Retrospective excise demand on revised classification barred unless the earlier approved classification is first challenged by notice.

An approved classification list remains operative until its correctness is specifically challenged by a show cause notice. Excise duty cannot be demanded retrospectively on the basis of a revised classification where the earlier approved classification was not first put in issue, and any reassessment must operate prospectively. Applying that principle, the Supreme Court held that the demand raised for the earlier period on the footing of the revised classification could not be sustained and quashed the demand.

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Issues: Whether a demand of central excise duty for an earlier period could be raised on the basis of a revised classification without first issuing a notice challenging the earlier approved classification list.

Analysis: An approved classification list remains operative until its correctness is specifically questioned by issuance of a show cause notice. A reassessment or revised classification cannot be given retrospective effect so as to sustain a demand for a past period without first putting the assessee on notice and proceeding prospectively. The Court applied this principle to the impugned demand raised for an earlier period on the footing of a classification already approved.

Conclusion: The demand based on the impugned notice could not be sustained for the past period and was quashed; the appeal succeeded in favour of the assessee.

Ratio Decidendi: A demand of excise duty cannot be raised retrospectively on the basis of a revised classification unless the earlier approved classification is first challenged by a proper show cause notice, and any revised levy operates only prospectively.

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