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2019 (6) TMI 909 - HC - CustomsValidity of SCN - Demand of duty drawback - Rule 16A of The Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 - time limitation - HELD THAT - This Court is of the considered view that this is not a fit case for interfering at the SCN stage. This is because the exceptions for interfering in writ jurisdiction at SCN stage have been clearly laid down in a long line of authorities. It should be a case of SCN being issued without jurisdiction or a SCN that is attempting to re-open settled position of law or a SCN which has been issued with malafide intentions or a SCN which has been issued in a manner that leads one to believe that Authority issuing the SCN has pre-determined the issue. While this Court comes to the conclusion that this is not a fit case for interfering in the SCN stage, this Court is also of the view that it would be appropriate to direct the respondent to decide the issue of limitation first and then proceed with the adjudication, subject of course to the decision of limitation; and direct the Authority to complete the adjudication within a time frame. Petition disposed off.
Issues Involved:
1. Validity of the Show-Cause Notice (SCN) and corrigendum. 2. Limitation period for issuing the SCN. 3. Jurisdiction and discretion of the High Court in interfering at the SCN stage. 4. Procedural directions for adjudication. Detailed Analysis: 1. Validity of the Show-Cause Notice (SCN) and corrigendum: The petitioner challenged the SCN dated 24.08.2018 and its corrigendum dated 28.02.2019 issued by the respondent. The SCN called upon the petitioner to show cause why the drawback of ?65,08,939/- should not be demanded, why the already paid amount of ?49,00,000/- should not be appropriated, why interest should not be levied, why the consignments should not be confiscated, and why a penalty should not be imposed under Section 114AA of the Customs Act, 1962. The petitioner argued that the SCN and corrigendum were barred by limitation. 2. Limitation period for issuing the SCN: The petitioner contended that no specific time frame for issuing the SCN was prescribed under the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995, or the new Rules of 2017. The petitioner referenced Section 28 of the Customs Act, which prescribes a two-year or five-year period for recovery of duties not levied, not paid, short levied, short paid, or erroneously refunded. The petitioner cited the Gujarat High Court judgment in Pratibha Syntex Ltd. v. Union of India, which held that when no limitation is prescribed, the power must be exercised within a reasonable time. The petitioner argued that the SCN issued nearly a decade after the exercise was clearly barred by limitation. 3. Jurisdiction and discretion of the High Court in interfering at the SCN stage: The respondent argued that the Gujarat High Court judgment was factually distinguishable as it dealt with a post-adjudication stage, not the SCN stage. The respondent emphasized that limitation is a mixed question of law and facts, and the matter should not be scuttled at the SCN stage. The Court agreed with the respondent, referencing the Kunisetty Satyanarayana case, which held that writ jurisdiction is discretionary and should not ordinarily be exercised to quash an SCN unless it is wholly without jurisdiction or illegal. The Court also cited the Satyawati Tandon case, emphasizing the need for caution in revenue matters and the importance of exhausting alternative remedies. 4. Procedural directions for adjudication: The Court concluded that this was not a fit case for interfering at the SCN stage. The Court directed the respondent to decide the issue of limitation first and then proceed with the adjudication. The petitioner was instructed to file a further response to the SCN and corrigendum within a fortnight. The respondent was directed to complete the adjudication within one month from the date of filing of objections, with the limitation aspect to be decided first but not requiring a separate order. Post-adjudication, a copy of the order should be served on the petitioner within ten working days. Conclusion: The writ petition was disposed of with directions to carry the SCN and corrigendum to their logical end. The petitioner was allowed to file further responses, and the respondent was instructed to adjudicate within a specified time frame, considering the limitation aspect first. There was no order as to costs, and the connected miscellaneous petition was closed.
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