Natural justice and Cenvat debit treated as duty payment; withdrawal of deferred duty facility and penalty enhancement failed.

Withdrawal of deferred duty payment facility without notice or an opportunity of hearing violated natural justice and could not be sustained. The corrigendum that materially enhanced the penalty without recorded reasons was also impermissible, as it could not validly alter the original adjudication and had not been noticed by the appellate authority. The record further showed that duty liability had been discharged by debit in the Cenvat account, which was treated as payment of duty under excise law. On these grounds, the impugned order was set aside and the appeals were allowed with consequential relief.

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Issues: Whether withdrawal of the facility of deferred payment of duty without show cause notice and the corrigendum enhancing penalty without recorded reasons could be sustained, and whether duty payment through Cenvat credit could be treated as payment of duty.

Analysis: The facility of deferred payment was withdrawn without issuing notice or affording an opportunity of hearing, which offended the principles of natural justice. The corrigendum enhanced the penalty materially without any reasoning, and such a corrigendum could not substantially alter the original adjudication. The appellate authority also failed to notice the corrigendum. The record further showed that the duty liability had been discharged by debit in the Cenvat account, and such payment was treated as duty payment under the excise law.

Conclusion: The impugned order could not be sustained, and the appeals were allowed with consequential relief.

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