Show cause notice limits adjudication: refund rejection could not rest on a ground never put to the claimant.

Refund or rebate rejection could not be sustained to the extent the authority relied on a ground not raised in the show cause notice. The notice addressed the character of the final product and admissibility under Section 11B(2)(a) of the Central Excise Act, but the adjudication also invoked non-compliance with Rule 8 of the Central Excise Rules, 2002 read with Notification No. 21/2004-CE(NT). That additional basis was introduced without prior notice and therefore travelled beyond the scope of the notice. The orders were quashed to that extent and the matter was remanded for fresh adjudication after hearing the claimants.

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Issues: Whether the orders rejecting the refund or rebate claim could be sustained when one of the grounds on which relief was refused was not set out in the show cause notice, and whether the matter was required to be remanded for fresh decision.

Analysis: The show cause notice proceeded on specified grounds relating to the character of the final product and the admissibility of the claim under Section 11B(2)(a) of the Central Excise Act, 1944. The impugned orders, however, also denied the claim on the footing that the petitioners had not followed the procedure prescribed under Rule 8 of the Central Excise Rules, 2002 read with Notification No. 21/2004-CE(NT) dated 06.09.2004. That ground was not part of the notice and was therefore introduced at the adjudicatory stage without prior notice to the petitioners. To that extent, the orders travelled beyond the scope of the show cause notice.

Conclusion: The rejection orders were quashed and set aside to the extent they were founded on a ground not contained in the show cause notice, and the matter was remanded to the original authority for fresh adjudication in accordance with law after giving the petitioners an opportunity of hearing.

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