Show cause notice limits adjudication: unexplained hazardous-waste allegations and new value misdeclaration grounds could not support penalty.

An adjudication order cannot sustain confiscation or penalty on a ground not put to notice in the show cause notice, and silence in the final findings on a specifically answered allegation may amount to acceptance of the importer's explanation. Here, the notice alleged prohibited import as hazardous waste, but the order recorded no adverse finding on that issue after the importer replied with supporting material; that allegation was treated as accepted. The order also shifted to misdeclaration of value, a distinct basis not disclosed in the notice, so the confiscation and penalty founded on that ground were held unsustainable and set aside.

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Issues: (i) Whether silence in the adjudication order on the alleged import of prohibited hazardous waste, after the importer had replied to the show cause notice and placed supporting material, amounted to acceptance of the importer's explanation. (ii) Whether confiscation and penalty could be sustained when the adjudication order rested on misdeclaration of value, although the show cause notice had proceeded on the basis of prohibited import and had not put the importer to notice on that distinct ground.

Issue (i): Whether silence in the adjudication order on the alleged import of prohibited hazardous waste, after the importer had replied to the show cause notice and placed supporting material, amounted to acceptance of the importer's explanation.

Analysis: The show cause notice alleged that the goods were prohibited because they were used critical care medical equipment falling within the hazardous-waste regime. The importer replied to that allegation and filed supporting certificates. In the impugned order, the submissions were reproduced at length, but the discussion and findings contained no substantive determination that the goods were hazardous waste or other waste. Where an adjudicating authority considers the reply and does not record any adverse finding on the specific allegation, the explanation is treated as having been accepted.

Conclusion: The allegation that the goods were prohibited hazardous waste was treated as having been accepted in favour of the importer.

Issue (ii): Whether confiscation and penalty could be sustained when the adjudication order rested on misdeclaration of value, although the show cause notice had proceeded on the basis of prohibited import and had not put the importer to notice on that distinct ground.

Analysis: The show cause notice called upon the importer to answer only the allegation of prohibited import and the consequential confiscation and penalty flowing from that allegation. The adjudication order, however, went further and rejected the declared value, redetermined assessable value, and imposed confiscation and penalty on the footing of value misdeclaration. A person cannot be condemned on a ground not clearly proposed in the notice, and an adjudication cannot travel beyond the case set up in the notice.

Conclusion: The confiscation and penalty founded on misdeclaration of value were unsustainable and were set aside.

Final Conclusion: The impugned adjudication order could not survive because the hazardous-waste allegation was not adversely decided and the value-misdeclaration basis was outside the scope of the notice. The petition was allowed and the order was set aside.

Ratio Decidendi: An adjudication order cannot sustain consequences on a ground not put to notice in the show cause notice, and where a specific allegation is fully answered by the party but left unanswered in the final findings, the authority may be taken to have accepted that explanation.

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