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2013 (1) TMI 282 - HC - Customs


Issues Involved:
1. Compliance with Section 129E of the Customs Act, 1962.
2. Eligibility and rate of drawback under the Customs & Central Excise Duties Drawback Rules, 1995.
3. Issuance of show cause notices and recovery of erroneously paid drawback.
4. Reasonable period for recovery under Rule 16 of the Drawback Rules.

Detailed Analysis:

1. Compliance with Section 129E of the Customs Act, 1962:
The petitioners challenged the dismissal of their appeal by the Commissioner of Customs (Appeals), Ahmedabad, for non-compliance with Section 129E of the Customs Act, 1962. This section mandates pre-deposit of the disputed amount for the appeal to be entertained. The petitioners requested the appeal to be kept in abeyance and the recovery stayed, but their request for reconsideration of the stay order was rejected, leading to the dismissal of their appeal for non-deposit of the amount.

2. Eligibility and Rate of Drawback under the Customs & Central Excise Duties Drawback Rules, 1995:
The petitioners, engaged in exporting fabrics made from 100% polyester filament yarn, claimed drawback under Sub-Serial No. 54.04 of the Drawback Schedule. They were eligible for a 17% FOB value drawback as they did not meet condition (b) but fell under condition (c) of the Drawback Schedule. Initially, their claims were scrutinized, verified, and sanctioned by the competent officer, and the drawback amounts were disbursed by August 1996.

3. Issuance of Show Cause Notices and Recovery of Erroneously Paid Drawback:
The third respondent issued show cause notices in February and March 2000, invoking Rule 16 of the Drawback Rules for recovery of erroneously paid drawback, claiming that the maximum limit of Rs. 62/- per kg was not applied. The notices culminated in an Order-in-Original demanding the excess amount. The petitioners' appeal against this order was dismissed for non-compliance with Section 129E.

4. Reasonable Period for Recovery under Rule 16 of the Drawback Rules:
The court examined whether a reasonable period should be read into Rule 16, which does not prescribe a limitation period for recovery of erroneously paid drawback. The court noted that the drawback claims were processed and cleared before the clarification issued in September 1996. The show cause notices were issued more than three years later, in February 2000. The court held that a reasonable period must be read into Rule 16, and a delay of more than three years is unreasonable. The court cited precedents establishing that statutory powers should be exercised within a reasonable time, even if no specific limitation period is prescribed.

Conclusion:
The court concluded that the show cause notices issued after more than three years were time-barred and invalid. Consequently, the orders based on these notices, including the impugned order, were unsustainable. The petition was allowed, and the impugned Order-in-Appeal was quashed and set aside. The rule was made absolute with no order as to costs.

 

 

 

 

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