Mandatory show-cause notice before excise duty recovery under Rule 10A was essential; demand failed without it.

Recovery of excise duty short levied under Rule 10A required prior service of a notice specifying the amount recoverable and calling for a show-cause response. As no such notice had been served before the recovery direction, the statutory precondition was not met and the demand could not be sustained, regardless of the underlying classification dispute. The excise authorities' orders were therefore liable to be quashed in favour of the assessee.

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Issues: Whether the demand of excise duty under Rule 10A was valid in the absence of service of the required notice and whether the impugned orders were liable to be set aside with consequential refund.

Analysis: Rule 10A permits recovery of duty short levied only after service of a notice specifying the amount recoverable and calling upon the person liable to show cause. The record showed that no notice under Rule 10A had been served before the Assistant Collector directed recovery of alleged short levy. In the absence of compliance with this statutory precondition, the demand could not be sustained, irrespective of the merits of the classification dispute.

Conclusion: The demand under Rule 10A was invalid for want of the mandatory notice, and the orders of the excise authorities were liable to be quashed in favour of the assessee.

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