2024 (12) TMI 302 - HC - Customs

Challenge to notice issued, seeking to recover duty foregone under Section 143 of the Customs Act, 1962 - time limitation for recovery of duty - non-submission of the Export Obligation Discharge Certificate against Advance Authorization - HELD THAT - Admittedly, there is no dispute that no time limit is provided under Section 143 of the Customs Act for recovery of duty foregone. However, it is a settled position that where the Act is silent on the limitation, the proceedings have to be initiated within a reasonable period, and the said reasonable period has to be ascertained based on a holistic reading of the Scheme of the Act. In the instant case, admittedly, the impugned notice is issued for non-submission of Export Obligation Discharge Certificate dated 23 September 1996, after almost 26 years. On a reading of the Customs Act, the reasonable period for initiating any proceedings for recovery of dues can certainly not be 26 years, even where a bond may have been executed. Section 28 of the Customs Act, and that too, in a case where suppression or fraud is alleged, provides a time limit of 5 years. This period gives a clue and could, therefore, provide guidance in determining a reasonable time when the legislature offers no specific time limit. In this case, there are no allegations of any fraud or suppression. Therefore, there is nothing reasonable in seeking to make recoveries after 26 years. Not even an attempt is made to explain this inordinate delay. The impugned notice dated 15 December 2022 is quashed and set aside - Petition disposed off.

Summary

Issues:
Challenge to notice seeking duty recovery for non-submission of Export Obligation Discharge Certificate after 26 years.

Analysis:
The petitioners challenged a notice issued by respondent no. 2 to recover duty foregone under Section 143 of the Customs Act, 1962, for not submitting the Export Obligation Discharge Certificate against an Advance Authorization dating back to 1996. The petitioner argued that the proceedings were time-barred due to the 26-year delay, citing the lack of a specific time limit under the Customs Act. The respondent contended that since Section 143 does not provide a time limit for enforcing the bond, the notice was not barred by limitation. The court noted that while the Act is silent on limitation, proceedings must be initiated within a reasonable period, determined by the Act's scheme. Despite no specific time limit, a reasonable period could not be considered as 26 years, especially without allegations of fraud or suppression, as Section 28 of the Customs Act sets a 5-year limit in cases of fraud. The court found the delay in commencing proceedings unreasonable and unjustified.

The court referenced the Supreme Court's decision in Union of India vs. Citi Bank, where a show cause notice issued almost a decade after a transaction was quashed due to delay. Additionally, a Co-ordinate Bench decision in Coventry Estates Pvt. Ltd. Vs. The Joint Commissioner analyzed delayed adjudication and quashed notices proposed after significant delays. The court, in line with these precedents, quashed the impugned notice dated December 15, 2022, due to the unreasonable delay of 26 years. The court held that the delay rendered the proceedings unjust and unsupported, ultimately setting aside the notice and disposing of the petition accordingly.