Restored statutory permission relates back in appellate proceedings, preserving export oriented unit status and defeating demand and penalty.

Cancellation of a statutory permission that was later set aside in appeal did not survive for the interregnum where the same appellate chain restored the permission. The appellate proceedings were treated as a continuation of the original controversy, so the cancellation order merged into the later order and the restored status related back. On that footing, the assessee was entitled to be treated as a 100% export oriented unit for the relevant period, and the duty demand and penalty could not be sustained.

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Issues: Whether the appellant could be treated as a non-100% export oriented unit for the period when its letter of permission stood cancelled, despite the cancellation order having been set aside in appeal and the permission restored in subsequent proceedings.

Analysis: The basis of the demand was the cancellation of the letter of permission. That cancellation was carried in appeal, the matter was remanded, and in the remand proceedings the cancellation stood dropped and the permission was restored. The appellate proceedings were a continuation of the original controversy, and the final result of that litigation was in favour of the assessee. In such a situation, the original cancellation order merged in the later order passed in the same set of proceedings, and the assessee could not be denied the benefit of the restored status for the interregnum period. Treating the cancellation as operative for that period would defeat the effect of the appellate relief.

Conclusion: The appellant was entitled to be treated as a 100% export oriented unit during the relevant period; the duty demand and penalty could not be sustained.

Final Conclusion: The impugned order was set aside and the assessee obtained consequential relief.

Ratio Decidendi: Where an order cancelling a statutory permission is set aside in appellate proceedings and the permission is restored in the same chain of litigation, the original cancellation does not survive for the interregnum and the restored status relates back to the original order.

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