Order demanding duty drawback recovery quashed for lack of personal hearing and time-barred claim under limitation rules
The HC quashed the impugned order demanding recovery of duty drawback from the petitioner, holding that the petitioner was not afforded a personal hearing, violating natural justice. The court reiterated that recovery claims beyond three years are generally barred as per precedent. Although public notices were issued, they do not substitute the requirement of following due legal procedure for recovery. The petitioner's contention that the claim was time-barred due to delay in show cause notice was upheld. The matter was remanded to the first respondent for fresh consideration on merits and in accordance with law.
ISSUES:
Whether the demand for recovery of availed duty drawback beyond three years from the date of respective shipments is barred by limitation under the Customs Act, 1962.Whether the impugned order-in-original was passed in violation of principles of natural justice due to non-receipt of personal hearing notices by the petitioner.Whether the issuance of show cause notice after a lapse of more than a decade from the date of exports affects the validity of the recovery demand.Whether public notices and departmental display suffice to inform the exporter of the requirement to produce Bank Realisation Certificates (BRCs) for duty drawback claims.
RULINGS / HOLDINGS:
The Court held that "three years period is the maximum period, which can be considered as a reasonable one for recovery of any amount erroneously paid" and that a claim made beyond three years is "unsustainable."The impugned order-in-original was quashed because the petitioner was not afforded a "personal hearing" and did not receive the personal hearing notices, thus violating principles of natural justice.The issuance of the show cause notice after a lapse of more than a decade was found to be barred by limitation, rendering the recovery demand invalid unless reconsidered with due procedure.The Court found that public notices and departmental display alone do not satisfy the requirement for recovery of duty drawback; recovery must be made "only by following the due procedure established under law."
RATIONALE:
The Court applied Section 75(1) and Section 75A(2) of the Customs Act, 1962, and Rule 16A of the Customs and Central Excise Duties Drawback Rules, 1995, alongside established principles of limitation and natural justice.The Court relied on precedent affirming that "any demand by any statutory authority will have to be made within a reasonable period," citing the Supreme Court's decision in Government of India vs. Citedal Fine Pharmaceuticals.The Court emphasized adherence to principles of natural justice, requiring that the affected party receive proper notice and an opportunity for personal hearing before passing adverse orders.The Court noted that the respondents failed to prove that the petitioner received the personal hearing notices, which were sent to an outdated address, undermining the validity of the impugned order.The Court directed remand for fresh consideration on merits, mandating that personal hearing notices be sent to the petitioner's current address and that the petitioner be permitted to submit explanations, including the plea of limitation.
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