Duty demand fails where adjudication departs from the show cause notice, limitation is unsupported, and extension under the exemption notification was ignored.

A duty demand cannot be sustained where the adjudication rests on grounds not alleged in the show cause notice, because the assessee must have notice of the case to meet. The demand also failed on limitation, since the notice did not allege the wilful contravention needed to justify denial of the time bar. In addition, the exemption notification allowed the Collector to extend the prescribed time, the assessee sought such extension, and no decision was communicated. On these facts, the adverse order was unsupported and the demand was held unsustainable.

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Issues: Whether the demand of duty could be sustained when the adjudicating authority confirmed it on grounds not alleged in the show cause notice, when the notice did not allege wilful contravention for the purpose of limitation, and when the assessee's request for extension of time under the exemption notification was not dealt with by the Collector.

Analysis: The demand was founded on a basis different from the allegation in the show cause notice. The notice also did not contain the ingredients required to justify a finding that the demand was not barred by limitation. Further, the notification itself permitted extension of time by the Collector, and the assessee had sought such extension, but no decision was communicated. In these circumstances, the adverse order could not be supported.

Conclusion: The demand was not sustainable and the appeal succeeded in favour of the assessee.

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