Natural justice limits CENVAT credit demands where interest is added on a rule not mentioned in the notice.

An order in appeal cannot sustain a demand or interest liability on Rule 6(3A)(e) of the CENVAT Credit Rules, 2004 when that provision was not invoked in the show-cause notice. The noticee must be given an opportunity to meet the exact case against it, and adjudication cannot travel beyond the notice. On that basis, the order-in-appeal was found to have exceeded the scope of the show-cause notice, and the matter was remanded to the Commissioner (Appeals) for de novo adjudication in accordance with natural justice.

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Issues: Whether the order-in-appeal could invoke Rule 6(3A)(e) of the CENVAT Credit Rules, 2004, when that provision was not referred to in the show-cause notice, and whether the matter should be remanded for fresh adjudication.

Analysis: The appellant was proceeded against for non-maintenance of separate accounts and non-reversal of credit under Rule 6(3) of the CENVAT Credit Rules, 2004. The order-in-appeal, however, introduced Rule 6(3A)(e) for the purpose of charging interest, although that provision did not appear to have been invoked in the show-cause notice. A demand or liability cannot be sustained on a basis not put to the noticee, since the party must have an opportunity to meet the case against it. The authority below had therefore travelled beyond the scope of the notice.

Conclusion: The order-in-appeal was held to have gone beyond the show-cause notice, and the matter was remanded to the Commissioner (Appeals) for de novo adjudication after following the principles of natural justice.

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