Show cause notice scope controls excise adjudication; demand failed where authority relied on an uninvoked rule

Excise adjudication must remain within the scope of the show cause notice, and an authority cannot sustain a demand on a statutory basis not invoked in that notice. Where proceedings were initiated under Rule 9A(4)(iii), the rate of duty could not be shifted to Rule 9A(5), which fixes liability by reference to the date of payment. The assessment direction was therefore invalid because the adjudicating authority relied on a provision not put to the assessee for , and the demand could not stand on that footing.

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Issues: (i) Whether duty could be demanded at the rate prevailing on the date of actual payment under Rule 9A(5) of the Central Excise Rules when the proceedings were initiated under Rule 9A(4)(iii); (ii) Whether the order of the Additional Collector was sustainable when the show cause notice did not propose assessment under Rule 9A(5).

Issue (i): Whether duty could be demanded at the rate prevailing on the date of actual payment under Rule 9A(5) of the Central Excise Rules when the proceedings were initiated under Rule 9A(4)(iii).

Analysis: Rule 9A(5) governs cases where duty is to be paid and fixes the rate by reference to the date of payment. That basis was distinct from the basis stated in the show cause notice, which proceeded under Rule 9A(4)(iii) concerning discovery of loss in storage by the proper officer or when it is made known to him. The rate question therefore depended on the provision under which the matter was lawfully initiated.

Conclusion: The demand could not be sustained on the footing of Rule 9A(5) in the present proceedings.

Issue (ii): Whether the order of the Additional Collector was sustainable when the show cause notice did not propose assessment under Rule 9A(5).

Analysis: The show cause notice was confined to assessment under Rule 9A(4)(iii). The Additional Collector, however, proceeded on a different basis and directed payment under Rule 9A(5). An adjudicating authority cannot travel beyond the scope of the notice and grant relief on a ground on which the assessee was not called upon to answer.

Conclusion: The order was unlawful and liable to be set aside.

Final Conclusion: The assessment direction could not stand because the adjudication travelled beyond the show cause notice and relied on a provision not put in issue.

Ratio Decidendi: An adjudication in excise proceedings must remain within the scope of the show cause notice, and relief or demand cannot be founded on a statutory provision not invoked in the notice.

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