Prior hearing under excise credit recovery rules is mandatory where civil rights are affected and natural justice applies.

Action under Rule 57-I of the Central Excise Rules, 1944 could not be taken without a prior opportunity to show cause, because the provision did not expressly exclude natural justice and the disallowance of wrongly taken credit affected civil rights. In the absence of any cogent reason to dispense with a pre-decisional hearing, the rule of audi alteram partem applied. Since no prior notice or hearing was given before the impugned orders, the orders were held unsustainable and liable to be quashed. Any fresh action was required to be preceded by reasonable opportunity and followed by a speaking order after considering the explanation offered.

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Issues: Whether action under Rule 57-I of the Central Excise Rules, 1944 could be taken without giving the affected party a prior opportunity to show cause.

Analysis: Rule 57-I empowered the proper officer to disallow wrongly taken credit and recover the amount, but it did not expressly exclude the application of natural justice. The order affected civil rights and, in the absence of any cogent reason showing that pre-decisional hearing was intended to be excluded, the ordinary rule of audi alteram partem applied. Since no opportunity to show cause was given before the impugned orders were passed, the orders could not stand. The Court also directed that any fresh action must be preceded by reasonable opportunity and followed by speaking orders after considering any explanation offered.

Conclusion: Prior notice and an opportunity of hearing were required before taking action under Rule 57-I, and the impugned orders were liable to be quashed for breach of natural justice.

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