Exemption notification recovery demands a specific show cause notice and cannot be denied without evidence of disqualifying Modvat credit availment.

Recovery of duty foregone under Notification No. 203/92-Cus. requires a show cause notice to set out specific factual grounds and a valid basis for invoking the extended limitation period under Section 28(1) of the Customs Act, 1962; a vague, routine notice does not satisfy that standard and cannot support extended limitation. The exemption benefit also cannot be denied on alleged Modvat credit availment where export shipping bills recorded non-availment, those declarations were attested by the Central Excise Superintendent, and the department had been informed of the position. On that material, the duty demand and adverse findings were unsustainable.

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Issues: (i) whether the show cause notice issued for recovery of duty foregone under Notification No. 203/92-Cus. disclosed specific grounds and furnished a valid basis for invoking the extended period of limitation under Section 28(1) of the Customs Act, 1962; (ii) whether the appellant was disentitled to the benefit of the notification on the allegation that Modvat credit had been availed of in the manufacture of the exported goods.

Issue (i): whether the show cause notice issued for recovery of duty foregone under Notification No. 203/92-Cus. disclosed specific grounds and furnished a valid basis for invoking the extended period of limitation under Section 28(1) of the Customs Act, 1962

Analysis: The notice contained no material supporting the allegation of availment of Modvat credit and was couched in general, routine terms. The requirement of clear and specific reasons in a notice seeking recovery of duty foregone, and the need to show sufficient material for invoking the extended limitation period, were not satisfied.

Conclusion: The notice could not sustain the invocation of the extended period of limitation and was invalid on that ground.

Issue (ii): whether the appellant was disentitled to the benefit of the notification on the allegation that Modvat credit had been availed of in the manufacture of the exported goods

Analysis: The export shipping bills contained declarations that Modvat facility had not been availed of, and those declarations were attested by the Central Excise Superintendent. The record before the Commissioner also showed that the department had been informed of these facts. On that material, the allegation that no evidence supported non-availment of Modvat credit could not be accepted.

Conclusion: The appellant was entitled to the benefit of the notification and was not disqualified on the alleged ground of Modvat credit availment.

Final Conclusion: The duty demand and the adverse findings were unsustainable, and the impugned order was set aside in full.

Ratio Decidendi: A demand for recovery of duty foregone under an exemption notification cannot be sustained on a vague notice lacking specific factual basis, and the benefit of the notification cannot be denied where the record supports the asserted non-availment of the disqualifying credit facility.

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