Retrospective revision of approved price lists needs specific notice; unchallenged liability orders remain operative from the stated date.

Differential excise duty cannot be sustained by retrospectively treating approved price lists as amended unless the assessee was specifically put to notice on that basis; a notice confined to differential duty is insufficient for that broader revision. At the same time, where an earlier departmental order fixing liability from a specified date remains unchallenged, that order continues to operate, and duty may be recovered from that date. The Tribunal also followed the binding High Court view that duty paid on yarn under the compounded levy forms part of the assessable value of cotton fabrics, sustaining the demand only from 3-5-1977.

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Issues: (i) Whether the assessee could be fastened with differential duty by retrospectively treating the approved price lists as amended without a show cause notice; (ii) whether duty on yarn paid under the compounded levy formed part of the assessable value of the cotton fabrics and whether the demand could operate from 3-5-1977.

Issue (i): Whether the assessee could be fastened with differential duty by retrospectively treating the approved price lists as amended without a show cause notice.

Analysis: The show cause notice issued under Rule 10 of the Central Excise Rules, 1944 called upon the assessee only to meet the demand for differential duty. It did not require the assessee to show cause against a retrospective revision of all price lists. In the absence of a notice on that specific aspect, the retrospective modification of the approved price lists could not be sustained.

Conclusion: This issue was decided in favour of the assessee.

Issue (ii): Whether duty on yarn paid under the compounded levy formed part of the assessable value of the cotton fabrics and whether the demand could operate from 3-5-1977.

Analysis: The Tribunal accepted that the unappealed order dated 7-6-1977 remained operative. On that basis, duty became payable from 3-5-1977. The Tribunal also held that the duty paid on yarn was includible in the assessable value of the textile fabrics, following the binding High Court view on the point. The demand was therefore sustained only to the extent flowing from the unchallenged order and not for the period prior to 3-5-1977.

Conclusion: This issue was decided partly against the assessee and partly in favour of the assessee, with duty held payable only from 3-5-1977.

Final Conclusion: The assessee succeeded on the objection to retrospective price-list modification without notice, but the duty demand was sustained from 3-5-1977 on the basis of the unappealed order and the inclusion of yarn duty in the assessable value.

Ratio Decidendi: A demand for differential excise duty cannot be supported by a retrospective revision of approved price lists unless the assessee was put to notice on that specific basis, but an unappealed departmental order fixing liability from a specified date remains operative for that period.

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