Show cause notice requirement bars excise duty demand where prior notice covered only tariff reclassification.

A demand for Central Excise duty must be preceded by a valid show cause notice proposing the duty liability; a notice confined only to reclassification of goods does not authorise a later demand for differential duty. Subsequent communications seeking payment cannot cure the absence of prior notice. The demand was therefore held bad in law, and relief followed in favour of the assessee.

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Issues: Whether demand of Central Excise duty could be raised without issuing a show cause notice when the earlier notice related only to change in classification.

Analysis: The notice issued to the assessee was confined to reclassification of the goods from Chapter 73 to Chapter 84 of the Central Excise Tariff Schedule and did not propose any demand of differential duty. The subsequent communications asking for payment of duty could not cure the absence of a prior notice proposing the levy. A demand for short-levied or non-levied excise duty must be preceded by a show cause notice in observance of natural justice.

Conclusion: The demand of Central Excise duty without a show cause notice was held to be bad in law, and the issue was decided in favour of the assessee.

Final Conclusion: The appeal succeeded and the duty demand was set aside with consequential relief.

Ratio Decidendi: A demand for Central Excise duty cannot be sustained unless the assessee was put to notice of the proposed duty liability through a valid show cause notice; a notice limited to classification does not authorize a later demand for differential duty.

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