Classification cannot rest on a new statutory basis beyond the show cause notice in excise proceedings.

In classification proceedings, an adjudicatory or appellate order cannot sustain a demand on a statutory basis that differs materially from the show cause notice. Here, the notices proceeded on Section Note 5(f) of Section XI of the Central Excise Tariff Act, 1985, but the appellate order relied on Section Note 5(b) and treated the processed knitted pile fabrics as ready-made articles. Introducing a new legal foundation at the appellate stage went beyond the allegations in the notice and was impermissible. The order was therefore unsustainable, and the appeals were allowed.

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Issues: Whether the impugned order was unsustainable for travelling beyond the show cause notice by relying on a different section note while classifying the processed knitted pile fabrics.

Analysis: The show cause notices proceeded on Section Note 5(f) of Section XI of the Central Excise Tariff Act, 1985, and the adjudicating authority confirmed the demand on that basis. The appellate order, however, relied on Section Note 5(b) of Section XI and held the goods to be ready for use as made-up articles. Introducing a different statutory foundation at the appellate stage changed the basis of the case and exceeded the allegations in the notice, which is impermissible in classification proceedings.

Conclusion: The impugned order was beyond the scope of the show cause notice and could not be sustained; the appeals were allowed.

Ratio Decidendi: An adjudicatory or appellate order cannot sustain a demand or classification on a statutory basis that is materially different from the foundation set out in the show cause notice.

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