Retrospective validation of valuation demands preserved timely notices, but duty demands without show cause notice were impermissible.

A retrospective validating amendment to the valuation provision cured the earlier defect in duty computation, so show cause notices issued on that basis were treated as valid and the resulting demands were within limitation. By contrast, demands raised merely on RT 12 returns, without a prior show cause notice and adjudication, were held impermissible because liability cannot be enforced without the prescribed notice-and-hearing process. The net effect was that demands founded on valid notices were sustained, while RT 12-based demands made without notice were annulled.

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Issues: (i) Whether the show cause notices and the resulting duty demands were valid and within limitation in view of the retrospective amendment to the valuation provision. (ii) Whether demands raised on RT 12 returns without issue of show cause notice could be sustained.

Issue (i): Whether the show cause notices and the resulting duty demands were valid and within limitation in view of the retrospective amendment to the valuation provision.

Analysis: The retrospective amendment by Section 47(2) of the Finance Act, 1982 validated actions taken during the relevant period and gave statutory effect to the amended valuation principle. On that basis, the notices issued by the departmental authority were treated as valid, and the demands raised pursuant to those notices were held to be within the prescribed period of limitation. The earlier contrary view could not survive the retrospective legislative validation.

Conclusion: In favour of Revenue. The show cause notices and the demands based on them were held valid and not time-barred.

Issue (ii): Whether demands raised on RT 12 returns without issue of show cause notice could be sustained.

Analysis: Demands made merely on RT 12 returns, without a prior show cause notice and adjudication, were held impermissible. A demand affecting liability could not be sustained in the absence of the prescribed notice-and-adjudication process.

Conclusion: In favour of the assessee. The RT 12-based demands without show cause notice were set aside.

Final Conclusion: The order below was modified so that duty demands founded on valid show cause notices were sustained, while demands raised only on RT 12 returns without notice were annulled.

Ratio Decidendi: A retrospective validating amendment can cure the legal defect in valuation-based duty demands and save timely show cause notices, but a customs or excise demand cannot be sustained where it is raised without the mandatory show cause notice and adjudication process.

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