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Issues: Whether, after rejecting the Revenue's demand under Tariff Item 68 on the footing that coloured polystyrene was not classifiable thereunder, the Tribunal could nevertheless sustain the demand on a different basis by restricting it to the amount notionally payable at the coloured stage.
Analysis: The demand issued to the assessee proceeded on the basis that coloured polystyrene was liable under Tariff Item 68 and that manufacture took place from uncoloured to coloured polystyrene. Once that basis was found unsustainable, the Tribunal could not uphold the levy by substituting a different foundation for the demand and by computing liability under a different tariff treatment. Moulding of relief cannot proceed on a footing wholly different from the case made out in the show cause notice. The proper course was to set aside the demand and leave it open to the Revenue to proceed in accordance with law on the correct basis, if so advised.
Conclusion: The Tribunal's order sustaining the demand on an altered basis was unsustainable and the assessee succeeded.
Final Conclusion: The demand was set aside, and the Revenue was left at liberty to take fresh action in accordance with law on the basis actually permissible.
Ratio Decidendi: A demand cannot be sustained on a basis fundamentally different from the case set out in the notice or adjudication; if the original basis fails, the adjudicating authority must set aside the demand rather than substitute a new foundation for liability.
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