Show cause notice limits adjudication: a departmental challenge cannot rely on a ground never put to the assessee.

A departmental challenge cannot be sustained on a ground not set out in the show cause notice. The notice had proceeded on denial and grant of exemption benefits under one notification, but the appeal sought to dispute entitlement under a different notification that was neither the subject of the notice nor the basis of adjudication. Since adjudication cannot travel beyond the notice, reliance on that new ground was legally impermissible. The Revenue's appeal therefore lacked merit, and the assessee's favourable adjudication remained undisturbed.

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Issues: Whether the departmental appeal could sustain a demand or denial of benefit founded on Notification No. 377/86-C.E. when that notification was neither the subject-matter of the show cause notice nor the basis on which the adjudication proceeded.

Analysis: The notice had proceeded on the footing of denying benefit under Notification No. 71/68-C.E. and granting benefit under Notification No. 377/86-C.E., whereas the departmental grievance before the appellate forum sought to dispute entitlement under Notification No. 377/86-C.E. The scope of adjudication cannot travel beyond the show cause notice, and an order founded on a ground not put to notice to the assessee is unsustainable. Since the dispute regarding Notification No. 377/86-C.E. was neither the subject of the notice nor an issue decided against the assessee in the manner sought by the Department, the appeal lacked merit.

Conclusion: The departmental appeal was not maintainable to the extent it sought to rely on a ground beyond the show cause notice, and the assessee succeeded.

Final Conclusion: Relief was denied to the Revenue and the adjudication in favour of the assessee was left undisturbed because the impugned departmental challenge travelled beyond the notice.

Ratio Decidendi: A demand or appellate challenge cannot be sustained on a ground not proposed in the show cause notice, since adjudication beyond the notice is legally impermissible.

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