Natural justice in provisional excise assessment: prior notice and hearing are required before enhanced duty is demanded

Where the revenue seeks to recover enhanced central excise duty on the footing that an earlier assessment was provisional, the assessee must first be told the grounds for the proposed increase and given an opportunity to respond. The Court treated this as the minimum requirement of natural justice under Rule 9B(5) of the Central Excise Rules and applied it whenever enhanced liability was to be fastened. Prior validity of the earlier assessment was not in issue; the decisive point was that additional duty could not be made payable without prior notice and hearing. The High Court's direction was upheld.

---

---

Issues: Whether, before recovering enhanced central excise duty on the basis that the earlier assessment was provisional, the assessee was entitled to a notice stating the grounds for the proposed higher liability and an opportunity to meet those grounds under Rule 9B(5) of the Central Excise Rules.

Analysis: The dispute turned on whether the later demand for additional duty could be enforced without first informing the assessee of the basis of enhancement. The Court accepted that the earlier order was not being challenged for its validity, but held that when the revenue sought to fasten higher liability, the assessee had to be told the grounds for such enhancement and given an opportunity to respond. This requirement was treated as the minimum content of natural justice and as applicable wherever Rule 9B(5) operated.

Conclusion: The assessee was entitled to prior notice and an opportunity of hearing before the enhanced duty could be made payable, and the High Court's direction was upheld.

---