Show-cause notice limits classification: demand and penalty fail when adjudication rests on a new case beyond the notice.

Demand and penalty could not be sustained where adjudication departed from the allegations in the show-cause notice. The notice alleged that low carbon high chromium ingots were wrongly accounted as M.S. ingots or alloy steel ingots, but the adjudication record itself rejected the allegation that the goods were exclusively used as ferro-alloys in stainless steel production. Once that stated basis failed, no case survived on the terms of the notice. Reclassifying the goods as stainless steel ingots under a different tariff heading introduced a new and distinct case beyond the notice, which was impermissible in law.

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Issues: Whether the demand and classification could be sustained when the adjudication proceeded on a case different from the allegations in the show-cause notice.

Analysis: The notice proceeded on the allegation that the goods were low carbon high chromium ingots wrongly accounted as M.S. ingots/Alloy Steel ingots, and the adjudication itself recorded that the allegation of exclusive use of the goods as ferro-alloys in stainless steel production could not be upheld. Once that basis failed, no case survived on the terms of the notice. Treating the goods as stainless steel ingots under a different tariff heading introduced a new and distinct case beyond the notice, which was impermissible in law.

Conclusion: The demand and penalty could not be sustained on a ground not put to the assessee in the show-cause notice, and the appeal succeeded.

Ratio Decidendi: An adjudication cannot be sustained on a ground or classification that constitutes a new case beyond the allegations in the show-cause notice.

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