Recovery under Customs demand notices invalid when earlier notices remained unenforced for a decade; relief granted to petitioner.

The dispute concerns recovery of customs duty for warehoused goods where demand notices issued in 2013 were not acted upon for about ten years. The court found that administrative inaction rendered enforcement of the earlier demand notices ineffective, and a subsequent demand notice issued without prior execution of the original notices could not lawfully revive recovery; consequence: the later notice and related alert communications were held invalid and relief was granted to the petitioner. The reasoning rested on the statutory scheme governing customs recovery and the impermissibility of issuing a fresh demand after prolonged non-enforcement.

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Issues Involved:
1. Legality of the demand notices dated 8 August 2013 and 11 December 2023.
2. Validity of the bond under Section 59 of the Customs Act.
3. Justification for the Alert issued on 23 March 2018.
4. Applicability of Section 142 for recovery of sums due to the government.

Summary:
1. Legality of the Demand Notices:
The petitioner challenged the recovery initiated by the respondents based on a demand notice dated 8 August 2013 issued under Section 72(1) of the Customs Act, 1962. The Court noted that the demand notice was not acted upon for almost ten years, rendering it unenforceable. The issuance of a fresh notice under Section 72(2) on 11 December 2023 was deemed impermissible as the earlier notice had lapsed. The Court observed, "a fresh notice under Section 72(2) could not have been issued, when the earlier demand notice dated 8 August 2013 itself was not acted upon and/or was given up."

2. Validity of the Bond:
The petitioner argued that the bond furnished under Section 59 of the Customs Act had expired and was thus unenforceable. The Court agreed, stating, "the bond had clearly become unenforceable not only by considering the terms of the bond but also for the future period, as the law would make it unenforceable." The Court further noted that any action to recover amounts under the bond would be barred by the Limitation Act, 1963, which prescribes a three-year limitation period.

3. Justification for the Alert:
The respondents issued an Alert on 23 March 2018, which the petitioner contended was unjustified. The Court found that the Alert was not a step to execute the demand notice and was issued after an unreasonable delay. The Court held, "any attempt on the part of the respondents to recover such amounts by the impugned Alert notice dated 23 August 2018, and which was reiterated in the impugned communication dated 24 January 2018 would also be required to be held to be illegal and invalid."

4. Applicability of Section 142:
The respondents justified the Alert under Section 142 of the Customs Act, which provides for the recovery of sums due to the government. The Court rejected this justification, stating, "even under the provisions of Section 142 which is a provision for recovery of sums due to Government, in the facts of the present case, the impugned Alert could not have been issued and/or foisted on the petitioner."

Conclusion:
The petition was allowed, and the demand notices, Alert, and related communications were quashed. The Court ruled in favor of the petitioner, making the rule absolute with no costs.

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