Approved excise classification lists cannot be reopened without statutory power; demands based on improper reports fail for natural justice and jurisdiction.

An approved excise classification list under Rule 173B could not be recalled or reopened because the rules did not confer an express power of review or revocation; a differential duty demand based on such reopening was therefore unsustainable. The show cause notice and resulting short-levy demand were also invalid because they relied on a report from an improper officer and did not set out a legally sustainable basis for liability, depriving the assessee of a proper opportunity to meet the case. The demand was set aside for breach of natural justice and want of jurisdiction, while the refusal of refund remained undisturbed.

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Issues: (i) Whether an approved classification list under Rule 173B could be recalled or reopened so as to demand differential duty for the same periods. (ii) Whether the show cause notice and consequential demand were vitiated because they were founded on an impermissible report and did not afford a proper opportunity to meet the case against the assessee.

Issue (i): Whether an approved classification list under Rule 173B could be recalled or reopened so as to demand differential duty for the same periods.

Analysis: Rule 173B permitted approval of the classification list and, where necessary, withholding of approval. The provision did not confer any express power to recall an approval once granted. The reopening of concluded assessments on the footing that approval could be revoked was therefore unsupported by the scheme of the rules. The court also noted that, if duty had escaped levy, reopening had to fit within the statutory mechanism then available, and the department could not use an implied power of review that the rules did not confer.

Conclusion: The reopening of the approved classification list was not sustainable, and the demand founded on such recall was invalid.

Issue (ii): Whether the show cause notice and consequential demand were vitiated because they were founded on an impermissible report and did not afford a proper opportunity to meet the case against the assessee.

Analysis: The sample had been sent to the Textile Commissioner, who was not the proper officer for the purpose of the excise inquiry. The notice proceeded substantially on that report, even though the assessee was entitled to be informed of the legally permissible basis for the proposed short levy. Since the foundation of the demand was defective, the assessee was not called upon to answer a valid case, and the proceedings suffered from violation of natural justice as well as want of jurisdiction.

Conclusion: The show cause notice and the demand for short levy were quashed for breach of natural justice and lack of jurisdiction.

Final Conclusion: The writ petition succeeded to the extent of setting aside the excise demand for the alleged short levy, while the refusal of refund was left undisturbed.

Ratio Decidendi: In the absence of an express statutory power, an approved excise classification list cannot be recalled or reviewed, and a demand for differential duty based on an impermissible inquiry or report that does not disclose the legally sustainable basis of liability is liable to be quashed for breach of natural justice and want of jurisdiction.

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