Duty on actual removal date governs excise valuation; excess duty refundable and moderated penalty sustained.

Where excisable goods are removed without payment of duty and the date of actual removal can be ascertained from the records, duty is to be determined under Rule 9A(1)(ii) of the Central Excise Rules, 1944, not Rule 9A(5). The words "cleared" and "removed" were treated as synonymous in the scheme of the excise law, so the applicable rate is the one in force on the date of removal, with any excess duty paid refundable to the assessee. The penalty, having already been moderated, was not further interfered with because the non-payment came to light only on audit and the delay in disclosure was not treated as sufficient mitigation.

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Issues: (i) Whether, for goods manufactured and removed without payment of duty, the applicable rate of duty was to be determined under Rule 9A(1)(ii) of the Central Excise Rules, 1944 or under Rule 9A(5); (ii) Whether the penalty imposed by the Board called for interference.

Issue (i): Whether, for goods manufactured and removed without payment of duty, the applicable rate of duty was to be determined under Rule 9A(1)(ii) of the Central Excise Rules, 1944 or under Rule 9A(5).

Analysis: The relevant question turned on the meaning of the expression used in Rule 9A as it stood before the 1981 amendment, when the word 'cleared' was substituted by 'removed'. The reasoning accepted that the words 'cleared' and 'removed' were used synonymously in the scheme of the excise law and that Rule 9A(1)(ii) governed cases where the dates of actual removal from the factory were ascertainable, even if duty had not been paid at the time of removal. The authorities cited supported the view that Rule 9A(5) was not meant to displace Rule 9A(1)(ii) where the date of removal could be established from records.

Conclusion: Rule 9A(1)(ii) applied, not Rule 9A(5); the duty was chargeable by reference to the rate in force on the date of actual removal, and excess duty, if any, was refundable to the assessee.

Issue (ii): Whether the penalty imposed by the Board called for interference.

Analysis: The record showed that the goods had been cleared without payment of duty and the default came to light only on audit. The delay in disclosure and payment was not treated as sufficient to warrant further reduction of the penalty already moderated by the Board.

Conclusion: The penalty order was upheld and no further interference was made in favour of the assessee.

Final Conclusion: The duty demand was confined to the amount chargeable under Rule 9A(1)(ii), with refund of any excess duty paid, while the reduced penalty was maintained in all other respects.

Ratio Decidendi: Where the date of actual removal of excisable goods from the factory can be ascertained, duty is to be determined under Rule 9A(1)(ii) and not under Rule 9A(5), even if the goods were removed without payment of duty.

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