Customs duty demand on already adjudicated NFE default cannot be reopened after penalty payment, the text states.

Customs duty demands linked to non-fulfilment of NFE norms were described as unsustainable where the Development Commissioner had already adjudicated the NFE default and the prescribed penalty had been paid, because the same issue could not be reopened through a parallel customs demand. The text also states that an appeal against such a customs duty demand was maintainable before the Commissioner (Appeals), Customs, and that dismissal on the ground that the matter lay before the Commissioner (Appeals), Central Excise was erroneous. It further notes that renewal of the Letter of Permission supported the position that the NFE issue had already been dealt with.

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Issues: (i) Whether the appeal against the customs duty demand was correctly filed before the Commissioner (Appeals), Customs. (ii) Whether the demand of customs duty on the ground of non-fulfilment of NFE norms could be sustained when the NFE issue had already been adjudicated by the Development Commissioner and the penalty had been paid.

Issue (i): Whether the appeal against the customs duty demand was correctly filed before the Commissioner (Appeals), Customs.

Analysis: The duty demand was one of customs duty and the accompanying penalty arose in that context. The appellate forum could not be rejected on the ground that the matter belonged before the Commissioner (Appeals), Central Excise. The dismissal of the appeal on that jurisdictional ground was therefore erroneous.

Conclusion: The appeal was rightly maintainable before the Commissioner (Appeals), Customs, and the dismissal on that ground was unsustainable.

Issue (ii): Whether the demand of customs duty on the ground of non-fulfilment of NFE norms could be sustained when the NFE issue had already been adjudicated by the Development Commissioner and the penalty had been paid.

Analysis: The NFE default had already been dealt with by the Development Commissioner, who imposed a penalty that was subsequently paid. The Letter of Permission was thereafter renewed from time to time. In these circumstances, the Revenue had no basis to reopen the same NFE issue and sustain a customs duty demand on that footing.

Conclusion: The demand based on alleged non-fulfilment of NFE norms could not be sustained.

Final Conclusion: The impugned order was set aside and the appeal was allowed with consequential relief.

Ratio Decidendi: Where the substantive NFE issue has already been adjudicated by the competent authority and the prescribed penalty has been paid, a parallel customs demand on the same default cannot be sustained, and dismissal of the appeal on an incorrect appellate forum ground is impermissible.

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