Retrospective excise duty enhancement cannot be applied to goods already adjudicated; recovery must follow the fixed liability.

Excise duty liability for goods already manufactured and removed is fixed by the applicable assessment rule and by the adjudicated determination of duty and penalty. A later enhancement of duty cannot be retrospectively applied to those very goods for recovery purposes, because recovery must conform to the liability already fixed. The demand raised at the enhanced rate was therefore unsustainable and was quashed. The Department, however, remained free to issue a fresh demand only for any balance still due under the adjudicated order.

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Issues: Whether excise duty on goods manufactured and removed prior to enhancement of duty could be demanded at the enhanced rate on the date of adjudication, and whether the recovery demand based on such enhanced rate was sustainable.

Analysis: Excise duty under section 3 is attracted by production or manufacture of excisable goods, while section 33 provides for adjudication of liability in respect of duty evasion. Rule 9-A fixes the rate and tariff valuation applicable with reference to the date on which duty is assessed. Once the liability for the goods removed without payment of duty had been adjudicated and the amount of duty and penalty had been determined, the subsequent enhancement of duty could not be applied to those very goods. The demand for recovery based on the later enhanced rate therefore exceeded the liability already fixed by adjudication. At the same time, the Department was not precluded from issuing a fresh demand for any balance due under the adjudicated order.

Conclusion: The demand based on the enhanced excise duty was unsustainable and was quashed; the petitioner succeeded, subject to the Department's liberty to raise a fresh demand only for any balance remaining under the adjudicated liability.

Ratio Decidendi: Where excise duty liability has been finally adjudicated for goods already removed, a subsequent enhancement of duty cannot be retrospectively applied to those goods for recovery purposes; recovery must conform to the adjudicated liability and the rate fixed under the applicable assessment rule.

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