Double duty barred on goods already taxed, but unauthorised removal without prior permission can still attract strict penalty.

Where semi-finished goods are moved to another factory for completion and duty is paid when the finished goods are cleared, a fresh duty demand on the same goods is not sustainable because it would amount to double levy; any separately established short-payment must be pursued independently. However, removal of goods before prior permission under Rule 56B remains a breach of the statutory removal condition, and such contravention can attract penalty under Rule 173Q on a strict liability basis without proof of mens rea where the statute does not require it. The document therefore distinguishes between an unsustainable duplicate duty demand and a valid penalty for unauthorised removal.

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Issues: (i) whether the demand of duty for the clearances made between 5 March 1986 and 13 March 1986 was sustainable when the goods were later cleared on payment of duty at the receiving factory, and (ii) whether penalty was exigible for removal of goods without prior permission under Rule 56B.

Issue (i): whether the demand of duty for the clearances made between 5 March 1986 and 13 March 1986 was sustainable when the goods were later cleared on payment of duty at the receiving factory.

Analysis: The duty demand rested on the premise that the goods were removed from the Dhadka factory without payment of duty. The record showed, however, that the goods were semi-finished Ultramarine Blue moved to the Behala factory for completion of packing and that duty had been paid when the finished goods were cleared from that factory. On these facts, double levy on the same goods was not justified. Any short-payment, if separately established, was a matter for separate recovery and could not sustain the impugned demand for the same goods.

Conclusion: The duty demand was not sustainable and was set aside.

Issue (ii): whether penalty was exigible for removal of goods without prior permission under Rule 56B.

Analysis: Permission under Rule 56B was granted only on 27 March 1986 and could not operate retrospectively to cover removals made earlier between 5 March 1986 and 13 March 1986. The removals were therefore in contravention of the rule. In the absence of any statutory requirement to prove mens rea, the breach amounted to a strict statutory default and was sufficient to attract penalty. The conduct was not treated as a mere technical lapse.

Conclusion: The penalty under Rule 173Q was rightly imposed and was confirmed.

Final Conclusion: The demand of duty was annulled, but the penalty was sustained, so the appeal succeeded only to that extent.

Ratio Decidendi: Where duty has already been paid on the finished goods, a fresh demand on the same goods cannot be sustained; but breach of a statutory removal condition attracting a strict liability penalty does not require proof of mens rea unless the statute so provides.

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