2024 (1) TMI 837 - HC - Customs

Time limitation - suppression of facts or not - impugned order challenged on the premise that the very initiation by issuance of show cause notices 9 to 11 years after the subject import is beyond reasonable period - HELD THAT - Section 124 of the Act which provides for confiscation, does not prescribe any period of limitation. It is trite law that whenever the statute does not prescribe limitation for taking any action, courts have consistently held that such action must be taken within a reasonable time - Thus any proceeding initiated or completed after a reasonable period would suffer from the vice of arbitrariness thereby falling foul of Article 14 of the Constitution of India. Now what would constitute a reasonable period for taking any action or passing an order would depend on the scheme of the Act and the nature of rights and obligations flowing therefrom and the facts of the case. Keeping the above aspect in mind and on gleaning through the provisions of the Act, the largest period for taking action is provided under Section 28 of the Act for recovery of duty in case of fraud, suppression or wilful misstatement. The impugned proceedings under Section 124 of the Act, 9 to 11 years after the date of the subject import cannot stand the scrutiny of reasonableness/arbitrariness inasmuch as any proceedings under Section 124 of the Act, 9 to 11 years after the import is unreasonable. Thus the impugned proceedings are set aside. The writ petition is disposed off.

Summary

Issues:
The judgment involves the challenge of an Order in Original dated 24.12.2020 and 20.01.2021 on the grounds of being unreasonable and arbitrary, violating Article 14 of the Constitution of India, due to the initiation through show cause notices made 9 to 11 years after the subject import.

Brief Facts:
The petitioner, a private limited company, engaged in container-related business, received import consignments from M/s. Global Overseas Indian at Chennai Port in April 2009, July 2011, and June 2012. The consignments were discharged in good condition, and the petitioner filed Import General Manifests. Subsequently, show cause notices were issued regarding Steel Scrap / Secondary Defective Mild Steel Bars, leading to the petitioner's penalty under Section 112 of the Act.

Contentions:
The petitioner argued that the delayed initiation of show cause notices after 9 to 11 years post-import was unreasonable and illegal. The respondent countered by mentioning the availability of a statutory appeal under Section 128 of the Act and non-compliance with Foreign Trade Policy requirements by the petitioner.

Legal Analysis:
The judgment delves into the absence of a prescribed limitation period under Section 124 of the Act for confiscation, emphasizing the necessity of actions being taken within a reasonable time. Citing relevant case laws, the judgment highlights the principle that any action after an unreasonable delay becomes arbitrary and violates Article 14 of the Constitution of India.

Conclusion:
After analyzing the provisions of the Act and considering the nature of rights and obligations, the judgment concludes that proceedings initiated 9 to 11 years post-import are unreasonable and arbitrary. Consequently, the impugned proceedings under Section 124 are set aside, and the writ petitions are disposed of without costs.