Assessable value under excise cannot be expanded on a theory not pleaded in the show cause notice.

Transportation and unloading charges recovered from buyers were not includible in assessable value where the contracts showed an ex-works price separately from such charges and the factory-gate price remained the sole consideration. The Revenue could not sustain the excise demand on a new theory that sales were made at the buyers' premises, because that factual basis was not alleged in the show cause notice and could not be introduced at the appellate stage. On the pleaded facts, the excess recovery did not justify addition to value, so the demand and penalty did not survive.

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Issues: Whether transportation and unloading charges collected from buyers in excess of actual expenses were includible in the assessable value under the Central Excise valuation scheme, and whether the Revenue could rely on a theory of sale at the buyers' premises when such case was not alleged in the show cause notice.

Analysis: The demand was founded only on the allegation that the assessee had recovered transportation charges beyond actual expenditure and that the excess should form part of the assessable value. The notice proceeded on the footing that the sales were at the factory gate, and there was no allegation that the price charged at the factory gate was not the sole consideration or that it was a depressed price warranting application of Rule 5 of the Central Excise (Valuation) Rules, 1975. The contracts also showed ex-works price separately from transportation charges, which supported the assessee's stand. A new basis, such as sale at the buyers' premises, could not be introduced at the appellate stage when it was absent from the notice.

Conclusion: The transportation and unloading charges were not liable to be added to the assessable value on the facts pleaded and proved, and the Revenue's challenge failed.

Final Conclusion: The excise demand and penalty did not survive, and the Revenue's appeal was dismissed.

Ratio Decidendi: An excise demand cannot be sustained on a factual foundation not alleged in the show cause notice, and excess recovery of transportation charges is not automatically includible in assessable value where the sale is on an ex-works basis and the factory-gate price is the sole consideration.

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