Duty demand must be specifically raised in the notice, but Rule 25 penalty can survive without prior duty demand.

A show-cause notice that merely sought appropriation of duty already deposited, without specifically demanding the balance as duty, could not sustain confirmation of that balance demand. The defect in drafting was treated as fatal to the duty-demand portion because the amount was not clearly quantified and proposed as recoverable duty. By contrast, penalty under Rule 25 of the Central Excise Rules was upheld because that penalty mechanism does not depend on a prior duty demand; the relevant contraventions and evasion were not disputed. The result was partial relief to the assessee: the balance duty demand was set aside, but the penalty remained in force.

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Issues: (i) Whether the balance duty demand could be sustained when the show-cause notice sought only appropriation of duty already paid and did not specifically demand that amount. (ii) Whether penalty under Rule 25 of the Central Excise Rules could be imposed in the absence of a duty demand in the show-cause notice.

Issue (i): Whether the balance duty demand could be sustained when the show-cause notice sought only appropriation of duty already paid and did not specifically demand that amount.

Analysis: The demand already dropped in appeal had been set aside on the footing that the notice did not raise a duty demand, but only sought appropriation of amounts already deposited. The same defect applied to the remaining amount covered by the notice, since the notice did not specifically quantify and demand that balance as duty.

Conclusion: The balance duty demand was not sustainable and was set aside.

Issue (ii): Whether penalty under Rule 25 of the Central Excise Rules could be imposed in the absence of a duty demand in the show-cause notice.

Analysis: Rule 25 permits confiscation and penalty for specified contraventions and does not make prior demand of duty a condition precedent. The contraventions and resulting evasion were not disputed, and the omission to raise a duty demand was treated as a drafting defect rather than as negating the breach.

Conclusion: The penalty under Rule 25 was sustained.

Final Conclusion: The assessee succeeded on the duty-demand issue, but the penalty remained intact, resulting in only partial relief.

Ratio Decidendi: Where the show-cause notice does not specifically demand duty, a duty demand cannot be confirmed merely by treating earlier deposits as appropriable amounts; however, penalty for contravention under Rule 25 can still be imposed because it is not dependent on a prior duty demand.

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