JUDGMENT K. K. DESAI .J. - [After starting, the facts and considering the considering the contentions of the petitioners and respondent No.1, this judgment proceeds]. Now, in connection with these rival contentions, it is convenient first to refer to the provisions in rule 9 and the general scheme of the rules relating to enforcement and collection of excise duty. In that very connection, it is necessary to refer to sections 6, 9 and 33, of the Central Excises and Salt Act, hereinafter referred to as "the Act". 2. Under section 3 of the Act, duty of excise is charged on all excisable goods produced or manufactured in India. The word "manufacturer" is defined in clause (f) of section 2 to include not only a person who employs hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacture on his own account. Under rule 7, it is incumbent on every person who manufactures excisable goods to pay excise duty. In that connection, under rule 9, there is prohibition against removal of excisable goods from the place of their manufacture or any premises appurtenant thereto specified by the Collector until excise duty is paid. Under rule 10, provision is made for recovering short-levied excise duty. The rules in Chapter V provide for what might be called a watertight scheme for recovering duty before the excisable goods are removed, from the place of manufacture and for any other place fixed for storing of the excisable goods after taking licence and the authority of the Collector. The scheme of rules 43 to 56 in this chapter makes it impossible for any manufacturer to remove excisable goods except upon payment of duty. Any evasion of payment of excise duty of necessity involves contravention of these rules in Chapter V. Sub-rule (2) of rule 9 provides: "If any excisable goods are, in contravention of sub-rule (1) removed from, any place specified therein, the producer or manufacturer thereof shall pay the duty leviable on such goods upon written demand, made and shall also be liable to a penalty which may extend to two thousand rupees, and such goods shall be liable to confiscation." This sub-rule was inserted in rule 9 by a notification dated November 27, 1948. Section 9 of the Act relates to offences and penalties, and evasion of payment of duty payable under the Act is made an offence and is punishable with imprisonment for a term extending to six months and fine extending to two thousand rupees or with both. Under section 33, power of adjudication of penalty and confiscation is vested in the officers mentioned in that section. Jurisdiction of Civil Court is withdrawn in respect of matters arising under the Act. Having regard to the scheme in the rules and the above provisions in sections 9 and 33, the nature of the investigations which will take place for imposing liability to pay excise duty under sub-rule (2) of rule 9 becomes evident. Without wilful and fraudulent breach of the rules relating to storing and non-removal of goods without payment of excise duty, no manufacturer would be able to evade payment of excise duty. Inquiry under sub-rule (2) is towards proving fraudulent and wilful evasion of obligation to pay duty and for arriving at a positive finding that a manufacturer had by such wilful and fraudulent breach of rules evaded payment of duty. On the very same finding, penalty and confiscation can be adjudged against him. On the very same finding, though by a different Tribunal, the offending manufacturer can be held to be guilty of offence under section 9 and can be sentenced to imprisonment and fine. The findings to be made for imposing excise duty under sub-rule (2) of rule 9 thus will be of extremely serious kind and character. Having regard to these facts, it is difficult to hold that the inquiry which must be made before imposing and/or demanding duty under sub-rule (2) will not be of quasi-judicial character or will be administrative. Now, in this connection, the department may be considered to be one party to the lis wherein in claim is that the manufacturer has willfully and fraudulently evaded payment of duty and has for that purpose illegally committed breach of statutory rules. The other party to that li8 would be the offending manufacturer. The result of the findings made in the inquiry under sub-rule (2) would be levy of (i) heavy excise duty and (ii) penalty and confiscation. The other party to that li8 would be the offending manufacturer. The result of the findings made in the inquiry under sub-rule (2) would be levy of (i) heavy excise duty and (ii) penalty and confiscation. It would be difficult to hold that in such an inquiry conclusions can be made and findings can be arrived at without giving an appropriate opportunity to show cause to the offending manufacturer. The nature of the opportunity to be afforded to ouch a manufacturer cannot be started in detail in this judgment. It is, however, sufficient to state that the materials on the basis whereof conclusions and/or findings are intended to be arrived at against him should be in clearest terms and in all detailed particulars disclosed to the offending manufacturer. Tl1h would be necessary, so that in connection with these materials, he can give explanation and if he so chooses tender evidence and make a case that the material was insufficient for the necessary conclusions and findings and/or that the material was not reliable. 