2023 (3) TMI 138 - HC - Customs

High Court quashes 11-year-old Order-in-Original, denies refund due to limitation, upholds legal principles.

The High Court quashed the Order-in-Original issued after an 11-year delay but denied the petitioner's refund claim due to limitation, aligning with legal ... Adjudication of SCN - Period of Limitation - SCN was issued to the petitioner in the year 2009 and a personal hearing was granted to them in the very same year but the impugned order came to be passed only in the year 2020 after a lapse of more than eleven years - contentions of the petitioner in this writ petition is that even though Section 75 of the Customs Act, 1962 does not prescribe a period of limitation for recovering the duty drawback amount, any recovery can be made only within a reasonable period. HELD THAT:- In the instant case, admittedly the show cause notice which culminated in the passing of the impugned Order-in-Original was issued on 12.03.2009, whereas the Order-in-Original was passed after a lapse of more than eleven years i.e., only on 25.09.2020. Pursuant to the show cause notice dated 12.03.2009, the petitioner has sent a reply on 09.09.2009 and a personal hearing was also afforded to the petitioner on 10.09.2009 itself. However, the Order-in-Original which is challenged in this writ petition was passed only on 25.09.2020 after a lapse of more than eleven years. The Hon'ble Supreme Court in the case of STATE OF PUNJAB VERSUS BHATINDA DISTRICT CO-OP. MILK P. UNION LTD. [2007 (10) TMI 300 - SUPREME COURT], though dealing with a case involving reopening of an assessment under the Punjab General Sales Tax Act, 1948 has held that though limitation is not prescribed under Section 21 of the said Act, the statutory authority must exercise jurisdiction, within a reasonable period - Having passed the Order-in-Original on 25.09.2020 even though the show cause notice was issued by the 2nd respondent as early as on 12.03.2009 which was also replied by the petitioner on 09.09.2009 and a personal hearing was afforded to the petitioner on 10.09.2009 itself, the 2nd respondent did not pass the final order immediately thereafter or within a reasonable time but has chosen to pass the impugned Order-in-Original only on 25.09.2020 after a lapse of more than eleven years. The petitioner claims that the said amount was paid under protest, though there is no documentary evidence produced by the petitioner before this Court to show that the same was paid under protest. Even assuming that the petitioner's statement that the said amount was paid under protest is to be accepted by this Court, even otherwise, the petitioner is not entitled for refund, as any refund claim will also be barred by limitation. When the petitioner has pleaded before this Court that on the ground of limitation the Order-in-Original ought not to have been passed, the same yardstick applies to the petitioner as well. The petitioner cannot blow hot and cold - this Court makes it clear that the petitioner is also not entitled for refund of the amount, which they had already paid in the year 2007 itself, which is the subject matter of the Order-in-Original which is challenged in this writ petition. The impugned show cause notice dated 12.03.2009 and the Order-in-Original, dated 25.09.2020 are hereby quashed and the writ petition is allowed. Issues:1. Consideration of quashing an Order-in-Original passed after a significant delay following a show cause notice.2. Interpretation of Section 75 and 75A(2) of the Customs Act, 1962 in relation to recovery of duty drawback amount.3. Determining the applicability of a reasonable period for recovery in the absence of a prescribed limitation period under Section 75 of the Customs Act, 1962.4. Analysis of judicial precedents regarding exercising jurisdiction within a reasonable period in the absence of a statutory limitation.5. Evaluation of the petitioner's claim for refund based on a Division Bench judgment of the Bombay High Court.6. Decision on quashing the show cause notice and Order-in-Original while denying the petitioner's claim for refund due to limitation.Issue 1:The High Court considered whether an Order-in-Original, issued under Customs and Central Excise Duty Drawback Rules, 1995 after an 11-year delay following a show cause notice, can be quashed. The petitioner argued that the substantial delay in passing the order warranted quashing, citing a judgment involving a similar matter.Issue 2:The Order-in-Original required the petitioner to pay a specific sum under Section 75 and 75A(2) of the Customs Act, 1962. The court analyzed the provisions to determine the legality of the demand for payment.Issue 3:The petitioner contended that although Section 75 of the Customs Act, 1962 does not specify a limitation period for recovering duty drawback amounts, such recovery must occur within a reasonable period. The court examined the concept of a reasonable period in the absence of a statutory limitation.Issue 4:Judicial precedents, including a Supreme Court decision, were referenced to establish that statutory authorities must act within a reasonable timeframe even without a prescribed limitation period. The court applied these precedents to assess the delay in passing the Order-in-Original.Issue 5:The petitioner sought a refund based on a Bombay High Court judgment, claiming payment under protest in a previous year. However, the court found no evidence of payment under protest and rejected the refund claim due to limitation, emphasizing consistency in legal arguments.Issue 6:Ultimately, the court quashed the show cause notice and Order-in-Original due to the unreasonable delay in issuance. However, the petitioner's claim for a refund of the amount paid earlier was denied on the grounds of limitation, aligning with the legal principles discussed in the judgment. The court clarified the decision and closed the case without costs.