1. On the matter being called, Shri K. Narayanan, the learned Advocate for the appellants, submits that this case is squarely covered by ratio of the decision of Order No. 90/85-D, dated 18-1-1985 in Appeal No.E/639/80-D in the case of R. Subbiah. The basic facts in this case are that there was a shortage of 8460 kgs. of tobacco from the warehouse.
The shortage and substitution was noticed on 18-2-1976. The lower authorities had held that there had been unauthorised removal of tobacco as well as substitution. As a result duty has been demanded on 8460 kgs. of tobacco which had been removed and illicitly disposed of by the appellant. A penalty of Rs. 750/- has been imposed on the appellant in this regard. A quantity of 7829.5 kgs. substituted for the tobacco illicitly removed, has been confiscated subject to fine of Rs. 500/- in lieu of confiscation and also a direction that this should be accounted for.
2. Shri Narayanan stated that the fine of Rs. 500/- on the substituted tobacco has already been paid and it has also been duly accounted for.
No question has been raised in the appeal in regard to this quantity of tobacco. The penalty of Rs. 750/- has also been paid and no relief was sought in regard to this penalty. However, as regards the payment of duty on 8460 kgs. of tobacco held to have been illicitly removed, the learned Counsel submitted that the clandestine removal was not being disputed, but this argument was based on the fact that this quantity of tobacco was held as having been clandestinely removed. Since this has been observed on 18-2-1976, it must have taken place prior to 11-4-1981 when Sub-rule (1) of Rule 9A of the Central Excise Rules had been amended to cover tobacco Removed' and not 'cleared' as the rule read earlier. He, therefore, submitted that so far as the demand for duty on this quantity of tobacco was concerned, this case was covered by the ratio of an earlier order dated 18-1-1985 and he was entitled to relief by setting aside the demand for duty on this quantity of tobacco.
3. Replying for the respondent Collector, the learned Representative of the department Smt. Dolly Saxena referred to our earlier order and particularly drew our attention to para 4 of that order i.e. "neither side is able to say as to why Rule 9A(5) should not apply to the cases of such illicit removals'. She submitted that Sub-rule (5) should be held as not applicable to the case. It was her submission that in such a situation Sub-rule (1) was more appropriate. Even though the exact date of removal might not be known, it must have been on some date prior to 18-2-1976, or that very date, and therefore, the last of the possible dates, namely 18-2-1976, should have been taken as the date of removal. In that view, the rate of duty applicable would have been the rate as in force on 18-2-1976.
4. It was pointed out by the Bench that prior to the amendment of 11-4-1981, Sub-rule (1) referred to goods "cleared' and in the Tribunal's previous order dated 18-1-1985 the position under the prevailing law had been examined. The Tribunal had taken note of the Law Ministry's advice and the Board's instructions that the term "cleared' which was originally in Sub-rule (1) referred to Clearance after payment of appropriate duty of excise, and would not cover goods unauthorisedly or clandestinely removed. It was in the light of this interpretation that the Tribunal had held in the previous case that in a case of clandestine removal which came to light prior to 11-4-1981 the rate of duty would be covered by the provisions of Sub-rule (5) of Rule 9A. On being invited to show why the ratio of that decision would not apply in the present case, Smt. Saxena again submitted that where the date of removal was known or could be presumed that should be taken as the relevant date and provisions of Sub-rule (1) of Rule 9A should apply.
5. We have carefully considered the arguments advanced on both sides.
We find that Shri Narayanan is right in saying that the case relating to demand of duty in the present proceedings is covered by the ratio of the previous decision. As regards the arguments advanced by Smt.
Saxena, these are of a general nature and do not support the Department's case with reference to the provisions of Rule 9A at the relevant time. In the circumstances, we follow our previous decision and hold that the demand for duty on 8460 kgs. of tobacco in this case which was held as clandestinely removed would be covered by Sub-rule (5) of Rule 9A. Since the duty has not so far been paid and there is now no duty on unmanufactured tobacco, we set aside the demand for duty in respect of the above mentioned 8460 kgs. of tobacco. The appeal is allowed to this extent only and in other respects we reject the appeal and confirm the order of the Appellate Collector.