2014 (9) TMI 981 - HC - Customs

Recovery of irregular duty drawback - discrepancy in the show cause notice - period of limitation - allegation that the duty drawback claimed and paid for export of readymade garments of cotton was irregular/fraudulent - 100% EOU of Gemini Textile industries - Held that - for recovery of duty draw back, statute has not prescribed any limitation. In the facts and circumstances of the case, proceedings could be initiated within a reasonable time. Therefore, it cannot be said that proceedings are barred by limitation. Insofar as the other ground is concerned, as rightly held by the learned Single Judge, substantially the allegation in the show cause notice and the addendum are identical except few corrections. In fact, addendum is in the nature of amendment to the show cause notice. Therefore, the appellants were fully conscious of the allegations against them which are based on documentary evidence and therefore, it cannot be said either they are taken by surprise or any prejudice is caused by that addendum. Therefore, the learned single Judge was justified in dismissing the writ petition. - Decided against assessee.

Summary

Issues:
1. Challenge to the order passed by the original authority and the appellate authority.
2. Substantial alteration in the terms of the show cause notice.
3. Issuance of addendum beyond the prescribed period of five years.

Analysis:
1. The appellants challenged the order passed by the original and appellate authorities, contending that the addendum substantially altered the terms of the show cause notice. The common show cause notice issued under Section 124 of the Customs Act was later amended by an addendum. The learned Single Judge examined the issue and concluded that the addendum did not structurally alter the original notice. The court emphasized that the addendum merely reiterated the allegations in the original notice, without changing the fundamental nature of the notice. As no limitation was prescribed for the recovery of duty drawback, the court held that the proceedings were not barred by limitation. Therefore, the Single Judge declined to interfere with the impugned orders, deeming them legal and valid.

2. The appellants also argued that the addendum was issued beyond the statutory period of five years, rendering the entire proceedings invalid. However, the Single Judge ruled that the absence of a statutory limitation did not warrant the court to impose a time limit. The court clarified that the absence of a time limit did not automatically vitiate the proceedings, especially when the rights of the citizens were not violated. The court found that the addendum did not introduce substantial changes and was akin to an amendment to the original notice. The appellants were deemed aware of the allegations against them, supported by documentary evidence, and were not caught off guard by the addendum. Consequently, the Single Judge dismissed the writ petition, upholding the validity of the impugned orders.

3. During the appeal, the appellants reiterated their arguments, but the court found no merit in their contentions. It was reiterated that the absence of a prescribed limitation for duty drawback recovery allowed proceedings to be initiated within a reasonable timeframe. The court emphasized that the addendum did not significantly alter the original notice and did not cause any prejudice to the appellants. As the allegations were clear and supported by evidence, the court concluded that the appellants were not taken by surprise. Therefore, the court upheld the decision of the Single Judge and dismissed the appeals, finding no grounds for interference with the well-considered order.

In conclusion, the High Court upheld the original and appellate authorities' orders, emphasizing that the addendum did not structurally alter the original show cause notice and that the absence of a statutory limitation did not invalidate the proceedings. The court found no grounds to interfere with the Single Judge's decision and dismissed the appeals accordingly.