Natural justice in classification disputes requires notice of the exact basis adopted before liability is fixed.

A classification order is vulnerable where the show cause notice proposes one tariff heading but the adjudicating authority relies on a different classification without giving the assessee notice and an opportunity to meet that basis. In a classification dispute, liability cannot be determined on a ground not put to the assessee in the notice, as this breaches natural justice. The challenge based on the circular under Section 37B of the Central Excise Act was not finally decided. The order was quashed and the matter remitted for fresh adjudication.

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Issues: Whether the classification order was vitiated for want of a show cause notice covering the eventual classification adopted in adjudication.

Analysis: The notice proposed classification under one heading, but the adjudicating order proceeded on a different classification without affording the assessee an opportunity to meet that basis. In a classification dispute, if the authority ultimately relies on a category different from the one proposed in the notice, the assessee must be put to notice and given an opportunity to contest that specific basis before liability is determined. The challenge based on the circular under Section 37B of the Central Excise Act was not finally decided.

Conclusion: The order was vitiated for breach of natural justice and was quashed; the matter was remitted for fresh adjudication.

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