Strict construction of exemption notifications supports relief where adjudication cannot travel beyond the show cause notice.

An exemption notification must be construed strictly according to its text, and the omission of Chapter 60 from the base-fabric reference was treated as deliberate. On that reading, the benefit of Notification No. 63/87-C.E. was available even where the grey base fabrics fell under Chapter 60, because the duty-linked condition applied only to base fabrics under Chapters 52, 54 or 55. The document also states that adjudication cannot go beyond the show cause notices: later notifications and a fresh classification exercise outside the notices were extraneous, and a demand based on such matters was unsustainable.

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Issues: (i) Whether the benefit of Notification No. 63/87-C.E. was available where the base fabrics were classifiable under Chapter 60 and not under Chapters 52, 54 or 55; (ii) Whether the authorities could rely on later notifications and a fresh classification beyond the scope of the show cause notices.

Issue (i): Whether the benefit of Notification No. 63/87-C.E. was available where the base fabrics were classifiable under Chapter 60 and not under Chapters 52, 54 or 55.

Analysis: The notification had to be construed strictly on the words used. The reference in the relevant entries to base fabrics falling under Chapters 52, 54 or 55 indicated that the duty on base fabrics was required only in those cases. The omission of Chapter 60 was treated as deliberate. Since knitted cotton and man-made fabrics fell under Chapter 60 at the grey stage, the condition in the notification could not be read to deny the exemption merely because the base fabrics were not covered by the chapters mentioned in the table.

Conclusion: The benefit of exemption under Serial Nos. 2 and 3 of Notification No. 63/87-C.E. was available to the assessee.

Issue (ii): Whether the authorities could rely on later notifications and a fresh classification beyond the scope of the show cause notices.

Analysis: The show cause notices proceeded only on an alleged misreading of the entry in Notification No. 63/87-C.E. The later notifications removing the reference to the base-stage duty were held to be extraneous to the controversy. The Commissioner (Appeals) also went beyond the notice by entering into a fresh classification exercise and by invoking a serial not proposed in the notices, which rendered the order unsustainable.

Conclusion: The demand could not be sustained on the basis of matters outside the show cause notices, and the appellate order was untenable.

Final Conclusion: The assessee succeeded on the core exemption issue, and the revenue's challenge failed because the notification was construed in favour of the assessee and the adjudication could not travel beyond the show cause notices.

Ratio Decidendi: An exemption notification must be interpreted strictly according to its text, and where the notice confines the dispute to one alleged misreading, the adjudicating authority cannot sustain the demand by relying on extraneous later amendments or by travelling beyond the scope of the notice.

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