Show cause notice limits in tariff classification disputes bar the Revenue from shifting to a new heading without fresh notice.

A classification demand based on a new tariff heading could not be sustained where the Revenue departed from the classification proposed in the show cause notice after receipt of the chemical test report. The dispute had originally centred on classification between headings 3902/3904 and Chapter 59, but the later shift to sub-heading 3921.19 or 3926.90 introduced a fresh case outside the scope of notice. The proper course was to issue a fresh show cause notice before relying on the new classification. Because the assessee was not put on notice for that basis, the adjudication was vitiated to that extent and the objection that the Revenue travelled beyond the notice was upheld.

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Issues: Whether the demand and classification adopted by the Revenue could be sustained when the classification proposed in the show cause notice was different from the classification finally relied upon after the chemical test report.

Analysis: The dispute originally concerned acceptance or rejection of the claim for classification under Chapter 59, whereas the later proceedings proceeded on a different footing after the chemical examiner reported the goods as knitted fabrics. The subsequent move to classify the goods under sub-heading 3921.19 or 3926.90 introduced a new case, different from the earlier controversy between headings 3902/3904 and Chapter 59. Once the basis of classification was shifted to a totally new heading, the proper course was to issue a fresh show cause notice and proceed within the limits of such notice. Since the appellants were not put on notice for the new classification at the earlier stage, the adjudication was vitiated to that extent.

Conclusion: The objection that the Revenue travelled beyond the show cause notice was upheld, and the challenge succeeded in favour of the assessee.

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