Tribunal Cannot Rewrite Unchallenged Relief: Absolute Confiscation in Assessee’s Appeal is Jurisdictional Overreach: Madras High Court

“A Tribunal has no authority to undo what the Department never challenged. The power to ‘pass such orders as it thinks fit’ is not a free pass to reopen finality,” In a powerful reaffirmation of appellate discipline, the Madras High Court set aside an order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai, which had directed absolute confiscation of goods in an appeal filed solely by the assessee, despite there being no challenge or cross-objection by the Department against the original order that had allowed re-export upon redemption fine.

The High Court, while allowing CMA No. 836 of 2018 filed by M/s. Antoine & Becouerel Organic Chemical Co., made it clear that the Tribunal cannot improve or worsen the outcome of an appeal beyond what is under challenge before it, especially when such challenge is absent from the opposing party.

“The direction of the Tribunal setting aside the redemption and re-export, which had attained finality at the stage of assessment, does not arise from the appeal filed by the assessee, and has hence been issued in excess of jurisdiction,” declared the Division Bench comprising Dr. Justice Anita Sumanth and Justice K. Govindarajan Thilakavadi.

“No Reformatio in Peius: Tribunal Cannot Aggravate the Position of a Sole Appellant”

The core dispute arose from an order-in-original dated 28 March 2014, wherein the Commissioner of Customs (Airport & Air Cargo), Chennai, after invoking Section 111(d) of the Customs Act read with the Drugs and Cosmetics Act and Rules, confiscated a consignment imported by the appellant but permitted re-export on payment of ₹7,00,000/- redemption fine, invoking Section 125(1) of the Act.

Dissatisfied, the assessee appealed to CESTAT challenging confiscation, penalties, and interest. However, the Department neither filed a statutory appeal under Section 129-A(2), nor a cross-objection under Section 129-A(4), nor invoked suo motu revision powers under Section 129-DA. Despite this, the Tribunal reversed even the redemption permission, accusing the appellant of fraud and smuggling and ordered absolute confiscation. The goods had already been re-exported after redemption.

The Tribunal’s finding read: “Evidence gathered by Revenue unambiguously proved that both the appellants were contributory to the fraud committed against customs... Absolute confiscation of the impugned goods is hereby ordered... the re-export has caused detriment to the interests of justice.”

This, the High Court found to be entirely outside the Tribunal’s legal competence. The Court firmly held: “The width of the powers that enure to the Tribunal can relate only to those grounds of appeal laid by the party before it.”

“When Department Accepts Redemption, Tribunal Cannot Overrule That Silence with a Sword”

The Court underlined that once the Department chose not to challenge the adjudicating authority’s redemption order, it attained finality, and the Tribunal had no basis to revisit it:

“The Department has not availed of any of the available remedies and the only inference in law is that it is not aggrieved by the direction of the authority for redemption and re-export.”

The Bench further emphasized that Section 129-B, which empowers the Tribunal to pass “such orders as it thinks fit,” is not an unrestrained power but a confined appellate jurisdiction:

“Though Section 129-B vests in the Tribunal wide powers, the exercise of such power must be confined to matters arising in appeal or properly raised before it.”

The Court condemned the Tribunal’s reliance on fraud allegations that were never litigated in the appeal process. “The Tribunal’s order suffers from jurisdictional overreach and denial of natural justice,” the judges ruled.

The High Court allowed the appeal, quashed the portion of CESTAT’s order that directed absolute confiscation, and answered all substantial questions of law in favour of the assessee. The Court observed: “In doing so, the Tribunal has committed a fundamental error in law by worsening the position of the appellant without any legal basis, violating the core principle of ‘no reformatio in peius’.”

The ruling acts as a stern reminder that appellate forums must act within the four corners of jurisdiction, and cannot operate as courts of unlimited correction or review. The Tribunal's intervention, in absence of a departmental challenge, amounted to rewriting an unchallenged relief — a move that the High Court firmly held to be legally unsustainable.

Date of Decision: 16 December 2025