Differential duty under RT-12 assessment is maintainable, but only if natural justice and hearing requirements are followed.

Differential duty may be assessed at the RT-12 stage under Rule 173-I where the approved classification list shows a higher duty rate than the duty actually paid, so the demand is legally sustainable in principle. However, recovery and finalisation of the assessment must follow the prescribed procedure and comply with natural justice, including a proper opportunity for the assessee to be heard. Where hearing is not afforded, the assessment order is procedurally defective and cannot stand, even if the duty demand itself is otherwise maintainable.

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Issues: Whether differential duty could be demanded at the stage of assessment of RT-12 returns under Rule 173-I, and whether the assessment order was sustainable in the absence of an opportunity of hearing.

Analysis: The approved classification list required duty at 15%, while the assessee had paid duty at 10%. The Superintendent had power to assess RT-12 returns on the basis of the approved classification list and to demand the differential duty under Rule 173-I. The demand was therefore not invalid merely because Section 11A was invoked or considered by the lower appellate authority. However, the recovery action and the assessment finalisation were vitiated because the respondents were not afforded an appropriate opportunity to represent their case, and the procedure required for recovery under Rule 173-I was not properly followed.

Conclusion: The demand was legally maintainable in principle under Rule 173-I, but the assessment order could not stand because it was passed without compliance with the principles of natural justice.

Final Conclusion: The order of the lower appellate authority was set aside and the matter was remitted for fresh consideration after hearing the respondents.

Ratio Decidendi: Differential duty may be demanded at the time of RT-12 assessment under Rule 173-I, but such action must comply with natural justice by giving the assessee an opportunity of hearing.

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