Clandestine removal under excise law: notices fail where the department already knew of the removals and jurisdiction was absent.

Rule 9(2) of the Central Excise Rules applies only to clandestine or unauthorised removal of excisable goods in contravention of Rule 9(1), so notices issued on facts showing prior departmental knowledge and earlier proceedings could not be sustained. Where the department had already examined the removals and dropped the earlier matter on the view that the goods were not excisable, later notices treating the same removals as clandestine were without jurisdiction and liable to be quashed. A writ petition challenging such jurisdictional defect was not premature, because availability of departmental remedies does not bar Article 226 relief where proceedings are initiated without authority on admitted facts.

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Issues: (i) Whether show-cause notices issued under Rule 9(2) of the Central Excise Rules were without jurisdiction on the footing that the goods had not been removed clandestinely. (ii) Whether the writ petition was premature in view of the availability of departmental remedies.

Issue (i): Whether show-cause notices issued under Rule 9(2) of the Central Excise Rules were without jurisdiction on the footing that the goods had not been removed clandestinely.

Analysis: Rule 9(1) prohibits removal of excisable goods without payment of duty, and Rule 9(2) is attracted only where removal is in contravention of Rule 9(1). The decisive element is clandestine or unauthorised removal without assessment or without the knowledge or consent of the department. Where the department had already initiated proceedings, examined the matter, and dropped the earlier case on the view that the goods were not excisable, later attempts to treat the same removals as clandestine could not stand. On the facts, removal after departmental knowledge and prior proceedings could not be characterised as clandestine removal so as to invoke Rule 9(2).

Conclusion: The notices under Rule 9(2) were without jurisdiction and were liable to be quashed.

Issue (ii): Whether the writ petition was premature in view of the availability of departmental remedies.

Analysis: Where proceedings are initiated without jurisdiction on admitted facts, the existence of a departmental forum does not bar recourse to Article 226 of the Constitution of India. A challenge to jurisdictional competence can therefore be entertained directly in writ proceedings.

Conclusion: The writ petition was maintainable and not premature.

Final Conclusion: The impugned show-cause notices could not be sustained, and the assessee obtained complete relief by way of quashing of the notices.

Ratio Decidendi: Rule 9(2) of the Central Excise Rules applies only to clandestine removal in contravention of Rule 9(1); where the department has knowledge of the removal and the action is not clandestine, proceedings under that provision are without jurisdiction and may be challenged in writ jurisdiction.

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