Customs exemption claim may be raised in appeal; merits-based consideration and remand were required.

A claim for concessional customs duty under Notification No. 21/2002-Cus. was not confined to the original adjudication stage and could be raised before the lower appellate authority. The appellate authority should have examined the exemption claim on merits or, if required, remanded the matter for consideration by the adjudicating authority. Rejecting the claim solely because it had not been made before the original authority was incorrect. The assessee was therefore entitled to merits-based consideration of the exemption claim, and the matter had to be remanded for fresh adjudication after granting a reasonable opportunity of hearing.

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Issues: Whether the assessee could raise a claim for concessional customs duty under Notification No. 21/2002-Cus. before the lower appellate authority and whether the matter should be remanded for examination on merits.

Analysis: The claim for coverage under the notification was not confined to the original adjudication stage and could be raised before the appellate authority. The lower appellate authority ought to have examined the merits of the exemption claim or, if necessary, remanded the matter for consideration by the adjudicating authority. Rejecting the appeal solely on the ground that the claim was not made before the original authority was incorrect.

Conclusion: The assessee was entitled to have its exemption claim considered on merits, and the matter was required to be remanded for fresh adjudication after granting reasonable opportunity of hearing.

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