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2013 (1) TMI 282 - HC - CustomsValidity of Show Cause Notice Period of limitation - recovery of duty drawback - When rule 16 does not prescribe any period of limitation, whether action can be taken thereunder after any length of time, or whether the concept of reasonable period has to be read into it - Recovery of erroneously paid drawback - Duty Drawback u/s 75 - Rule 16 of the Drawback Rules for recovery of erroneously paid drawback - Sub-Serial No. 54.04 of the Drawback Schedule - Drawback recoverable u/s 142 of the Customs Act, 1962 Held that - Though rule 16 of the Drawback Rules does not provide for any period of limitation, a reasonable period has to be read into the said rule. The SCN which have been issued after a period of more than three years from the date when the drawback came to be paid to the petitioners, cannot by any stretch of imagination be said to have been issued within a reasonable period of time. The SCN in question came to be issued in February 2000 in respect of drawback paid prior to August 1996. Under the circumstances, by no stretch of imagination, can the show cause notices be said to have been issued within a reasonable time. Under the circumstances, the show cause notices have to be held to be bad on the ground of being time-barred. In favour of assessee
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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