Natural justice requires notice before modifying an approved classification list that had already conferred a substantive benefit on the assessee.

An approved classification list under Rule 173B could not be withdrawn or modified to the assessee's prejudice without prior notice and an effective opportunity of hearing, because the assessing authority was acting quasi-judicially and the earlier approval had conferred a substantive benefit. The assessee's reliance on the approved classification, including not collecting duty from customers, made the prejudice from unilateral alteration more serious. The modification order and consequential demand were therefore set aside for breach of natural justice, and the writ petition was allowed.

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Issues: Whether the Assistant Collector could modify the earlier approval of the classification list under Rule 173B without affording the petitioner an opportunity of being heard, and whether the consequential demand and modification order were liable to be quashed.

Analysis: The approval of the classification list had conferred a substantive benefit on the assessee, and the assessing authority exercised a quasi-judicial function in dealing with classification and duty liability. Once the earlier approval was sought to be withdrawn or altered to the prejudice of the assessee, fairness required prior notice and an effective opportunity to meet the proposed change. The fact that the petitioner had acted on the approved classification and had not collected duty from customers made the prejudice more serious. In these circumstances, the challenge to the tariff classification itself did not require separate determination for granting relief.

Conclusion: The modification order and the consequential demand were set aside for breach of natural justice, and the writ petition was allowed.

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