Self-assessment duty defaults allowed forfeiture without separate notice, but instalment-payment facility could be withdrawn only for two months.

Under the self-assessment regime, admitted duty defaults disclosed in returns did not require a separate show-cause notice before withdrawal of the instalment-payment facility, and the objection based on natural justice failed. However, Rule 8(4)(ii) was read as permitting forfeiture only for the prescribed two-month period, not as authorising a continuous deprivation extending over several months or beyond the relevant financial year. The order was therefore modified to confine the forfeiture to two months from communication of the order, and the broader continuous forfeiture was not sustained.

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Issues: (i) Whether the forfeiture of the facility for payment of duty in instalments under Rule 8 required a prior show-cause notice or opportunity of hearing. (ii) Whether the forfeiture could be ordered continuously for periods extending beyond two months and beyond the financial year in which the defaults occurred.

Issue (i): Whether the forfeiture of the facility for payment of duty in instalments under Rule 8 required a prior show-cause notice or opportunity of hearing.

Analysis: The assessee was governed by the self-assessment scheme, under which duty liability and defaults were disclosed through returns filed by it. The defaulted duty was already admitted, and the Board's instructions treated such unpaid duty as arrears recoverable without initiation of proceedings under Section 11A of the Central Excise Act. On that basis, the order withdrawing the facility was held to be within the statutory framework and not vitiated merely for want of a separate show-cause notice.

Conclusion: The objection based on violation of natural justice failed.

Issue (ii): Whether the forfeiture could be ordered continuously for periods extending beyond two months and beyond the financial year in which the defaults occurred.

Analysis: Rule 8(4)(ii) was treated as authorising forfeiture only for a two-month period and not as permitting a continuous deprivation running for several months on the basis of successive defaults. The authority was expected to act on each qualifying default in the manner prescribed by the rule and the Board's instructions, rather than impose a single continuous forfeiture spanning eight months. The order was therefore modified so that the forfeiture would operate for two months from communication of the order and not as a continuous block.

Conclusion: The continuous forfeiture beyond two months was not sustained.

Final Conclusion: The appeals succeeded only in part, with the forfeiture orders being modified to confine the deprivation of instalment-payment facility to the lawful two-month period.

Ratio Decidendi: Where duty defaults are admitted under a self-assessment regime, separate show-cause proceedings are not necessary for recovery, but the power to forfeit a deferred-payment facility must be exercised strictly within the temporal limits prescribed by the governing rule.

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