Show cause notice scope and exemption barred additional excise duty demand on goods outside the notice.

Additional excise duty could not be sustained where the adjudicating and appellate authorities proceeded on goods and value categories not covered by the show cause notice. Comparing the RT-12 returns, the notice annexure and the order-in-original, the Tribunal found that duty had been raised on clearances different from those specifically proposed in the notice, and a demand on declared goods could not be made without following the statutory demand procedure. The Tribunal also noted that the goods described in the notice were exempt under the relevant notification, so the demand failed both for want of notice coverage and because the notified goods were exempt.

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Issues: Whether the demand of additional excise duty could be sustained when the adjudicating and appellate authorities proceeded on goods different from those covered by the show cause notice, and whether the goods mentioned in the notice were exempt under the relevant notification.

Analysis: The demand was founded on RT-12 returns, but the notice and its annexure targeted clearances of shoddy woollen fabrics/blankets of a different value category from that ultimately adopted in the adjudication order. On a comparison of the returns with the annexure and the order-in-original, the Tribunal found that the authorities had raised duty on goods not covered by the show cause notice. A duty demand on goods already declared in the returns but not specifically proposed in the notice could not be sustained without following the statutory procedure for demand. The Tribunal also noted that the goods described in the notice were exempt under the notification governing additional excise duty.

Conclusion: The demand was invalid as being beyond the scope of the show cause notice and the goods covered by the notice were exempt; the appeal succeeded.

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