Natural justice governs discretionary excise facility approvals; non-speaking refusal without hearing was set aside and remanded.

A discretionary refusal of approval under Rule 56B affecting an assessee's facility could not stand where no personal hearing was given and no reasons were recorded; the non-speaking order was set aside for breach of natural justice and fair play. The matter was remanded for fresh decision after hearing the assessee, with a time-bound direction for reconsideration. Interim continuance of the facility was permitted pending redetermination, subject to revenue safeguards.

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Issues: (i) Whether rejection of the request for facility under Rule 56B of the Central Excise Rules, 1944 without hearing the applicants and without reasons was sustainable; (ii) Whether the matter should be remanded for fresh decision with interim continuation of the facility.

Issue (i): Whether rejection of the request for facility under Rule 56B of the Central Excise Rules, 1944 without hearing the applicants and without reasons was sustainable.

Analysis: The approval contemplated by Rule 56B is to be exercised by the Collector in accordance with fair play and justice. A refusal that affects the assessee's facility could not be sustained where no personal hearing was afforded and no reasons were recorded for rejecting the request on the ground that the proposed processing amounted to manufacture.

Conclusion: The rejection order was liable to be set aside.

Issue (ii): Whether the matter should be remanded for fresh decision with interim continuation of the facility.

Analysis: Since the order was found defective for want of hearing and reasons, the proper course was to require a fresh decision after personal hearing. The Tribunal also directed a time-bound decision and permitted clearances in the meantime in accordance with the earlier facility, subject to revenue safeguards.

Conclusion: The matter was remanded for de novo adjudication and the assessee was allowed interim continuance of the facility.

Final Conclusion: The assessee succeeded on the procedural challenge, the impugned order was set aside, and the matter was sent back for fresh decision after observance of fair procedure.

Ratio Decidendi: A discretionary approval affecting tax relief or facility must be exercised consistently with natural justice and fair play, and a non-speaking refusal without hearing is liable to be set aside and remanded for fresh consideration.

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