Intentional Misdeclaration required for excise penalty; penalty cannot exceed the scope of the show cause notice.

Penalty under excise law could not be sustained where the goods had earlier been classified under the assessee's declared heading and the Department had approved the classification lists, since a different self-assessed classification by the assessee did not by itself prove intentional misdeclaration. Penalty was also unsustainable in the appeal where the show cause notice did not propose such penalty, because the adjudication could not travel beyond the notice. The penalty orders were therefore annulled.

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Issues: Whether penalty could be sustained on the allegation of misdeclaration in the classification lists and whether penalty could be imposed when the show cause notice did not propose such penalty in one of the appeals.

Analysis: The goods had earlier been classified under the assessee's declared heading and the Department had approved the classification lists in the past. The declared goods were not shown to be different from what was stated in the classification lists. Mere adoption of a different classification by the assessee, based on its understanding that the goods were motor vehicle parts used in its scooter unit, did not by itself establish intentional misdeclaration so as to attract penalty. In one appeal, the show cause notice did not contain any proposal for penalty, making the penalty order unsustainable beyond the scope of the notice.

Conclusion: Penalty was not sustainable and was set aside.

Final Conclusion: The penalty orders were annulled and the appeals succeeded.

Ratio Decidendi: Penalty under the excise law cannot be imposed absent intentional misdeclaration, and it cannot travel beyond the scope of the show cause notice.

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