Approved excise classification cannot be changed without notice and hearing; duty demand based on unilateral reclassification fails.

An approved excise classification list forms part of the assessment process and cannot be altered to the assessee's detriment without notice and an opportunity of hearing. Where the department proposes reclassification on the basis of later material or a subsequent ruling, it must follow the procedure under Rule 173B(v) and comply with natural justice before making any change. A demand for short-levy or non-levy under Section 11A cannot be sustained on the basis of a unilateral suo motu reclassification that was not lawfully made. Any duty consequence would arise only prospectively after a valid notice and lawful revision of classification.

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Issues: Whether an approved classification list could be altered suo motu by the excise authorities without issuing notice and affording hearing to the assessee, and whether a demand for short-levy or non-levy under Section 11A of the Central Excises and Salt Act, 1944 was sustainable on the basis of such unilateral reclassification.

Analysis: An approved classification list is a formal part of the assessment process and cannot be revised to the detriment of the assessee without following the procedure contemplated by Rule 173B(v) of the Central Excise Rules, 1944 and the requirements of natural justice. Where a change in classification is proposed on the basis of a later ruling or other material, the assessee must be put on notice and heard before the classification is modified. A demand under Section 11A cannot rest on a unilateral suo motu reclassification which has not been validly made in accordance with law. The demand, if any, would operate only prospectively from the date of notice after a lawful change in classification.

Conclusion: The suo motu revision of the classification without notice was not legally tenable, and the demand under Section 11A was not sustainable.

Final Conclusion: The appeal succeeded and the impugned demand based on the unilateral change in classification was set aside.

Ratio Decidendi: An approved excise classification list cannot be altered to the assessee's detriment without notice and hearing, and a demand for duty based on such unilateral reclassification is unsustainable.

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