2024 (1) TMI 100 - HC - Customs

Period of limitation - recovery proceedings of drawback for alleged non-realization of export proceeds - whether the proceedings can be sustained having been made after close to 12 years since the subject export? - HELD THAT - In the present case, what is now sought to be recovered relates to drawback in respect of shipping bills for the period 2004-09, after almost 12 years, cannot be considered to be reasonable. The period of 12 years taken for passing the impugned order for recovery of drawback allegedly sanctioned erroneously does not stand the scrutiny of reasonableness and is thus liable to be set aside. The writ petition stands disposed of.

Summary

Issues Involved:
1. Whether the recovery proceedings of drawback for alleged non-realization of export proceeds can be sustained after a significant lapse of time since the subject export.

Summary:
The High Court of Madras considered the challenge to recovery proceedings of drawback due to alleged non-realization of export proceeds, initiated almost 12 years after the subject export. The petitioner contended that the impugned order of adjudication was made after an unreasonable delay of 8 years from the date of the shipping bill. Despite providing evidence of realization of sale proceeds through Chartered Accountant Certificates, a second show cause notice was issued after a hiatus of more than 7 years. The petitioner argued that any state action must be taken within a reasonable time to comply with fairness and reasonableness, citing Article 14 of the constitution. The respondent, on the other hand, argued that in the absence of a prescribed time limit, no limitation can be read into the provision.

The Court noted that the Chartered Accountant Certificate is a valid basis for proving compliance with rebate requirements, as per Circular No.5 of 2009. Emphasizing the principle of reasonable time for actions without statutory limitation, the Court referred to relevant judgments highlighting the necessity of completing proceedings within a reasonable period. The Court also considered provisions under the Customs Act, 1962, regarding the limitation for recovery of duty/rebate in cases of short levy or non-payment due to collusion or suppression of facts.

Moreover, the Court discussed previous judgments underscoring the importance of acting within a reasonable time when no specific limitation is prescribed by the statute. Citing the case of Lakshmi Machine Works Limited, the Court reiterated that even in the absence of a specified time limit, actions must be completed within a reasonable period. In this case, the Court found the 12-year delay in the recovery proceedings unreasonable and set aside the impugned order for recovery of drawback.