Exemption notifications must be read as a whole; Chapter 60 cotton base fabric was excluded, but unpleaded duty-paid objections failed.

An exemption notification was construed as a whole, and the concessional entry was held confined to base fabrics under Chapter 52; laminated fabrics made from knitted cotton base fabric of Chapter 60 were therefore outside Serial No. 1. A duty-paid objection not raised in the show cause notices could not be used against the assessee at the appellate stage, and goods bought from the market were presumed duty paid unless the department rebutted that presumption. The residuary classification claim was not fully examined earlier, so the matter was remanded for de novo consideration by the jurisdictional authority.

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Issues: (i) Whether laminated fabrics manufactured from cotton base fabric falling under Chapter 60 were covered by Serial No. 1 of Notification No. 82/88-C.E. for goods described as textile fabrics laminated with plastics of base fabrics of cotton; (ii) whether the duty-paid nature of the base fabric could be examined when that issue was not raised in the show cause notices; and (iii) whether the claim for classification under the residuary entry equivalent to Serial No. 3 required de novo consideration.

Issue (i): Whether laminated fabrics manufactured from cotton base fabric falling under Chapter 60 were covered by Serial No. 1 of Notification No. 82/88-C.E. for goods described as textile fabrics laminated with plastics of base fabrics of cotton.

Analysis: The notification had to be read as a whole, and the concessional entry in column 4 expressly linked Serial No. 1 to base fabrics under Chapter 52. Applying the same approach earlier adopted in the comparable exemption-notification controversy, the reference to Chapter 52 was treated as qualifying the description of the eligible base fabric. The later omission of that reference by amendment was treated as confirming that, until such amendment, the entry did not extend to cotton base fabrics outside Chapter 52.

Conclusion: The laminated fabrics made from knitted cotton base fabric of Chapter 60 were not covered by Serial No. 1 of Notification No. 82/88-C.E.; the issue was decided against the assessee.

Issue (ii): Whether the duty-paid nature of the base fabric could be examined when that issue was not raised in the show cause notices.

Analysis: A ground not put to the assessee in the show cause notices could not be examined at the appellate stage to their detriment. The burden to establish non-duty-paid character remained on the department, and goods purchased from the market were to be presumed duty paid unless rebutted by evidence.

Conclusion: The duty-paid character of the base fabric could not be denied on the basis of a ground not alleged in the notices; this issue was decided in favour of the assessee.

Issue (iii): Whether the claim for classification under the residuary entry equivalent to Serial No. 3 required de novo consideration.

Analysis: The residuary exemption/classification position had not been fully examined at the earlier stage, and the appellate record showed that the issue required fresh factual and legal determination by the jurisdictional authority.

Conclusion: The matter was remanded for de novo decision on classification under the residuary entry; this issue was kept open for fresh adjudication.

Final Conclusion: The exemption entry was construed narrowly against coverage of Chapter 60 base fabric, but the assessee succeeded on the unpleaded duty-paid-fabric objection and obtained a remand for fresh determination on the residuary classification claim.

Ratio Decidendi: An exemption notification must be construed as a whole and, where the entry expressly links concessional treatment to a specified chapter of the base fabric, the benefit cannot be extended beyond that expressed scope; separately, a demand or denial cannot rest on a ground not raised in the show cause notice, and the department bears the burden to prove non-duty-paid character.

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