Finality of withdrawn show cause notice bars a later demand on the same grounds without new material.

An earlier show cause notice, after reply and personal hearing, was withdrawn by the competent authority; that withdrawal was treated as a quasi-judicial adjudication with continuing force unless set aside in appeal. A later notice on the same foundation, covering substantially the same period and adding no new material beyond enhanced quantification, was barred by finality and principles analogous to res judicata. The consequent demand and penalty could not be sustained, and the assessee succeeded because the earlier withdrawal had attained finality.

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Issues: (i) Whether withdrawal of the earlier show cause notice after reply and personal hearing amounted to a valid quasi-judicial adjudication having finality unless set aside in appeal; (ii) Whether the subsequent show cause notice on the same basis and for substantially the same period was barred by finality and principles analogous to res judicata, making the demand unsustainable.

Issue (i): Whether withdrawal of the earlier show cause notice after reply and personal hearing amounted to a valid quasi-judicial adjudication having finality unless set aside in appeal.

Analysis: The earlier notice had been issued, replied to, heard, and then withdrawn by the competent authority. That process was not merely ministerial, but partook of a judicially styled adjudicatory exercise. The withdrawal order therefore had the character of a quasi-judicial decision and remained operative unless challenged and set aside in accordance with law. The availability of an appeal against such an order under the Central Excise Act reinforced its legal finality.

Conclusion: The withdrawal order was valid and had continuing force until set aside, in favour of the assessee.

Issue (ii): Whether the subsequent show cause notice on the same basis and for substantially the same period was barred by finality and principles analogous to res judicata, making the demand unsustainable.

Analysis: The later notice did not bring any new material apart from enhanced quantification. The core allegation remained the same as in the earlier proceeding, which had already culminated in withdrawal. In such circumstances, a second notice on identical grounds could not be sustained merely by altering the period or amount. The settled principle applied was that once an issue has been decided and accepted, a fresh proceeding on the same foundation is barred by finality and analogous res judicata, especially where the earlier determination has not been appealed against. The demand and penalty therefore could not survive.

Conclusion: The subsequent demand notice and confirmation of demand were unsustainable, in favour of the assessee.

Final Conclusion: The Revenue's appeal failed because the earlier withdrawal of the notice had attained finality and the later demand, based on the same foundation, could not be reopened.

Ratio Decidendi: A notice withdrawn after adjudicatory process attains finality unless set aside in appeal, and a subsequent notice on the same grounds without new material is barred by principles analogous to res judicata.

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