Excise adjudication must stay within the show cause notice; demand, interest and penalty fell when authorities relied on an unalleged ground.

An excise adjudication cannot be sustained where the demand is founded on a factual basis not alleged in the show cause notice. The notice alleged collection of additional consideration towards handling charges and related expenses, but the authorities instead proceeded on an unalleged theory that sales were made from a Delhi godown. Because the adjudication travelled beyond the scope of the notice, the demand, interest, and penalty were set aside and the assessee obtained complete relief.

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Issues: Whether the demand, interest, and penalty could be sustained when the authorities proceeded on a basis not covered by the show cause notice.

Analysis: The notice alleged that the assessee had collected Re. 1 per kg. as additional consideration towards handling charges and related expenses, making it part of the assessable value. The adjudicating and appellate authorities, however, proceeded on a different footing by treating the sales as having taken place from a godown at Delhi, a factual basis not alleged in the notice. Since there was no allegation in the notice regarding a Delhi godown or sale from such godown, the orders were founded on a case outside the scope of the notice.

Conclusion: The demand, interest, and penalty could not be sustained because the authorities travelled beyond the allegations contained in the show cause notice.

Final Conclusion: The impugned orders were set aside and the assessee obtained complete relief.

Ratio Decidendi: An adjudication under excise law cannot be sustained if it rests on a factual basis or ground not alleged in the show cause notice.

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