii): Whether Notification No. 71/78-C.E. could exempt uncleared pre-simplified-procedure stock from duty under Rule 173RG.

Analysis: The exemption under Notification No. 71/78-C.E. was held not to override the specific duty liability expressly created by Rule 173RG. The rule imposed a distinct obligation on pre-simplified-procedure stock, and that liability could not be displaced by the general exemption notification issued under Rule 8. The argument based on a small alleged calculation difference was also not entertained as it was a new factual contention not properly raised earlier.

Conclusion: The exemption notification did not absolve the assessee from duty on the pre-simplified-procedure stock.

Final Conclusion: The appeal failed in full because the statutory duty under the simplified-procedure rule prevailed over the limitation and exemption objections.

Ratio Decidendi: Where a special rule expressly creates duty liability on specified stock and makes no provision for a formal demand or limitation-triggering notice, that liability cannot be defeated by invoking general limitation rules or a later general exemption notification.

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