Appellate relief cannot rest on a new factual defence not raised before the original excise authority.

An appellate authority cannot set aside a central excise demand on a factual defence that was not raised before the adjudicating authority. The dispute concerned confirmed duty, interest and penalty under Section 11A of the Central Excise Act, 1944 read with Rule 96ZO(3)(i) and Rule 96ZO(3)(ii) of the Central Excise Rules, 1944. The record showed that the assessee's case before adjudication was limited to abatement and quantification issues, while the later opt-out defence was introduced only in appeal. Relief based on that new factual foundation was therefore unsustainable.

---

---

Issues: Whether the Commissioner (Appeals) was justified in setting aside the confirmed central excise duty, interest and penalty by relying on facts and contentions not raised before the adjudicating authority.

Analysis: The dispute arose from demand confirmed under Section 11A of the Central Excise Act, 1944 with reference to Rule 96ZO(3)(i) and Rule 96ZO(3)(ii) of the Central Excise Rules, 1944. The appellate authority accepted a defence based on an alleged opt-out from the compounding duty scheme, but that factual basis was not shown to have been raised before the original adjudicating authority. The record indicated that the assessee's defence before adjudication was confined to abatement and quantification disputes, not to the later basis accepted in appeal. An appellate order founded on material not presented at the original stage cannot stand where it departs from the record and the findings under appeal.

Conclusion: The Commissioner (Appeals) was not justified in granting relief on a factual basis not before the adjudicating authority, and the order setting aside the demand, interest and penalty was unsustainable.

Ratio Decidendi: An appellate authority cannot sustain reversal of an adjudication by relying on facts or defences that were not raised or considered before the original authority.

---