Clandestine removal and limitation in central excise: Rule 9(2) could not be invoked, and the demand was time-barred.

Rule 9(2) of the Central Excise Rules applies only to clandestine or surreptitious removal of excisable goods, and the excise authorities bear the burden of proving such removal. On the record, there was no finding in the notice or orders that the goods were clandestinely cleared, and the approved classification list further undermined invocation of Rule 9(2). If any misstatement existed, the proper route was Rule 10 read with Rule 173J, which carried a one-year limitation. Because the show cause notice covered a period beyond that limit, the demand was time-barred and the appeal succeeded.

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Issues: Whether the demand for central excise duty was barred by limitation and whether Rule 9(2) of the Central Excise Rules could be invoked in the absence of clandestine removal.

Analysis: Rule 9(2) applies only where excisable goods are removed surreptitiously or clandestinely, and the burden to establish such removal lies on the excise authorities. On the record, there was no finding in the notice or the orders that the goods had been cleared clandestinely. The classification list had been approved by the excise officer, and even if there was any misstatement, the proper provision would have been Rule 10 read with Rule 173J, which carried a one-year limitation. The show cause notice covered a period for which the demand was raised after expiry of that period.

Conclusion: The demand was time-barred and Rule 9(2) was not attracted; the appeal succeeded.

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