Mandatory show-cause notice and hearing safeguard duty demand and penalty orders; non-compliance vitiates the adjudication.

A show-cause notice and opportunity of hearing were treated as mandatory for determining duty under Section 11A and for penalty under Rule 233A. A letter expressing readiness to pay duty did not amount to waiver of those statutory safeguards or of the right to be heard on penalty. Because the procedural requirements were not complied with, the demand and penalty order was vitiated for breach of natural justice and could not stand; the matter was remitted for fresh adjudication after proper notice and hearing.

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Issues: Whether the demand of duty and imposition of penalty could be sustained when no effective show-cause notice or opportunity of hearing had been given, and whether the order was liable to be set aside and the matter remanded for de novo adjudication.

Analysis: The assessee's letter only expressed readiness to pay the duty due and did not amount to a waiver of the requirement of notice for determining the duty payable or of the opportunity of hearing in relation to penalty. For determination of duty, issuance of notice under Section 11A was treated as mandatory. For penalty and related consequences, Rule 233A required notice and an opportunity of representation, including oral hearing. On the facts, those procedural safeguards were not complied with, resulting in violation of the statutory procedure and the principles of natural justice.

Conclusion: The demand and penalty order could not be sustained; it was set aside and the matter was remitted for fresh decision after issuing a proper show-cause notice and granting the required opportunity.

Ratio Decidendi: Where the statute makes show-cause notice and hearing mandatory for determination of duty and imposition of penalty, an order passed without complying with those requirements is vitiated for breach of natural justice and must be set aside.

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