Classification cannot be revised without notice, and exemption under a conditional notification depends on proving every prescribed requirement.

An appellate authority cannot revise the classification of goods on a ground not put to the assessee in the original notice; where the notice challenged only exemption, a later change in classification without opportunity to respond is improper, and the revised classification was set aside. For exemption under Notification No. 53/94-C.E., the assessee had to establish the specific condition that hearing-aid parts were used within the factory of production of the hearing aids. As that condition was not proved, the denial of exemption was sustained. The matter thus turned partly on procedural fairness in classification and partly on strict compliance with the notification's condition.

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Issues: (i) Whether the classification of the goods could be revised by the appellate authority without notice to the assessee. (ii) Whether the assessee was entitled to the benefit of Notification No. 53/94-C.E. in respect of the hearing-aid parts.

Issue (i): Whether the classification of the goods could be revised by the appellate authority without notice to the assessee.

Analysis: The notice issued at the original stage proposed only denial of the exemption benefit and did not put the assessee on notice that the classification itself would be altered. A change in classification, therefore, could not be made by the appellate authority without affording an opportunity to meet that case.

Conclusion: The classification determined by the appellate authority was set aside.

Issue (ii): Whether the assessee was entitled to the benefit of Notification No. 53/94-C.E. in respect of the hearing-aid parts.

Analysis: The relevant entry in the notification required that the parts of hearing aids be used within the factory of production of the hearing aids. The assessee did not establish compliance with that condition. The reference to another serial entry was only illustrative and did not alter the requirement attached to the applicable entry.

Conclusion: The denial of the exemption benefit was upheld.

Final Conclusion: The assessee succeeded only on the classification issue, while the refusal of exemption under the notification was sustained, leaving the appeal partly allowed.

Ratio Decidendi: A classification cannot be altered by an appellate authority on a basis not put in issue by notice, and exemption under a conditional notification is unavailable unless the prescribed condition is established to have been fulfilled.

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