Natural justice governs annual production capacity determinations, requiring a hearing before fixing duty-linked capacity.

Determination of annual capacity of production under the excise framework is a quasi-judicial exercise and must comply with natural justice. Where the assessee contends that the furnace was not in operation and seeks consideration of that representation, the authority must afford a reasonable opportunity of hearing before fixing capacity. In the absence of any indication that such hearing was granted, the capacity determination was invalid. The matter was therefore remanded for fresh determination after giving the assessee a proper opportunity to be heard.

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Issues: Whether the determination of annual capacity of production without affording a reasonable opportunity of hearing was valid.

Analysis: Determination of annual capacity of production under the relevant excise framework is a quasi-judicial exercise. Where the assessee asserts that the relevant furnace was not in operation and seeks consideration of representations on that basis, the authority is required to give a reasonable opportunity of being heard before fixing the capacity. In the absence of any indication that such opportunity was granted, the determination cannot stand.

Conclusion: The capacity determination was invalid for breach of natural justice and was set aside. The matter was remanded to the Commissioner for fresh determination after affording a reasonable opportunity of hearing.

Ratio Decidendi: A quasi-judicial determination affecting duty liability must be made after granting the affected party a reasonable opportunity of hearing; failure to do so vitiates the decision and warrants remand for fresh consideration.

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