2016 (9) TMI 615 - HC - Customs

Whether the Tribunal is justified in holding that Para 9.9 (a) of the policy provides that unless specifically prohibited in the LOP/LOI, rejects may be sold in the Domestic Tariff Area on the basis of records maintained by the unit and on prior intimation to the Customs Authority and that only sale of rejects above 5% of the FOB value of exports shall be counted against DTA sales , when the facts and law is otherwise? - Held that - assets of the respondent taken over by financial institution and were sold. The company, presently, existing only on papers. Thus, it is not appropriate to go into the issue raised by the revenue in the present appeal - appeal dismissed. In case the stand taken by the counsel for the respondent is found to be incorrect, the revenue shall be entitled to get the present appeal restored within 3 months.

Summary

Issues:
Appeal filed by revenue on substantial question of law regarding sale of rejects in Domestic Tariff Area based on Tribunal's order.

Analysis:
The High Court was presented with an appeal by the revenue challenging the Customs, Excise & Service Tax Appellate Tribunal's order dated 9.10.2003. The main question of law raised in the appeal was whether the Tribunal was correct in its interpretation of the policy regarding the sale of rejects in the Domestic Tariff Area. The Tribunal's decision was based on the provision that rejects may be sold in the DTA unless specifically prohibited in the LOP/LOI, and that only sales above 5% of the FOB value of exports would be counted against DTA sales. However, the respondent's counsel argued that the assets of the respondent-company had been taken over by a financial institution and sold, implying that even if the appeal was decided in favor of the revenue, recovery would not be possible as the company may only exist on paper.

Upon hearing the arguments from both sides, the High Court decided not to delve into the merits of the case due to the fact that the assets of the respondent-company had already been taken over and sold by a financial institution. Consequently, the appeal was dismissed, but the question of law was left open. The Court did mention that if the respondent's counsel's assertion regarding the unavailability of assets was found to be incorrect, the revenue would be entitled to have the appeal restored within three months. This decision was made to address the practicality of the situation where even if the revenue succeeded in the appeal, recovery might not be feasible due to the disposition of the respondent's assets.