Section 11A notice is mandatory for differential duty recovery, but not for revising a classification list after hearing.

Section 11A is mandatory for recovery of differential excise duty, but it is not a prerequisite for merely modifying an approved classification list where notice and hearing have otherwise been afforded. The High Court held that the challenge to the order modifying the classification list failed because the assessee had been given a show-cause notice, an opportunity of hearing, and the chance to adduce evidence. By contrast, the later demand for differential duty for the subsequent period was unsustainable because it was not preceded by a section 11A notice, and a fresh demand could be raised only in accordance with law.

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Issues: (i) whether the order modifying the approved classification list could be quashed for want of a notice under section 11A and for alleged violation of natural justice, and (ii) whether the subsequent demand notice for differential duty from March 1984 to April 1985 was sustainable without compliance with section 11A.

Issue (i): whether the order modifying the approved classification list could be quashed for want of a notice under section 11A and for alleged violation of natural justice

Analysis: Section 11A governs recovery of duty not levied, short-levied, short-paid or erroneously refunded. The Court held that this provision is attracted when a demand for differential duty is made, but it does not control the separate act of modifying an approved classification list. The Assistant Collector had, in fact, issued a notice to show cause before modifying the classification list, and the Collector also afforded hearing and opportunity to adduce evidence. The proviso to section 35A(3) was held not to require a section 11A notice merely because an appellate order concerns classification.

Conclusion: The challenge to the Collector's order failed; the order affirming modification of the classification list was upheld and is against the assessee.

Issue (ii): whether the subsequent demand notice for differential duty from March 1984 to April 1985 was sustainable without compliance with section 11A

Analysis: A demand for duty not levied or short-levied can be sustained only after issuance of a notice under section 11A and consideration of the assessee's representation. The impugned notice demanding differential duty for the later period was not preceded by such notice, and the interim stay operating in the matter did not dispense with the statutory requirement. The Court held that a fresh demand could be made only in accordance with law after following section 11A.

Conclusion: The demand notice was unsustainable and was quashed, in favour of the assessee.

Final Conclusion: The petition succeeded only to the extent of invalidating the later differential-duty demand, while the appellate order maintaining the revised classification remained undisturbed.

Ratio Decidendi: Section 11A is mandatory for recovery of differential excise duty, but it is not a prerequisite for merely modifying the approved classification list when notice and hearing have otherwise been afforded.

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