Henna paste exemption depends on no added ingredient, and duty demands must rest on material in the show cause notice.

Henna paste made with clove oil remained within the exemption for heena powder or paste not mixed with any other ingredient, because the oil was used only as a medium to make the paste marketable and usable, without evidence of any active ingredient or cosmetic admixture. A duty demand also cannot be sustained on material such as a CRCL report when that report was not referred to in the show cause notice and related to a different period, since the notice is the foundation for duty, interest and penalty proceedings. On these facts, the exemption was not denied and reliance on the unreferenced report was impermissible.

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Issues: Whether henna paste prepared with clove oil was entitled to exemption under Notification No. 12/2012-CE dated 17.03.2012, and whether the demand could be sustained on the basis of a CRCL report not referred to in the show cause notice.

Analysis: The exemption entry covered heena powder or paste not mixed with any other ingredient, and the Board's clarification treated liquid used only as a medium to convert powder into paste as consistent with the exemption. On the facts, the only addition was clove oil used to make the paste marketable and usable later, and there was no evidence of any active ingredient or cosmetic admixture. The demand was also founded on a CRCL report that did not form part of the show cause notice and related to a different period. Since the show cause notice is the foundation of duty, interest, and penalty proceedings, reliance on extraneous material not set out in the notice was impermissible.

Conclusion: The exemption could not be denied on the facts established, and the demand sustained on the basis of the unreferenced CRCL report was unsustainable.

Final Conclusion: The impugned order was set aside and the appeal was allowed with consequential relief.

Ratio Decidendi: Duty demands and denial of exemption must be supported by the allegations and material contained in the show cause notice, and a liquid used only to convert henna powder into paste does not by itself defeat an exemption for paste not mixed with any other ingredient.

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