S. K. MUKHERJEE, J.

( 1 ) THE petitioner in this case has challenged a notice dated 12th January, 1973, issued by the Assistant Collector, Central Excise, Calcutta IV Division. By the said notice the petitioner has been asked to show cause as to why a penalty should not be imposed on it under Rules 9 (2), 56a (4) and 173q of the Central Excise Rules and as to why Central excise duty should not be demanded under Rules 9 (2) and 173q of the Central Excise Rules. To appreciate the alleged violation of the aforesaid rules committed by the petitioner, it is necessary to state certain facts leading to the issuance of the aforesaid impugned show cause notice. The petitioner manufactures cotton fabrics from cotton yarn. The said yarn is obtained from the sources (a) from open market and (b) from yarn manufactured in the petitioner's own factory. So far as the yarn obtained from open market is concerned, the petitioner was permitted to avail of the special procedure under Rule 56a of the Central Excise Rules. The petitioner had been maintaining subsisting the necessary registers and other books and forms in terms of the said Rule 56a and making adjustments by way of proforma credit. During the period from June, 1968, to August, 1972, the petitioner purchased cotton yarn from the market, manufactured cotton fabrics from purchased cotton yarn as also from what was produced in the petitioner's own factory. In the personal ledger account the accumulated credit on account of purchased cotton yarn from outside market had been adjusted against Central excise duty payable on cotton yarn manufactured and utilised for weaving by the petitioner. The said adjustments had been made by the petitioner within the knowledge of the excise authorities, who made assessment and allowed the petitioner to clear the finished products from the said factory.

( 2 ) MR. Bhaskar Prased Gupta appearing on behalf of the petitioner in support of the rule has contended that Rule 9, Sub-rule (2), of the Central Excise Rules is attracted, when there is a violation of Rule 9. Sub-rule (1), of the said Rules. To constitute again a violation of Rule 9, Sub-rule (1), there must be clandestine removal of excisable goods by the assessee concerned with intention to evade payment of excise duty. Where goods have been removed within the knowledge of excise authorities and with their consent, it cannot be said that the aforesaid element is present. In the instant case, Mr. Gupta has contended that the facts and materials show that removal of the goods was made with the knowledge and approval of excise authorities and R. T. 12 forms had been duly submitted. Mr. Gupta, in this connection, has pointed out that the R. T. 12 forms contain a part known as "assessment memorandum". If there was any short payment of duty by the petitioner, the memorandum empowered the authorities to demand the duty short paid but it is not the case of the respondents that the memorandum in this case really indicated any such short payment by the petitioner. In fact, in the impugned show cause notice also, it has been admitted that R. T. 12 forms had been submitted. Moreover, there is no allegation in the said show cause notice that goods were clandestinely removed. In support of his above contention, Mr. Gupta referred to the decision of the Supreme Court in the case of N. B. Sanjana v. Elphinstone Spinning and Weaving Mills, a decision of the Bombay High Court in the case of Acme Metal Industries Private Ltd. v. S. S. Pathak, The Inspector, C. E. reported in 1980 E. L. T. 156, a decision of the Madras High Court in the case of Seshasayee Paper Board Ltd. v. Assistant Collector, C. E. , reported in 1979 E. L. T. 238 and one of the Calcutta High Court in the case of Union Carbide Company Ltd. v. Assistant Collector of Central Excise, reported in 1978 E. L. T. 180. In the last mentioned decision, it was laid down that even in a case where goods were removed without payment of duty but within the knowledge

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