2016 (3) TMI 38 - HC - Customs

Validity of Show cause notice issued to 3rd respondent - Period of limitation - Recovery of Duty drawback for the period from October 1999 to December, 2002 - Rule 16 of the Customs and Central Excise Duties Drawback Rules, 1995 read with Section 75A(2) of the Customs Act, 1962 - Show cause notice is based upon an alleged intelligence received by the Directorate of Revenue Intelligence, that prior to the year 2004, the noticee had indulged in misuse of brand rate of duty drawback scheme by availing higher rate of duty drawback, which was fixed for bicycles of various sizes/ weights but had actually exported bicycles of smaller sizes/ weights and had thus availed inadmissible drawback- Issue of limitation raised by the petitioner for the same. Held that Since only a show cause notice has been issued and final order in response thereto is yet to be passed, we are of the considered view that all the contentions raised herein can be effectively gone into by the 3rd respondent on consideration of the reply to the show-cause notice which may further be supplemented by the petitioner alongwith the decisions in Spectra Fashions versus Union of India 2015 (1) TMI 1261 - CALCUTTA HIGH COURT Rashmi Metaliks Ltd. vs. Union of India 2015 (6) TMI 332 - CALCUTTA HIGH COURT , Indsur Global Limited versus Union of India 2014 (12) TMI 585 - GUJARAT HIGH COURT , Padmini Exports versus Union of India 2013 (1) TMI 282 - GUJARAT HIGH COURT Also, it is Needless to say that the issue of limitation raised by the petitioner would surely require consideration at the hands of 3rd respondent who shall be obligated to deal with the same by passing a reasoned order. Therefore, writ petition is disposed of at this stage with liberty to the petitioner to submit a supplementary reply to the show-cause notice, whereupon the 3rd respondent shall pass a reasoned order after hearing the petitioner s representative and respondent No.3 shall be obligated to deal with the question of limitation in addition to the merits of the matter. - Decided in favour of petitioner

Summary

Issues:
Challenge to show-cause notice for recovery of Duty Drawback amount under Customs Act, 1962 and Rules, including issue of time limitation.

Analysis:
The judgment involves a challenge by a partnership firm to a show-cause notice issued by the Additional Commissioner of Customs, Ludhiana, seeking recovery of Duty Drawback amount under the Customs Act, 1962 and related Rules. The notice alleges misuse of the duty drawback scheme by availing a higher rate for smaller-sized bicycles than what was actually exported, resulting in inadmissible drawback. The petitioner contests the notice on grounds of validity, propriety, and being time-barred, citing a limitation period of five years under the Customs Act, 1962. The core issue raised is whether the Rules can extend the limitation period beyond what is prescribed in the principal statute, allowing authorities to pursue old matters after a significant period.

The petitioner relies on various decisions to support the limitation objection, including Spectra Fashions v. Union of India, Rashmi Metaliks Ltd. v. Union of India, Indsur Global Limited v. Union of India, and Padmini Exports v. Union of India. The court acknowledges the arguments presented by the petitioner and notes that as only a show cause notice has been issued, the final order is pending. The court opines that the issues raised can be addressed by the 3rd respondent upon consideration of the reply to the notice and the decisions cited. The court emphasizes that the question of limitation raised by the petitioner must be addressed by the 3rd respondent in a reasoned order, specifically in light of the case law presented.

Consequently, the court disposes of the writ petition, granting the petitioner the liberty to submit a supplementary reply to the show-cause notice. The 3rd respondent is directed to pass a reasoned order after hearing the petitioner's representative, focusing on both the limitation issue and the merits of the case. The petitioner is granted the right to appeal any adverse order to the appellate or superior forums if necessary. The judgment concludes with the appropriate orders being made for further proceedings, maintaining the petitioner's rights in the legal process.