3. In this connection it may be stated that in the case of Orient Paper Mills Ltd. v. Union of India1 duty was levied by excise officers under sub-item (1) of item 17 in the First Schedule to the Act merely because they were directed to do so by the higher authorities. The Supreme Court held that it was not proper for the excise officers to proceed to levy duty merely because directions were given. The observation was: "It is apparent from the judgment referred to above and numerous other decision of this Court delivered in respect of various taxation laws that the assessing authorities exercise quasi-judicial functions and they have duty cast on them to act in a judicial and independent manner". Mr. Bhabha has submitted that these are casual observations and are of no effect. 4. In the case of Collector of Central Excise and Land customs, Shilong v. Sanawarmal Purohit2 the Supreme Court, inter alia, observed: "If a tribunal receives from a third party a document relevant to the subject matter of the proceedings, it should give both parties an opportunity of commenting on it: vide Halsburys Laws of England, Vol. 11, p 66. 4. In the case of Collector of Central Excise and Land customs, Shilong v. Sanawarmal Purohit2 the Supreme Court, inter alia, observed: "If a tribunal receives from a third party a document relevant to the subject matter of the proceedings, it should give both parties an opportunity of commenting on it: vide Halsburys Laws of England, Vol. 11, p 66. It was the duty of the Collector of Customs to inform the persons charged before him of the charges against them with full details, the evidence in support of the charges and to give them an opportunity to meet those charges and the offences against them. A quasi-judicial authority would be acting contrary to the rules of natural justice if it acts upon information collected by it which has not been disclosed to the party concerned and in respect of which full opportunity of meeting the inferences which arise out of it has not been given." These cases go to show that the Supreme Court was of the view that assessment of excise duty involved determination of issues in a quasi-judicial manner. Inquiries in connection with imposing of excise duties must be held upon giving information to the person charged with full details of the evidence in support of the charges and an opportunity to meet those charges must always be afforded to the offending party. 5. In the case of A. K. Kraipak v. Union of India3 reference is made to the case of State of Orissa v. Binapani Dei4. In that case dealing with an inquiry as regards the correct age of a Government servant, Shah J., speaking for the Court observed (p. 1272): "We think that such an enquiry and decision were contrary to the basic concept of justice and cannot have any value. It is true that the order is administrative in character, but even an administrative order which involves civil consequences, as already stated, must be made consistently with the rules of natural justice after informing the first respondent of the case of the State,." The Court proceeded to decide the case of A. K. Kraipak v. Union of India on an assumption that the power of selection that was exercised was an administrative power. In that connection, the above observations in the case of State of Orissa v. Binapani Dei were cited. In that connection, the above observations in the case of State of Orissa v. Binapani Dei were cited. The Court referred to the observation of Lord Parker, C J., in H K. (An In fant), In Re5. The Court observed (p. 157): "Enquiries which were considered administrative at one time are now being considered as quasi-judicial in character. Arriving at a just decision is the aim of both quasi judicial enquiries as well as administrative enquiries. Au unjust decision in an administrative enquiry may have more far-reaching effect than a decision in a quasi-judicial enquiry. Whenever a complaint is made before a Court that some principle of natural justice had been contravened the Court has to decide whether the observance of that rule was necessary for a just decision on the facts of that case." Having regard to the above discussion, in our view, inquiries held under sub-rule (2) of rule 9 would be quasi-judicial and not merely administrative inquiry. Even if the inquiry is held to be administrative inquiry, having regard to the evil consequences which would be visited on the offending manufacturer, the inquiry would have to be without breach of rules of fairplay and natural justice. The description of the nature of the inquiry would not make any difference to the situation. 6. [The rest of the judgment is not material to this report.] Rule made absolute.