Natural justice and exemption threshold rules prevent added duty liability and exclusionary aggregation of unrelated clearances.

A corrigendum revising an approved classification list to impose additional duty liability was held invalid because no prior show cause notice had been issued; a later hearing before the Assistant Collector did not cure the breach of natural justice. For computation under Notification No. 44/82-Central Excise, only clearances of the specified goods could be considered, and clearances of Paints and Varnishes could not be added to the aggregate value. The assessee therefore remained within the prescribed limit and was entitled to the notification benefit with consequential relief.

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Issues: (i) Whether the modification of the approved classification list by corrigendum, resulting in additional duty liability, was invalid for want of a show cause notice; (ii) whether, for computing the aggregate value of clearances under Notification No. 44/82-Central Excise, clearances of goods other than the said goods could be included.

Issue (i): Whether the modification of the approved classification list by corrigendum, resulting in additional duty liability, was invalid for want of a show cause notice.

Analysis: The earlier approval of the classification list was revised by corrigendum so as to fasten additional duty liability without issuance of a show cause notice. Such a course was held to offend the principles of natural justice. The subsequent hearing before the Assistant Collector did not cure the defect, because the adverse revision had already been made without the procedural safeguard of notice.

Conclusion: The modification was invalid for want of a show cause notice and was contrary to the principles of natural justice, in favour of the assessee.

Issue (ii): Whether, for computing the aggregate value of clearances under Notification No. 44/82-Central Excise, clearances of goods other than the said goods could be included.

Analysis: Explanation II to the notification directed exclusion only of clearances of the said goods that were otherwise exempted under specified notifications, while requiring certain exempted clearances under Notifications Nos. 80/80-Central Excise and 43/82-Central Excise to be counted. The phrase said goods referred only to Synthetic Organic Dyestuffs and Synthetic Organic Derivatives falling under Item 14D. Clearances of Paints and Varnishes were not clearances of the said goods and therefore could not be added to the aggregate value for the purpose of the notification.

Conclusion: Clearances of Paints and Varnishes could not be included in the aggregate computation, and the assessee remained within the prescribed limit, in favour of the assessee.

Final Conclusion: The demand denial was unsustainable, the impugned order was set aside, and the assessee was held entitled to the notification benefit with consequential relief.

Ratio Decidendi: A classification-list revision imposing additional duty cannot be sustained without prior notice, and an exemption notification limited to the said goods cannot be enlarged to include clearances of other goods in computing the aggregate threshold.

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