Natural justice requires hearing before adverse excise classification of tobacco affecting duty liability is finalised.

Branded tobacco was classified as manufactured tobacco for central excise duty purposes, but the adverse classification was made on discreet enquiries without notice to the affected party or an opportunity of hearing. A final determination that changes duty liability must comply with natural justice, especially where the goods had earlier been treated differently. The classification order and the consequential demand were therefore quashed for breach of natural justice.

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Issues: Whether the excise classification order treating the petitioner's tobacco as manufactured tobacco, and the consequential demand, were liable to be quashed for breach of natural justice.

Analysis: The dispute concerned classification of the petitioner's branded tobacco, on which the levy of central excise duty depended. The goods had earlier been treated as unmanufactured tobacco, but the final adverse classification was made on discreet enquiries without notice to the petitioner or an opportunity of hearing. A final determination affecting duty liability could not be made behind the back of the affected party, particularly where the same goods had earlier been treated differently. The consequential communication based on that classification therefore also could not stand.

Conclusion: The classification order and the consequential demand were quashed for violation of natural justice, and the petitioner succeeded.

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