Demand cannot rest on an unstated show cause ground; further pre-deposit was set aside and appeal restored on merits.

A duty demand cannot be confirmed on a ground not set out in the show cause notice, and an adjudication order cannot sustain such a basis where the notice did not allege unaccounted purchase of scrap. On that footing, the Tribunal was not justified in insisting on a further pre-deposit as a condition for hearing the appeal. The High Court set aside the direction requiring deposit of Rs. 6 lakhs and directed that the appeal be heard on merits without insisting on that amount.

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Issues: Whether the demand could be confirmed on a ground not stated in the show cause notice, and whether the Tribunal was justified in insisting on a further pre-deposit of Rs. 6 lakhs as a condition for hearing the appeal on merits.

Analysis: A duty demand cannot be confirmed on a basis that was not made the subject of the show cause notice. The Court found that, where the notice did not demand duty on the basis of unaccounted purchase of scrap, the adjudication order could not sustain such a demand on that footing. In such circumstances, insisting on further deposit as a pre-condition for hearing the appeal was not justified.

Conclusion: The pre-deposit direction requiring the appellant to deposit Rs. 6 lakhs was set aside, and the Tribunal was directed to hear the appeal on merits without insisting on that deposit.

Final Conclusion: Relief was granted to the assessee on the issue of pre-deposit, and the matter was left to be decided by the Tribunal on merits.

Ratio Decidendi: A duty demand cannot be upheld on a ground not set out in the show cause notice, and a pre-deposit condition based on such an impermissible demand cannot be insisted upon.

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