Natural justice in capacity determination: orders set aside and remanded after failure to issue notice and hear assessees.

Annual capacity determinations for stenters were challenged because the impugned orders were made without a show cause notice and without affording the assessees a hearing. The Tribunal treated this procedural defect as fatal and set aside the determinations. It also noted the dispute over whether closed spaces and ducting should be excluded from the capacity computation on the basis that they did not aid heat setting or drying and were not equipment under the relevant notification. The matter was remanded for fresh decision after giving the appellants a proper opportunity to be heard.

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Issues: Whether the impugned orders determining the annual capacity of stenters were liable to be set aside for want of notice and hearing, and whether the matter should be remanded for fresh decision.

Analysis: The orders had been passed without issuing a show cause notice and without affording the assessees an opportunity of being heard. The controversy also concerned whether closed spaces/ducting were to be excluded while computing annual capacity, as they were said not to aid heat setting or drying and not to constitute equipment within the meaning of the relevant notification. In these circumstances, the Tribunal set aside the determination and directed a fresh decision after hearing the appellants.

Conclusion: The impugned orders were invalidated and the matter was remanded for reconsideration after granting a proper hearing, in favour of the appellants.

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