Scope of show cause notice limits adjudication: demand and penalties fail when the authority introduces a new basis not alleged.

An adjudication order cannot sustain a duty demand or penalty on a ground not specifically proposed in the show cause notice, because adjudication must remain confined to the notice's allegations and basis. Here, the notice alleged removal of copper scrap without payment of duty, but the de novo order instead demanded duty on an alleged 2.04% loss of copper in the enamelling process, which was not put to notice. The Tribunal was therefore correct to set aside the order, and the High Court upheld that view because the authority had travelled beyond jurisdiction.

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Issues: Whether a demand of duty, interest and penalty could be sustained when the adjudicating authority travelled beyond the basis stated in the show cause notice.

Analysis: The notice proposed duty demand on removal of copper scrap without payment of duty and consequential interest and penalty. The de novo adjudication, however, proceeded on a different basis by demanding duty on an alleged 2.04% loss of copper in the enamelling process, which was not proposed in the notice. The governing principle applied was that adjudication must remain confined to the allegations and proposals set out in the show cause notice, and any order founded on a new case not put to notice is without jurisdiction. The Tribunal had therefore correctly set aside the adjudication order.

Conclusion: The demand and penalties could not be sustained to the extent they were based on a ground not alleged in the show cause notice, and the decision was against the Revenue and in favour of the assessee.

Final Conclusion: The appeal failed because the adjudicating authority exceeded the scope of the notice, and the Tribunal's order was upheld.

Ratio Decidendi: An adjudication order cannot sustain a demand or penalty founded on a basis not specifically proposed in the show cause notice, since such an order travels beyond jurisdiction.

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