Job-work valuation cannot be replaced by a new basis not alleged in the show-cause notice, with demand and penalty unsustainable.

Job-work valuation based on the principal manufacturer's cost certificates was not displaced where the assessee had repeatedly disclosed the assessable value, paid differential duty and interest before the show-cause notice, and the variation was only marginal. In the absence of any allegation of suppression, concealment, or deliberate non-compliance, the demand for duty, penalty and interest could not be sustained. The adjudicating authority also could not confirm liability on a comparable-price basis when that method was not proposed in the notice, as the adjudication travelled beyond the foundation of the show-cause notice. The impugned orders were set aside in favour of the assessee.

---

---

Issues: Whether the demand of duty, penalty and interest on job-work clearances was sustainable when the assessee had declared value on the basis of the principal manufacturer's cost data, paid differential duty and interest before the show-cause notice, and the adjudicating authority adopted a comparable price method not proposed in the notice.

Analysis: The declared assessable value had been communicated from time to time on the basis of instructions and cost certificates received from the principal manufacturer, and the variation in value was marginal. The differential duty and interest had already been paid suo motu much before issuance of the show-cause notice. The notice did not allege any contumacious conduct, active suppression, concealment, or deliberate disregard of law. The adjudicating authority nevertheless confirmed the demand by shifting to a comparable-value basis, which was not the foundation of the notice and therefore travelled beyond it.

Conclusion: The demand, penalty and interest were not sustainable. The valuation adopted by the assessee could not be disturbed on the basis of a ground not alleged in the show-cause notice, and the impugned orders were liable to be set aside in favour of the assessee.

---