Mandatory show cause notice and strict limitation control excise duty demands; provisional assessment and interim stay did not save the demand.

A duty demand under excise law cannot be sustained without compliance with the mandatory show cause notice requirement, and ordinary correspondence or an order cannot replace that statutory step. Provisional assessment or provisional clearance can justify a different limitation position only when the record shows a genuine provisional procedure, including the relevant order and payment on that basis; absent such material, it does not apply. An interim High Court stay of a revision order, without a restraint on issuance of notice, does not attract exclusion of time under the limitation provision. The demands were therefore barred by limitation and set aside, and the classification issue was left unexamined.

---

---

Issues: Whether, in the absence of a valid show cause notice, the Revenue could raise and sustain a duty demand under the limitation scheme; whether the earlier assessment and the interim order of the High Court made the demand immune from limitation.

Analysis: The statutory scheme requires issuance of a show cause notice in the prescribed manner before a duty demand can be made, and ordinary correspondence or orders cannot be treated as a substitute for that mandatory requirement. A provisional assessment or provisional clearance can be relied upon only where there is material showing that the case was in fact governed by the provisional procedure, including the relevant order under the applicable rule and payment on that basis. Here, no such material existed. The interim order of the High Court only stayed operation of the impugned revision order and did not restrain issuance of a notice; exclusion of time under the limitation provision is therefore not attracted, and the period of limitation must be strictly applied.

Conclusion: The demand was barred for want of a valid show cause notice and the Revenue could not rely on provisional assessment or the interim stay to defeat limitation; the issue was decided in favour of the assessee.

Final Conclusion: The appeals succeeded and the impugned duty demands were set aside, without the need to examine the classification issue on merits.

Ratio Decidendi: A duty demand under the excise law cannot be sustained unless the mandatory show cause notice requirement is complied with, and the exclusion of time under limitation applies only where a legally cognizable stay or genuine provisional assessment is established on record.

---