Show cause notice limits confiscation consequences: undervaluation cannot support redemption fine or penalty if not alleged.

Redemption fine and penalty could not be sustained on a ground not set out in the show cause notice. The notice alleged only confiscation for violation of the Foreign Trade Policy and penalty under the Customs Act; undervaluation was never pleaded. When the appellate authority rejected confiscation on the policy allegation, it could not sustain confiscation-related consequences by introducing undervaluation for the first time, as that travelled beyond the scope of adjudication. The impugned order was set aside to that extent.

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Issues: Whether redemption fine and penalty could be sustained when the appellate authority travelled beyond the show cause notice and rested the order on undervaluation, although the notice alleged only contravention of the foreign trade policy.

Analysis: The only allegations in the show cause notice were that the imported goods were liable to confiscation under Section 111(d) of the Customs Act, 1962 for violation of Para 2.17 of Foreign Trade Policy 2009-14, and that penalty was imposable under Section 112 of the Customs Act, 1962. The appellate authority had already held that, for the alleged policy contravention, the goods were not liable to confiscation and that redemption fine and penalty could not survive on that basis. It then proceeded to sustain confiscation-related consequences on a different ground, namely undervaluation, although undervaluation was not part of the notice. Such a basis was outside the scope of the adjudication.

Conclusion: Redemption fine and penalty were not sustainable on the ground of undervaluation, as that issue was not alleged in the show cause notice. The appeal succeeded and the impugned order was set aside to that extent.

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