Exemption denial cannot rest on a new ground raised at appeal when the show cause notice never raised it.

A revenue authority cannot deny an exemption notification on a new ground raised for the first time in appeal if that ground was not stated in the show cause notices. The notices had questioned eligibility on tariff classification and the scope of the notification, but the appellate attempt to rely on the alleged non-duty-paid character of the inputs was not permitted. A fresh basis for denial cannot be introduced at the appellate stage to sustain the exemption challenge, so the new objection was impermissible and the exemption claim succeeded.

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Issues: Whether the Revenue could deny the benefit of the exemption notification on a ground not taken in the show cause notices.

Analysis: The notices proceeded on the footing that the final products were not eligible for exemption because they fell under the relevant tariff headings and the notification was said to apply only to specified primary forms of iron and certain waste and scrap products. In appeal, the Revenue sought to deny the exemption on a different basis, namely that the inputs were non-duty paid and therefore the condition in the notification was not satisfied. A ground not stated in the show cause notices cannot be introduced at the appellate stage to sustain denial of the exemption.

Conclusion: The new ground was impermissible and the challenge to the exemption failed.

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