Undisclosed material cannot support a demand; each show-cause notice must be decided on its own stated case.

An adjudication under a show-cause notice cannot rest on undisclosed material from an earlier proceeding or on statements not made available to the assessee. The authority must decide the notice on the case stated in that notice alone and must consider relevant defence material, including a cost-accountant certificate showing a changed pricing position. Because the demand on undervaluation was supported by undisclosed evidence and the assessee's evidence was not addressed, the adjudication could not stand. The impugned order was set aside and the matter remanded for fresh adjudication.

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Issues: Whether the adjudicating authority could sustain the demand by relying on material from an earlier notice and undisclosed statements, and whether the matter required remand for fresh adjudication.

Analysis: The demand was founded on allegations of undervaluation, but the notice did not disclose supporting evidence. The adjudicating authority relied on statements recorded in an earlier investigation and on material not made available to the assessee. The order also did not deal with the cost-accountant certificate relied upon by the assessee to show a changed pricing position. In these circumstances, the adjudication could not stand, and the matter had to be sent back for reconsideration. Each notice must be decided on the basis of the case made out in that notice alone.

Conclusion: The impugned order was set aside and the matter was remanded to the Deputy Commissioner for fresh adjudication; the appeal succeeded.

Ratio Decidendi: An adjudication under a show-cause notice cannot be founded on undisclosed material drawn from another proceeding, and each notice must be decided only on the basis of the case stated in that notice.

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