Recovery cannot proceed after demand is set aside and appeal is remanded for fresh disposal.

Setting aside the order sustaining the demand also displaced the underlying demand, and the direction for fresh disposal of the assessee's appeal meant recovery could not proceed on the basis of the earlier demand. The absence of a separate stay order did not authorise recovery where the Tribunal's final order had already altered the status of the demand. The recovery letter therefore rested on an erroneous reading of the Tribunal's order, and the recovery proceedings were set aside.

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Issues: Whether recovery of duty, penalty and interest could be initiated after the Tribunal had set aside the order sustaining the demand and directed fresh disposal of the assessee's appeal.

Analysis: The earlier final order setting aside the appellate order sustaining the demand had the effect of setting aside the underlying demand itself. Once that order required the lower appellate authority to decide the assessee's appeal afresh, recovery could not be pursued merely because no stay order had been separately granted. The recovery letter therefore proceeded on an erroneous understanding of the effect of the Tribunal's final order.

Conclusion: Recovery was not permissible, and the impugned proceedings were set aside in the assessee's favour.

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