Mandatory show cause notice under Central Excise law cannot be replaced by a mere letter or informal communication.

Rule 10 of the Central Excise Rules, 1944 required the proper officer, before recovering short-levied duty, to serve a statutory show cause notice specifying the demand and inviting an explanation. A mere letter or other communication that did not clearly state the amount demanded or call upon the assessee to show cause was not a valid substitute. The Delhi High Court treated this notice requirement as mandatory and held that non-compliance deprived the assessee of the opportunity protected by the rule and natural justice. The demand proceedings were therefore held invalid, and the impugned order and consequential demand were set aside.

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Issues: Whether the demand and all consequential proceedings were invalid for want of a show cause notice in the manner required by Rule 10 of the Central Excise Rules, 1944.

Analysis: Rule 10 required the proper officer, before recovering duty short-levied, to serve a notice on the person concerned specifying the amount demanded and calling upon him to show cause why the amount should not be paid. The Court applied the principle that this requirement is mandatory and that a mere letter or communication which does not specify the demand or call for a cause against recovery cannot substitute a statutory notice. Since no notice satisfying the rule had been issued, the assessee had been deprived of the opportunity that the rule and the principles of natural justice secure.

Conclusion: The demand proceedings were invalid for non-compliance with Rule 10, and the impugned order and consequential demand were set aside in favour of the assessee.

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