Natural justice in annual capacity fixation requires effective hearing and consideration of relevant evidence before final determination.

Fixation of annual capacity for an electric arc furnace under Rule 96ZO was unsustainable because the assessee was not given an effective hearing before the successor Commissioner and relevant material, including spot study or engineering evidence, was not considered. Since observance of natural justice and an opportunity to place material on record are essential to a valid capacity determination, the order could not stand. The determination was set aside and the matter was remanded for de novo adjudication with directions to hear the assessee and consider the relevant evidence.

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Issues: Whether the order determining annual capacity of the electric arc furnace was liable to be set aside for violation of natural justice and the matter remanded for fresh adjudication.

Analysis: The dispute concerned fixation of annual capacity under Rule 96ZO. The proceedings were taken up without affording the assessee an effective hearing before the successor Commissioner, and the material relevant to determination of capacity, including spot study or supporting engineering evidence, was not considered. Since hearing is an essential component of natural justice, the determination could not stand in the absence of a proper opportunity to place material on record.

Conclusion: The order was set aside and the matter was remanded for de novo adjudication with a direction that the assessee be heard and permitted to place relevant material.

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