Exemption for dredgers, barges and tugs upheld; duty demand beyond the show cause notice was unsustainable.

An exemption notification and the accompanying Collectorate trade notice were treated as covering indigenously built dredgers, barges and tugs as ocean-going vessels, so the exemption under Notification No. 234/82-C.E. was applied in their favour. The contrary reliance on a High Court ruling concerning imported trans-shippers was distinguished. A duty debit could not be directed from the assessee's Personal Ledger Account for an amount not included in the show cause notice, because demand cannot travel beyond the scope of the notice. On that basis, the duty demands, confiscation and penalties were set aside.

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Issues: (i) Whether dredgers, barges and tugs were covered by the exemption under Notification No. 234/82-C.E. as ocean going vessels; (ii) Whether the Collector could direct debit of duty from the assessee's Personal Ledger Account for an amount not covered by the show cause notice.

Issue (i): Whether dredgers, barges and tugs were covered by the exemption under Notification No. 234/82-C.E. as ocean going vessels.

Analysis: The exemption notification and the Collectorate Trade Notice specifically covered indigenously built barges, tugs and dredgers. The earlier Tribunal view treating barges as ocean going vessels, and the view that a dredger was entitled to similar treatment, supported the assessee. The departmental trade notice was treated as binding, and the contrary reliance on the High Court decision concerning imported trans-shippers was distinguished.

Conclusion: The dredgers, barges and tugs were held entitled to the exemption.

Issue (ii): Whether the Collector could direct debit of duty from the assessee's Personal Ledger Account for an amount not covered by the show cause notice.

Analysis: The amount directed to be debited was not included in the notice and therefore travelled beyond the scope of the proceedings initiated against the assessee. A demand cannot be sustained for an amount outside the show cause notice.

Conclusion: The direction for debit from the Personal Ledger Account was held to be beyond the scope of the show cause notice and unsustainable.

Final Conclusion: The duty demands, confiscation and penalties were set aside, and the appeals succeeded on merits.

Ratio Decidendi: Where the departmental trade notice consistently interprets an exemption notification to include dredgers, barges and tugs as ocean going vessels, that interpretation may be applied in the assessee's favour; additionally, a duty demand cannot be sustained to the extent it exceeds the show cause notice.

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