Show cause notice foundation rule: demand based on an unnotified tariff classification could not sustain pre-deposit recovery.

A demand confirmed on a tariff classification not proposed in the show cause notice was held prima facie unsustainable, because the notice is the foundation of any excise demand and must put the assessee to notice of the exact classification relied on. The adjudication order had shifted to a different heading without prior notice, creating a material mismatch between the demand notice and the confirmation order. On that basis, a strong prima facie case was found against the differential duty and interest, and waiver of pre-deposit was granted with recovery of the adjudged dues stayed pending appeal.

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Issues: Whether waiver of pre-deposit and stay of recovery should be granted where the demand was confirmed without a show cause notice proposing the classification adopted in the adjudication order.

Analysis: The demand notice had proceeded on one classification, while the adjudication order confirmed duty on a different heading without issuing a show cause notice proposing that revised classification. Since a show cause notice is the foundation of a demand, the discrepancy rendered the impugned demand prima facie unsustainable. The appellant therefore established a strong prima facie case against the differential duty and interest demanded.

Conclusion: Waiver of pre-deposit was granted and recovery of the adjudged dues was stayed pending disposal of the appeal.

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