Clandestine excise removal before the 11-4-1981 amendment was governed by Rule 9A(5), not Rule 9A(1).

For clandestine removal of unmanufactured tobacco detected before the 11-4-1981 amendment, duty liability was governed by Rule 9A(5) of the Central Excise Rules, 1944, because the term "cleared" in Rule 9A(1), as then framed, did not extend to unauthorised or clandestine removals. The contrary view that duty should be assessed under Rule 9A(1) by reference to the last possible date of removal was rejected. On that basis, the duty demand on the missing tobacco was set aside, while the remaining parts of the appeal were rejected.

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Issues: Whether duty demand on unmanufactured tobacco held to have been clandestinely removed was governed by Rule 9A(5) of the Central Excise Rules, 1944, or by Rule 9A(1).

Analysis: The demand related to tobacco found missing from the warehouse and treated as clandestinely removed before the amendment of 11-4-1981. The earlier interpretation accepted that the expression "cleared" in Rule 9A(1), as it then stood, did not extend to unauthorised or clandestine removals. In such cases, where the removal came to light before the amendment, the applicable provision for determining duty was Rule 9A(5). The contrary contention that the last possible date of removal should be taken for applying Rule 9A(1) was not accepted.

Conclusion: The demand for duty on the 8460 kgs. of tobacco was held to fall under Rule 9A(5) and was set aside; the assessee succeeded on this issue.

Final Conclusion: The dispute was resolved in favour of the assessee only to the extent of the duty demand on the clandestinely removed tobacco, while the remaining parts of the appeal were rejected.

Ratio Decidendi: For clandestine removals detected before the 11-4-1981 amendment, duty liability is governed by Rule 9A(5) and not by Rule 9A(1) as it then stood.

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