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 ... Exercise of statutory jurisdiction within a reasonable time - quashing of administrative order for undue delay - limitation as a defence to refund claimsExercise of statutory jurisdiction within a reasonable time - quashing of administrative order for undue delay - Impugned Order in Original dated 25.09.2020 passed pursuant to a show cause notice dated 12.03.2009 was liable to be quashed on the ground of inordinate delay in exercise of statutory jurisdiction. - HELD THAT: - The Court applied the principle that where a statute does not prescribe a period of limitation, the statutory authority must still exercise its jurisdiction within a reasonable period. Following the Supreme Court's principle in Bhattinda District Co operative Milk P. Union Ltd. and the decision of a Single Judge in J. Sheik Parith, the Court found that the second respondent, having issued the show cause notice on 12.03.2009, received a reply and afforded a personal hearing in September 2009, yet chose to pass the final Order in Original only on 25.09.2020 after more than eleven years. Such delay amounted to failure to exercise jurisdiction within a reasonable time and warranted quashing of the order. [Paras 1, 5, 6, 7, 10]The show cause notice dated 12.03.2009 and the Order in Original dated 25.09.2020 are quashed for having been passed after an unreasonable delay.Limitation as a defence to refund claims - Whether the petitioner was entitled to refund of the amount purportedly paid in 2007. - HELD THAT: - The petitioner asserted that the amount challenged in the Order in Original had been paid in 2007 and sought refund relying on a decision of the Bombay High Court. The Court observed there is no documentary evidence before it to show the sum was paid under protest. Even assuming payment under protest, the Court held that the petitioner cannot seek refund because such a claim would itself be barred by limitation; the same principle of limitation that invalidates the belated adjudication applies equally to retrospective refund claims. The Bombay High Court decision relied on did not address this factual and limitation circumstance and was therefore inapplicable. [Paras 9, 10]The petitioner is not entitled to claim refund of the amount allegedly paid in 2007 because the refund claim is barred by limitation.Final Conclusion: Writ petition allowed: the show cause notice dated 12.03.2009 and Order in Original dated 25.09.2020 are quashed for unreasonable delay in exercising statutory jurisdiction; however, the petitioner is not entitled to a refund of the amount allegedly paid in 2007 as that claim is barred by limitation. 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.