2026-VIL-1838-CESTAT-CHE-CU
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  2. 2026-VIL-1838-CESTAT-CHE-CU

CUSTOMS CESTAT Cases

Customs - Dismissal of appeals by FAA for want of pre-deposit under Section 129E of Customs Act, 1962 without notice of deficiency or hearing - Appellant imported machinery, paid Special Additional Duty and was sanctioned refund under the exemption notification as the subsequent sale bore nil rate of value added tax - The refund orders were set aside on review under Section 129D in the Department's appeals, and demand notices were confirmed for recovery of the refund under Section 28 - Appellant filed appeals before FAA on the last day of the condonable period through the Sevottam counter without pre-deposit, and FAA dismissed them as incomplete without notice or hearing, citing the time limit - Whether appeals presented within time but without the statutory deposit could be dismissed in this manner - HELD - Section 129E requires a deposit of seven and a half per cent before FAA and ten per cent before the Tribunal, which are distinct obligations, so the deposit made before the Tribunal is not compliance before FAA, and as the discretion to dispense with the deposit has been withdrawn, FAA cannot entertain an appeal without it. However, an appeal presented in time without the deposit is a defective appeal and not a nullity, as the embargo is only on entertaining it, and the High Courts have held that the power to recall a dismissal exists inherently since procedure is the handmaid of justice. Presenting an appeal on the last day is the exercise of a statutory right, an assessee cannot be penalised for using the Sevottam facility created by the Department, and Section 128A(1) obliges FAA to afford a hearing, so the curable defect ought to have been pointed out before dismissal - The dismissal without notice of the deficiency and without hearing is not sustainable, though the contention that Section 129E stood complied with before FAA is rejected - Power of Tribunal to finally dispose of appeals against an order of FAA which did not decide the merits, and whether remand is warranted - FAA dismissed the appeals only for want of pre-deposit, and Appellant sought final decision as the dispute had run for over a decade, while the earlier decision of the Hon'ble Supreme Court had cautioned against the Tribunal deciding the merits of such an appeal - Whether the Tribunal may dispose of the appeals finally or must remit them - HELD - That decision belongs to a regime in which the appellate authority could dispense with the deposit and the relief granted was a remand upon waiver, whereas under Section 129E as substituted there is no discretion, and neither the premise nor the remedy survives. The demands under challenge were expressly founded on orders of FAA and of this Tribunal which have since been set aside or recalled, and holding that a demand falls with the order on which it rests is working out the consequences of the Tribunal's own orders and not adjudicating the merits afresh. The subsequent Final Orders were promptly brought to notice, the Revenue had opportunity to respond, and they bear materially on relief. Remand should not be routine, particularly in revenue matters, and a remand whose outcome is foreclosed by the Tribunal's own final orders is an empty formality - The Tribunal is competent to dispose of the appeals finally and no remand is warranted - Invocation of Section 28 to recover refund sanctioned on adjudication while the Department's appeals against the refund orders were pending - Appellant contended that an order sanctioning refund under Section 27 can be undone only by appeal under Section 128 or review under Section 129D, relying on decisions of the jurisdictional High Court and Tribunal, and that two proceedings on the identical ground and sums were impermissible - Whether SCNs under Section 28 could be issued while the Department's appeals were pending - HELD - The Hon'ble Supreme Court has held that the recovery provision confers a right to issue an SCN where duty has been erroneously refunded, that it operates in a field different from the review provision, and that where the refund order is set aside on review no separate notice is required. The jurisdictional High Court has followed this view, and the Tribunal is bound under Article 141 to apply such decisions even if not cited, so the broad proposition that Section 28 can never be invoked to recover a refund sanctioned on adjudication cannot be accepted. The coordinate Bench decision relied on is distinguishable as the refund order there was never reviewed or challenged. The notices served to protect limitation, as the one-year period ran from the date of refund and the date of decision of the appeals was uncertain, and a precaution rendered unnecessary in law is not an abuse of power. The notices were adjudicated only after the appellate orders and confirmed solely on them, so they operated in aid of the Department's appeals, though they should have stated their basis - The SCNs were open to the Department to issue and stood or fell with the appellate orders, and the contention of Appellant is rejected - Survival of confirmed demands for recovery of refund of Special Additional Duty in light of Tribunal's final orders - Each demand was confirmed solely on an order of FAA or an ex parte Tribunal order, of which the former was set aside and the latter recalled and the appeal allowed, following the decision that a nil rate of value added tax is itself the appropriate rate and payment at that rate satisfies the notification condition - Whether anything survives of the demands - HELD - Each demand was expressly consequential upon an order since set aside or recalled, and a demand cannot outlive the order on which it is founded. The SCNs were not adjudicated on any independent assessment of the refund claims, and the only ground on which the refunds were said to be erroneous was rejected in Appellant's own case on these very refund orders by Final Orders which have attained finality and bind the parties - No foundation survives for the demands, the order of FAA, the confirmed demands and the proceedings under the SCNs are set aside, and the appeals are allowed with consequential relief, including refund of the deposit under Section 129E and any amount recovered in enforcement of the demands.
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