Automatic excise duty recovery on unauthorised warehouse removal sustained despite absence of prior show-cause notice.

Demand notices for excise duty were challenged on the ground that no prior show-cause notice had been issued before recovery. The Court held that no rule required a prior opportunity before issuing the demand notices, and that Rules 155 and 160 operated automatically where goods were removed from the warehouse without permission. As permission had not been obtained before removal of the tobacco, the duty demanded was recoverable. The challenge to the notices therefore failed, and the demand was sustained.

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Issues: Whether the demand notices of duty were invalid for want of a prior show-cause notice, and whether duty could be recovered when the goods were removed from the warehouse without permission under the Central Excise Rules.

Analysis: The petition challenged the demand notices on the footing that no opportunity had been afforded before their issuance. The authorities justified the demand by relying on the excise rules governing removal of dutiable goods from warehouse without permission. The Court found no rule requiring a prior opportunity before issuing the demand notices. It held that the operation of Rules 155 and 160 was automatic and that, since permission had not been obtained before removal of the tobacco, the duty demanded was payable.

Conclusion: The challenge failed. The demand notices were upheld and the petition was dismissed.

Ratio Decidendi: Where excise rules operate automatically on breach of the warehousing conditions, no prior show-cause notice is before issuing demand notices for recovery of duty arising from unauthorized removal of goods.

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