Inordinate delay in duty drawback recovery vitiates the demand where replies are ignored and natural justice is breached.

Recovery of duty drawback under Rule 16A must be initiated within a reasonable period, and an unexplained delay of more than 12 years was held to be inordinate. The Madras HC found that the show cause notice issued in 2017 for shipments of 2004-2005 was delayed beyond acceptable limits, and that the petitioner's request for further time and filed replies were not duly considered in the impugned order. On that basis, the recovery action was unsustainable, the writ petition succeeded, and the order directing recovery was quashed.

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Issues: Whether the order directing recovery of duty drawback, passed under Rule 16A of the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995, was liable to be quashed for inordinate delay and violation of natural justice.

Analysis: The shipments related to 2004-2005, while the show cause notice was issued only in 2017, after more than 12 years. The request for additional time to file a detailed reply was not considered, and the replies sent by the petitioner were not reflected in the impugned order. A demand for recovery of duty drawback must be made within a reasonable period, and a delay of this magnitude was held to be beyond that limit.

Conclusion: The recovery action was unsustainable. The delay was held to be inordinate, and the impugned order was quashed in favour of the assessee.

Final Conclusion: The writ petition succeeded and the recovery order stood annulled on the ground that the demand had been raised after an unreasonable lapse of time and without due consideration of the petitioner's replies.

Ratio Decidendi: A demand for recovery of duty drawback must be initiated within a reasonable period, and an unexplained delay of 12 years is inordinate and vitiates the recovery order, especially where the affected reply requests are not considered.

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