Settled classification cannot be reopened to deny exemption or impose duty on a revised basis outside the notice.

A settled classification of goods could not be reopened in excise proceedings to support a revised levy or deny exemption when that new classification was not within the scope of the show cause notice. Because the disputed goods had already attained final classification in earlier proceedings, the attempted reworking of that classification was impermissible, and the exemption denial founded on it could not stand. The demand, penalty and denial of exemption were therefore held unsustainable and set aside in favour of the appellant.

---

---

Issues: Whether the demand, penalty and denial of exemption could be sustained on a revised classification when the classification of the goods had already attained finality, and whether such a course was within the scope of the show cause notice.

Analysis: The goods in dispute were the same goods whose classification had already been settled in earlier proceedings. On that settled classification, the exemption claimed by the appellant would not be available. The show cause notice, however, proceeded on a different classification from the one that had attained finality. Once the classification had become final, it could not be reopened in proceedings for a fresh levy or fiscal detriment on a revised basis. The denial of exemption, being founded on an impermissible reworking of the classification, could not stand.

Conclusion: The demand, penalty and denial of exemption were unsustainable and were set aside in favour of the appellant.

Ratio Decidendi: A settled classification cannot be reopened in excise proceedings to impose duty or deny exemption on the basis of a revised classification that was not lawfully within the scope of the show cause notice.

---