Unexplained delay in customs proceedings and mere non-issuance of ARE-2 cannot sustain penal drawback action.

Inordinate and unexplained delay in initiating, adjudicating, or reviving customs proceedings vitiates the action as unfair, prejudicial, and unsustainable; the impugned notices and orders were quashed on that ground. Mere non-issuance of ARE-2, without proof of double drawback benefit or an intentional wrongful claim, does not by itself sustain drawback disallowance, penalty, or confiscation; those findings were also set aside. The article states that stale quasi-judicial proceedings cannot be revived after prolonged lapse, and that penal drawback action requires a demonstrated wrongful advantage rather than assumption alone.

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Issues: (i) Whether the show cause notices, adjudication orders and revision orders were liable to be quashed on account of inordinate and unexplained delay in initiation and completion of the proceedings; (ii) Whether the alleged non-issuance of ARE-2 and the consequent drawback-related allegations justified the impugned demand, penalty and confiscation findings.

Issue (i): Whether the show cause notices, adjudication orders and revision orders were liable to be quashed on account of inordinate and unexplained delay in initiation and completion of the proceedings.

Analysis: The proceedings had remained pending for an exceptionally long period, with adjudication taking place after more than eleven years in some matters and revisionary revival occurring after about seven to eight years. The delay was not supported by any satisfactory explanation. The Court applied the principle that stale proceedings cannot be revived after such prolonged and unexplained lapse, as it offends fairness, causes prejudice, and is inconsistent with the requirement of prompt adjudication in quasi-judicial proceedings.

Conclusion: The issue was decided in favour of the petitioners. The inordinate and unexplained delay vitiated the proceedings and justified quashing of the impugned notices and orders.

Issue (ii): Whether the alleged non-issuance of ARE-2 and the consequent drawback-related allegations justified the impugned demand, penalty and confiscation findings.

Analysis: The Court followed the earlier view that where the drawback pertains only to the customs portion, and no double benefit of duty drawback is shown, mere non-issuance of ARE-2 does not establish a breach warranting penal consequences. The revisional and adjudicatory findings were held unsustainable because they proceeded on the assumption of wrongful advantage without demonstrating intentional wrongful claim or actual double benefit.

Conclusion: The issue was decided in favour of the petitioners. The drawback disallowance, penalties and related findings could not survive on the footing adopted in the impugned orders.

Final Conclusion: The impugned show cause notices, adjudication orders and revision orders were quashed, and the writ petitions succeeded to that extent.

Ratio Decidendi: Inordinate and unexplained delay in adjudicating or reviving customs proceedings renders the action arbitrary and unsustainable, and mere non-issuance of ARE-2 does not justify drawback-related penal action where no double benefit or intentional wrongful claim is established.

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