Natural justice requires disclosure of adverse material before adjudication based on an undisclosed report cannot stand

Reliance on a post-hearing Range Officer's report, without supplying it to the assessee, breached natural justice because the assessee was denied an opportunity to explain the material and establish the nature of the goods covered by the records. An adjudication based on undisclosed adverse material is unsustainable. The order was set aside and the matter remanded for de novo adjudication after disclosure of the report and a proper opportunity of hearing.

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Issues: Whether the adjudication confirming denial of Modvat credit was vitiated for breach of natural justice because the adjudicating authority relied on a report obtained after the assessee was heard and not disclosed to it.

Analysis: The adjudicating authority placed reliance on a Range Officer's report prepared after the hearing and used it in deciding the dispute. Since the assessee was not supplied that material, it was denied an opportunity to explain the documents and establish the exact nature of the goods covered by the relevant records. Reliance on undisclosed material in such circumstances offends fair hearing requirements and renders the adjudication unsustainable.

Conclusion: The order could not be sustained. The matter was remanded for de novo adjudication after supplying the report to the assessee and affording a proper opportunity of hearing.

Ratio Decidendi: An adjudication cannot be sustained where adverse material relied upon by the authority is not disclosed to the affected party before decision.

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