Excise exemption and limitation require a precise show cause notice; extended time needs proof of suppression to evade duty.

An excise demand cannot be sustained where the adjudicating authority denies exemption on a notification or ground not stated in the show cause notice, because the assessee must be put on notice of the precise basis of liability. The extended limitation period is unavailable without proof of suppression of facts with intent to evade duty; on the stated facts, no such suppression was shown, so the demand could operate only within the normal limitation period and was time-barred beyond six months.

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Issues: (i) Whether the adjudicating authority could deny exemption by relying on a notification and ground not covered by the show cause notice; (ii) whether the extended period of limitation was available in the absence of suppression with intent to evade duty.

Issue (i): Whether the adjudicating authority could deny exemption by relying on a notification and ground not covered by the show cause notice.

Analysis: The claim in the classification lists was under Notifications No. 175/86-C.E. and No. 1/93, while the show cause notice proceeded on Notification No. 74/93 dated 28-2-1993. The adjudicating authority nevertheless examined a different notification and also applied a basis of denial not encompassed by the notice. A demand cannot be sustained when the assessee has not been put to notice of the precise basis on which liability is proposed to be fastened.

Conclusion: The adjudicating authority travelled beyond the scope of the show cause notice, and the denial of relief on that basis was unsustainable.

Issue (ii): Whether the extended period of limitation was available in the absence of suppression with intent to evade duty.

Analysis: The record did not show suppression with intent to evade duty. The unit was under State Government control, and the circumstances did not justify attributing a deliberate attempt to obtain undue duty benefit. In such circumstances, invocation of the longer period was not warranted, and the demand could operate only within the normal limitation period.

Conclusion: The extended period was not available, and the demand was time-barred beyond six months from the date of the show cause notice.

Final Conclusion: The impugned order was set aside and the appeal was allowed with consequential relief according to law.

Ratio Decidendi: An excise demand cannot be sustained on a ground or notification not set out in the show cause notice, and the extended limitation period requires proof of suppression of facts with intent to evade duty.

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