Show cause notice cannot sustain a duty demand on a new ground, with the exemption issue left open

Duty could not be sustained on a ground not stated in the show cause notice, because the levy was ultimately based on clearances exceeding the monetary limit while the notice proceeded on a different footing. The dispute over the exemption notification was left open for consideration by the Larger Bench. The challenge to the demand was stated to have failed.

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Issues: Whether duty could be sustained on a ground not stated in the show cause notice.

Analysis: The duty was ultimately levied on the basis that clearances exceeded the monetary limit, whereas the show cause notice proceeded on a different footing. A demand cannot be upheld on a ground not set out in the notice, and the subsequent controversy regarding the exemption notification was left open for consideration by the Larger Bench.

Conclusion: The levy could not be sustained on a ground outside the show cause notice, and the challenge to the demand failed.

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