The seal is a grease seal, not an oil seal, its purpose it to prevent grease from going past the front roller bearing when pumped in through the grease fitting on the rear bearing retainer of the transmission. Differential oil never gets anywhere near the seal. When pulling a rear assembly apart it is common to find 2-3 feet of the drive shaft dry and rusted.
the original seal was made of leather and it was important which way the leather flap was oriented during installation to prevent it from folding back over itself.
modern seals are neoprene. Most literature says to face the bevel toward the lubricant. The seals have a bevel on both sides and it is not clear which lubricant they are referring to. I personally believe the seal will do its job regardless of which way it is oriented.
the same seal is used as the inner seal in the axle housings. It is also a grease seal, not an oil seal. Its purpose is to prevent grease from centrifuging down the axle shaft toward the differential and instead force it outboard toward the wheel bearing when grease is pumped in through the grease fittings on the backing plates. It too was made of leather, the modern replacements are made of neoprene and have a bevel on both sides.
I have pulled many rear axle assemblies apart and found the original leather seal with CR (Chicago Rawhide) stamped on them that were totally shot. Oil from the differential never reached the brakes, but grease had centrifuged an inch in diameter a foot or more down the axle shaft.
When Borg Warner overdrive cottage industry modifications were in vogue most of the rear oil seals used at the back end of the unit were not an oil seal, but the same grease seal used on the Model A. These seals will allow oil to get past them and most BW installations will port oil into the banjo. This is why you should check the oil level in the banjo every 400-500 miles. If it is manufacturing oil it does not mean you will become rich, it means that left unattended the BW will starve for oil and self destruct and the differential will drown in oil and likely pass some of it out to the brakes when it gets deep enough.
Tom Endy