Customs duty demand cannot be sustained on appeal without an operative levy or departmental challenge to the original order.

Customs duty demand could not be sustained in appeal where the adjudicating authority had recorded duty as payable but did not actually levy it in the operative order, and the Department filed no appeal against that part of the adjudication. The Tribunal could not treat a non-existent duty demand as affirmed when the original order only imposed confiscation, redemption fine and penalty, especially after the show cause notice was held time-barred for duty. The Madras HC therefore held that the duty demand was not sustainable and answered the issue in favour of the importer and against the Revenue.

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Issues: Whether the demand of customs duty could be sustained when the adjudicating authority had not levied duty in its order and no departmental appeal was filed against that part of the adjudication.

Analysis: The adjudicating authority recorded that duty was payable but, because the show cause notice was issued beyond the relevant period, did not levy the duty. It nevertheless ordered confiscation, redemption fine and penalty. The Tribunal, while dealing with the importer's appeal, treated duty demand as sustained even though the original order had not actually fastened a demand and the Department had not challenged that aspect. In these circumstances, the demand of duty could not have been upheld in appeal in the absence of an operative duty demand from the original authority and without any challenge by the Department.

Conclusion: The demand of duty was not sustainable and the issue was answered in favour of the appellant/importer and against the Revenue.

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