CAS-4 valuation requirement defeated a vague show cause notice in captive transfer undervaluation dispute.

A show cause notice alleging suppression and undervaluation in a captive transfer of Special Denatured Spirit was found unsustainable because it did not specifically allege that the goods were valued below the CAS-4 standard. In captive transfer or self-consumption cases, valuation must be tested against the applicable CAS-4 framework, and the absence of that foundational allegation meant the assessee was not properly put to notice. The notice was therefore treated as vague and not maintainable, and the demand, penalty, and impugned order were set aside.

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Issues: Whether the show cause notice was sustainable when it contained no allegation that the value of Special Denatured Spirit transferred to another unit was below the value required under CAS-4, and whether the resultant demand and penalty could stand.

Analysis: The notice alleged suppression and undervaluation, but did not specifically assert that the goods transferred for further manufacture were valued below CAS-4 standards. In a case of captive transfer / self-consumption, valuation was required to be tested against the applicable CAS-4 framework, and the absence of any such foundational allegation meant that the demand was not properly put to the assessee. On that basis, the notice was treated as vague and unsustainable.

Conclusion: The show cause notice was held to be vague and not maintainable, and the demand, penalty, and impugned order were set aside in favour of the assessee.

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