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Issues: Whether a licensed manufacturer of package tea could be charged to excise duty and penalty on loose tea sold outside the licensed premises in the absence of evidence that such tea was manufactured into package tea within the licensed premises.
Analysis: Rules 9 and 50 of the Central Excise Rules regulate removal of manufactured tea from the licensed premises without payment of duty and the removal of loose tea only under the prescribed permit. They do not impose a further obligation on the licensee to bring every purchase of loose tea into the licensed premises. The mere possibility of evasion could not justify reading into the rules a restriction that was not expressed. In the absence of material showing that the disputed quantity of tea had in fact been converted into package tea, the assumption made by the department could not sustain the levy.
Conclusion: The duty and penalty were unsustainable and the assessee succeeded.
Final Conclusion: The assessment order imposing excise duty and penalty was quashed and the petition was allowed.
Ratio Decidendi: A fiscal liability cannot be imposed by inference or administrative suspicion where the governing rules do not expressly create the alleged restriction and there is no evidence that the goods were manufactured into the dutiable form.
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