Show cause notice limits appellate grounds: new excise objections cannot be introduced later to sustain demand.

Section 35E cannot be used to sustain an excise demand on a ground not raised in the show cause notice or decided in adjudication. Where the notice alleged only that goods were not inputs for the final product, a separate objection that their value was not included in the assessable value could not be introduced later at the appellate stage. A new ground needing further factual inquiry cannot be added by remand when it was never part of the original notice or order. The appellate order was therefore unsustainable.

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Issues: Whether the Department could invoke Section 35E to support an appeal on a ground not stated in the show cause notice, and whether the Collector (Appeals) could sustain the demand on that new ground.

Analysis: The notice alleged only that the items were not inputs for the final product and did not raise the separate objection that their value had not been included in the assessable value of the preceding year. Section 35E(2) permits an appeal only for determination of points arising out of the decision or order, and cannot be used to travel beyond the scope of the notice. A new ground requiring additional factual inquiry cannot be introduced at the appellate stage when it was never part of the original notice or adjudication. The proposed remand for fresh evidence on that new basis was also impermissible because proceedings must remain anchored to the allegations in the show cause notice.

Conclusion: The Collector (Appeals) could not sustain the demand on a ground not contained in the show cause notice, and the impugned order was unsustainable.

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