Scope of show-cause notice and remand directions: enhancement of duty and penalties beyond prior adjudication was unsustainable.

An adjudicating authority cannot travel beyond the scope of the show-cause notice or enlarge duty and penalties beyond an earlier unchallenged adjudication; the enhancement of demand and penalties was therefore unsustainable. It must also comply with the specific questions and directions in the remand order, and failure to address those issues rendered the order defective. The impugned order was set aside and the matter remanded again for fresh adjudication in line with the earlier directions.

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Issues: (i) Whether the impugned adjudication could travel beyond the scope of the show-cause notice and the earlier unchallenged adjudication while enhancing duty and penalties; (ii) Whether the Commissioner complied with the specific questions and directions contained in the remand order.

Issue (i): Whether the impugned adjudication could travel beyond the scope of the show-cause notice and the earlier unchallenged adjudication while enhancing duty and penalties.

Analysis: The show-cause notice contemplated recovery of either duty from the job workers or reversal of Modvat credit from the principal manufacturer, not both simultaneously. The earlier order-in-original had already fixed the quantum of demand and penalties, and the Revenue had not challenged that order. The impugned adjudication increased the duty demand and penalties far beyond the earlier figures, which was not permissible in the absence of a valid basis within the notice and the earlier adjudication framework.

Conclusion: The enhancement of demand and penalties was not sustainable.

Issue (ii): Whether the Commissioner complied with the specific questions and directions contained in the remand order.

Analysis: The remand required findings on the specific issues framed by the High Court, particularly the treatment of raw materials sent to job workers and the entitlement to credit under the actual user conditions. The impugned order did not answer those specific questions and instead proceeded on different issues, leaving the remand directions unaddressed.

Conclusion: The Commissioner failed to comply with the remand directions.

Final Conclusion: The impugned order was set aside and the matter was remanded again for fresh adjudication in accordance with the earlier directions.

Ratio Decidendi: An adjudicating authority cannot exceed the scope of the show-cause notice or enlarge the demand and penalties beyond the earlier unchallenged adjudication, and it must answer the specific questions on which the matter has been remanded.

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