Classification not proposed in show-cause notice cannot sustain duty demand or related penalties.

Duty demand, fine and penalties cannot be sustained where the show-cause notice did not propose classification of shikakai powder under Heading 3305.90. The omission went to the root of liability because the assessee was never put on notice that the demand would be worked out on that classification basis, and confirmation of duty on that footing for the normal period was therefore invalid. As the demand itself failed on this ground, the consequential fine and penalties founded on the same classification also could not survive. The rectification modified the earlier order and granted complete relief by deleting the duty demand and related penalties.

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Issues: Whether the duty demand, fine and penalties could be sustained when the show-cause notice did not propose classification of shikakai powder under Heading 3305.90.

Analysis: The rectification petition was allowed because the omission in the original proceedings went to the root of the demand. The demand had been restricted earlier to the normal period, but the notice had not put the assessee on notice that liability would be worked out on the basis of classification under Heading 3305.90. Since the very basis of liability was not part of the original proposal, confirmation of duty on that footing for the normal period was not valid. For the same reason, the fine and penalties founded on that classification could not survive.

Conclusion: The demand of duty, fine and penalties were not sustainable and were set aside in favour of the assessee.

Final Conclusion: The rectification modified the earlier order and granted complete relief by deleting the entire duty demand and the consequential penalties.

Ratio Decidendi: No duty demand or consequential penalty can be confirmed on a classification basis that was not proposed in the show-cause notice.

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