2006 (9) TMI 371 - AT - Customs

Summary

Issues Involved:
1. Power of Commissioner (Appeals) to remand the case.
2. Legality of the duty demand under Section 72(1)(b) of the Customs Act.
3. Extension of warehousing period and permission for re-export.
4. Financial constraints and the feasibility of re-exporting goods.

Detailed Analysis:

1. Power of Commissioner (Appeals) to Remand the Case:
The Revenue contended that after the amendment of Section 128A(3) of the Customs Act, 1962 by the Finance Act, 2001, the Commissioner of Customs (Appeals) no longer has the power to remand cases. However, the Tribunal clarified that it is well settled that the Commissioner (Appeals) retains the power to remand even after the amendment. This was supported by the Apex Court in the case of UOI v. Umesh Dhaimode, which held that the appellate authority has the power to pass orders as deemed fit, including remand.

2. Legality of the Duty Demand under Section 72(1)(b) of the Customs Act:
The Respondents, a 100% EOU, imported raw materials duty-free but failed to re-export them within the extended warehousing period, leading to a duty demand under Section 72(1)(b). The Commissioner (Appeals) did not address the legality of this demand, focusing instead on the financial difficulties of the Respondents. The Tribunal found that the Commissioner (Appeals) should have evaluated whether the duty demand and the attachment of goods were lawful. The Tribunal restored the Dy. Commissioner's Order-in-Original, which demanded duty and interest, deeming it legal and proper.

3. Extension of Warehousing Period and Permission for Re-export:
The Respondents requested an extension of the warehousing period and permission to re-export the goods. The Commissioner of Customs extended the period up to 12-10-2003, with conditions. The Respondents failed to meet these conditions, leading to the duty demand. The Commissioner (Appeals) suggested releasing 30-40% of the stock for re-export to alleviate financial strain, but this was beyond his jurisdiction. The Tribunal agreed with the Revenue that the power to extend the warehousing period and permit re-export lies with the Commissioner of Customs, not the Commissioner (Appeals).

4. Financial Constraints and Feasibility of Re-exporting Goods:
The Commissioner (Appeals) emphasized the Respondents' financial difficulties and proposed releasing part of the stock for re-export. The Revenue argued that even if 40% of the stock were sold, it would not cover the dues of Rs. 9 crores. The Tribunal found that the Commissioner (Appeals) overstepped his jurisdiction by focusing on financial issues rather than the legality of the duty demand. The Tribunal noted that each authority has specific jurisdiction, and the Commissioner (Appeals) should have confined himself to assessing the legality of the impugned order.

Conclusion:
The Tribunal concluded that the Commissioner (Appeals) exceeded his jurisdiction by addressing issues beyond the legality of the duty demand. The Tribunal restored the Dy. Commissioner's Order-in-Original, which was deemed legal and proper, and allowed the Revenue's appeal. This judgment underscores the importance of adhering to jurisdictional boundaries and the proper application of legal provisions in customs matters.