Exemption denial must match the show cause notice; a new ground cannot be added later.

Exemption liability cannot be sustained on a ground not set out in the show cause notice. Where the notice challenged the imported copper only on the basis that it was not refined, the department could not later rely on alleged non-compliance with Condition No. 22 of the exemption notification. The assessee must be put on clear notice of the precise basis for denial of exemption, and a fresh case cannot be built in the appellate process without prior notice. On that footing, the demand was not upheld.

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Issues: Whether the demand could be sustained on a ground of non-compliance with Condition No. 22 of the exemption notification when the show cause notice proposed denial of exemption only on the basis that the imported copper was not refined.

Analysis: The notice confined the controversy to the character of the imported copper and did not allege breach of Condition No. 22. The departmental authorities could not, therefore, sustain liability on a fresh ground introduced later in the appellate process. A party must be put to notice of the precise basis on which exemption is proposed to be denied, and a new case cannot be built without such notice.

Conclusion: The demand could not be upheld on the basis of Condition No. 22, and the finding in favour of the respondent was correct.

Final Conclusion: The appeal failed because the Revenue sought to sustain the duty demand on a ground not contained in the show cause notice, and no question of law arose for interference.

Ratio Decidendi: Liability cannot be imposed on a ground not set out in the show cause notice, and an assessee cannot be prejudiced by a new case introduced without notice.

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