2015 (10) TMI 30 - AT - Customs

Recovery of drawback Demand made after lapse of seven years Vide impugned order, adjudicating authority ordered for recovery of drawback amount under Rule 16 of Customs & Central Excise Duty Drawback Rules, 1995 Claim for drawback for amount in respect of four shipping bills have been rejected and exported goods were held liable to confiscation and penalty was imposed It was alleged that show cause notice was issued after lapse of more than five years and therefore, demands are unsustainable Held that - From records, it is seen that demands for recovery of erroneously sanctioned drawback has been made after lapse of more than seven years High Court in case of Dadri Inorganics Pvt. Ltd. 2010 (8) TMI 320 - GUJARAT HIGH COURT held that in absence of any period of limitation, it is required that every authority is required to exercise power within reasonable period Reasonable period prescribed in Customs Act is one year, where there is no wilful misstatement, collusion, suppression, etc. and five years if any of these elements are present Both these time-limits are already over and therefore, impugned demands for recovery of erroneously sanctioned drawback is hit by time-bar Liability to penalty without attracting any time limit is matter which needs deeper and careful consideration Revenue restrained from going ahead with attachment of property, during pendency of appeals Unconditional waiver from pre-deposit of dues also granted.

Summary

Issues:
Recovery of drawback amount, imposition of fines and penalties, time limit for issuance of show cause notice, imposition of penalties in case of unsustainable demands, applicability of time limits for recovery of drawback, liability to penalty without time limit, stay of recovery proceedings.

Analysis:

1. Recovery of Drawback Amount and Imposition of Fines and Penalties:
The judgment revolves around an appeal against an Order-in-Original that directed the recovery of drawback amounts from various companies. The appellants contested the recovery, arguing that the show cause notice was issued after a significant lapse of time from the date of sanction of drawback. The appellants claimed that the demands for recovery were unsustainable due to the absence of a specific time limit stipulated in the law. They relied on court decisions emphasizing the need for a reasonable time limit for recovery actions. The judgment highlighted the demands being made after a lapse of more than seven years, which was considered beyond the reasonable period for exercising such powers. The penalties imposed were also challenged on the grounds that they should not arise if the demands for recovery of drawback were held unsustainable.

2. Time Limit for Issuance of Show Cause Notice and Applicability of Time Limits for Recovery of Drawback:
The appellants argued that the show cause notice for recovery of drawback was issued after an unreasonable delay. They contended that the absence of a specific time limit in the law did not imply that recovery notices could be issued at any point in time. The judgment referred to precedents where courts had emphasized the need for a reasonable time limit to be read into the law in the absence of statutory prescriptions. It was noted that the demands for recovery were hit by a time-bar due to being made beyond the prescribed time limits under the Customs Act.

3. Liability to Penalty Without Time Limit:
The judgment delved into the issue of liability to penalty without a time limit, especially in cases where the goods were held liable to confiscation. The imposition of penalties was analyzed concerning the provisions of the Customs Act, which attract penalties when goods are liable to confiscation. The judgment highlighted the distinction between demand of duty/recovery and liability to confiscation, emphasizing that penalties could be attracted even without a specific time limit. The matter was deemed to require deeper consideration, especially in the context of actions in personam.

4. Stay of Recovery Proceedings:
The judgment granted an unconditional waiver from the pre-deposit of the dues adjudged against the appellants and stayed the recovery proceedings during the pendency of the appeals. The decision restrained the Revenue from attaching the appellants' property during the appeal process, considering the grant of stay for the demands and penalties.

In conclusion, the judgment addressed various legal aspects, including the time limits for recovery actions, liability to penalties, and the necessity for a reasonable period for exercising statutory powers. The decision provided insights into the interpretation of relevant laws and precedents to determine the sustainability of demands and penalties in the case at hand.