Modvat credit cannot be sustained on grounds outside the show cause notice and unrelated to the original disallowance.

Modvat credit could not be upheld on a ground outside the show cause notice. The notice challenged the credit because the invoices were said not to be issued by a registered dealer and to lack particulars required by the relevant notification, and the original disallowance rested on those grounds. The Commissioner (Appeals) instead allowed credit on the later introduction of a procedural requirement concerning lost duplicate invoices for transporters, which did not to the notice or the basis of disallowance. The appellate order was therefore set aside and the matter remitted for fresh decision in accordance with law.

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Issues: Whether the order of the Commissioner (Appeals) allowing Modvat credit could be sustained when the credit was granted on a ground not raised in the show cause notice and unrelated to the basis on which credit had been disallowed.

Analysis: The show cause notice alleged that the invoices supporting the credit were not issued by a registered dealer and did not contain the particulars required under the relevant notification. The adjudicating authority disallowed credit on those grounds. The Commissioner (Appeals), however, allowed credit on the footing that the procedural requirement regarding lost duplicate invoices for transporters was introduced only later by a trade notice. That reasoning did not answer the grounds actually set out in the notice and went beyond its scope.

Conclusion: The order of the Commissioner (Appeals) could not be sustained and was set aside.

Final Conclusion: The matter was remitted to the Commissioner (Appeals) for a fresh decision in accordance with law.

Ratio Decidendi: An appellate authority cannot sustain relief on a basis that is outside the scope of the show cause notice and unconnected with the grounds on which the original demand or disallowance was made.

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