Incorrect ACP fixation cannot sustain a consequential duty demand; matter remanded for fresh determination under the Notification.

A duty demand based on ACP fixation was found unsustainable because the parameters used to determine the ACP did not conform to the applicable Notification. Once the underlying fixation was accepted as incorrect, the consequential demand could not stand as one authorised by law. The proper course was to set aside the existing determination and remit the matter for re-fixation of ACP in accordance with the Notification, followed by fresh computation of duty liability on that basis.

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Issues: Whether the duty demand, founded on fixation of ACP on an incorrect basis, could be sustained and whether the matter required re-determination.

Analysis: The Tribunal noted that the Revenue fairly accepted that the parameters adopted for fixing the ACP were not in accordance with the Notification and were incorrect. It held that a demand flowing from such erroneous fixation could not be treated as one provided by law. Since the consequential demand depended on the ACP fixation, the proper course was to set aside the order and remit the matter for re-fixation of ACP in accordance with the Notification, after which the duty liability could be worked out afresh.

Conclusion: The duty demand was not sustainable on the existing ACP fixation and the matter was remanded for re-determination of ACP and fresh computation of duty.

Ratio Decidendi: A demand that is purely consequential to an incorrect fixation of statutory parameters cannot be sustained and must be set aside for fresh determination of those parameters in accordance with law.

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