Show cause notice limits differential duty demand in provisional assessment disputes; higher recovery beyond notice was unsustainable.

In proceedings for finalisation of provisional assessments, the department cannot sustain a differential duty demand higher than the quantum proposed in the show cause notice. Where the notice quantified the proposed demand and the original authority finalised the assessment on a lesser excess payment accepted by the assessee, the appellate authority could not enlarge the demand beyond that notice without a fresh notice or corrigendum. The Tribunal held that an appeal under Section 35E(4) could not be used to travel outside the scope of the original notice, and the higher demand was therefore unsustainable.

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Issues: Whether the Revenue could sustain a demand for differential duty higher than the amount proposed in the show cause notice while seeking finalisation of provisional assessments, and whether the appellate authority could uphold such a demand in proceedings arising out of that notice.

Analysis: The assessments had been kept provisional under Rule 9B of the Central Excise Rules, 1944, and the show cause notice proposed finalisation on a quantified basis with a specific total differential duty demand. The original authority finalized the assessments on a different footing and found only a smaller excess payment, which was accepted by the assessee. The Revenue, in appeal, sought recovery of a much higher amount than what had been proposed in the notice. The Tribunal held that such a course was not permissible, since the department could not travel beyond the scope of the show cause notice and claim a higher amount by way of appeal under Section 35E(4) of the Central Excise Act, 1944 without first issuing an appropriate corrigendum or fresh notice.

Conclusion: The demand for a higher differential duty than that proposed in the show cause notice could not be sustained, and the assessee succeeded.

Final Conclusion: The appellate order in favour of the Revenue was set aside, and the assessee's position on finalisation of the provisional assessments was restored.

Ratio Decidendi: In proceedings arising from a show cause notice, the department cannot seek or sustain a duty demand beyond the scope and quantum proposed in that notice unless the notice is duly amended or replaced.

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