In many cases seals have the "double lip" incorporated in the design for sealing on a rotating/sliding shaft or diameter. Look closely at the cross section of the seal and only one lip seals against fluid leaking out of the cavity (in this case, oil out of the differential). This lip would be the larger or the more prominent lip of the seal and should be pointed toward the fluid to be sealed. Depending on the application, this lip may have a small spring wrapped around the outer diameter of the lip to give tension to the seal lip. The other lip points in the opposite direction and is there to keep any foreign debris (dirt, water, etc.) from entering the area being sealed. If their is only one lip seal then it should be installed pointing toward the fluid. Hope this helps.