Show cause notice is a mandatory safeguard; excise demand and penalty failed when no notice was issued.

Duty demand and penalty under the central excise scheme could not be sustained where no show cause notice had been issued to the assessee. The notice requirement was treated as a primary statutory safeguard, not a mere formality, because it gives the assessee knowledge of the allegations and an opportunity to defend itself. The absence of notice was held to be a fundamental defect violating statutory procedure and natural justice, and it could not be cured by later recalculation or confirmation of liability.

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Issues: Whether duty demand and penalty could be sustained when no show cause notice had been issued to the assessee.

Analysis: The demand and penalty were held unsustainable because issuance of a show cause notice is a primary statutory safeguard under the central excise scheme and is not a mere formality. In the absence of notice, the assessee is denied an opportunity to know the allegations and defend itself, which violates the statutory procedure and the principles of natural justice. The defect was treated as fundamental and not curable by subsequent recalculation or confirmation of liability.

Conclusion: The demand and penalty could not be upheld without a show cause notice, and the assessee succeeded.

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