Rule 173H cannot be read to impose a six-month removal limit for duty-paid goods, so the excise demand and penalty failed.

Rule 173H of the Central Excise Rules, 1944 allowed duty-paid goods to be retained in, or brought into, a factory or warehouse subject to specified conditions, and permitted removal without duty where those conditions were met. The rule did not prescribe any six-month limit for removal of such goods, so a demand based on an assumed time restriction could not be sustained. Penalty founded on the same premise also failed. The impugned order was set aside and the appeal succeeded.

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Issues: Whether Rule 173H of the Central Excise Rules, 1944 prescribed a six-month limit for removal of duty-paid goods brought into the factory, and whether duty demand and penalty could be sustained on the basis of such a limit.

Analysis: Rule 173H permitted retention in, or bringing into, a factory or warehouse of duty-paid goods subject to specified conditions, and also allowed removal without payment of duty if the goods were retained or brought in accordance with the rule. The text of the rule did not contain any six-month period for removal of such goods. The demand had been confirmed on the premise that the goods were cleared after six months, but that condition was not found in the rule itself.

Conclusion: The alleged six-month restriction was not supported by Rule 173H, and the duty demand and penalty based on that premise could not stand.

Final Conclusion: The impugned order was set aside and the appeal succeeded.

Ratio Decidendi: A duty demand cannot be sustained by reading into a statutory rule a time limit that the rule does not expressly prescribe.

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