Valuation beyond the show cause notice cannot support pre-deposit demands; full waiver granted on prima facie case.

For stay and waiver of pre-deposit, a demand cannot be sustained on a valuation basis not proposed in the show cause notice, and a commissioner in those proceedings cannot record findings on alleged manufacture at a sister unit falling within another Commissionerate. The notice had proceeded under Rule 11 read with Section 4(1), but the impugned order shifted to Rule 7 and relied on a new basis beyond the notice. The order therefore treated the appellants as having a prima facie case for full waiver, especially where an earlier identical matter had already been granted full waiver and stay of recovery.

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Issues: Whether, for the purpose of stay and waiver of pre-deposit, the Commissioner could proceed on a valuation method not proposed in the show cause notice and record a finding on manufacture at a sister unit falling within another Commissionerate, and whether the appellants had made out a case for full waiver.

Analysis: The notice proceeded on valuation under Rule 11 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 read with Section 4(1) of the Central Excise Act, 1944, whereas the impugned order shifted to Rule 7 and also recorded a finding on whether the processes at the sister unit resulted in manufacture of new goods. The order held, prima facie, that such a new basis went beyond the show cause notice and that the finding on emergence of a new product in another Commissionerate was not for the Commissioner to determine in these proceedings. The order also noted that an earlier identical matter had been granted full waiver and stay.

Conclusion: The appellants were held entitled to full waiver of pre-deposit and stay of recovery.

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