Reasonable period for drawback recovery bars unexplained delayed proceedings where fraud or suppression is not alleged.

Recovery of customs drawback under Rule 16, despite no express limitation period, must be initiated within a reasonable period. The notes explain that proceedings commenced more than seven years after the drawback was last availed, followed by an unexplained further delay in adjudication, were treated as time-barred where no fraud or suppression was alleged. Non-production of export-realisation proof alone does not invoke the principle that fraud defeats limitation. The notes further state that an available statutory appeal need not be pursued where delayed recovery lacks statutory authority. The reported consequence was that the drawback-recovery demand and consequential action could not be sustained.

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Issues: (i) Whether recovery of drawback under Rule 16, where no express limitation period is prescribed, could be initiated after more than seven years in the absence of fraud or suppression; (ii) Whether the petitioner should be relegated to the statutory appellate remedy.

Issue (i): Whether recovery of drawback under Rule 16, where no express limitation period is prescribed, could be initiated after more than seven years in the absence of fraud or suppression.

Analysis: Rule 16 permits recovery of drawback erroneously or excessively paid but does not prescribe a limitation period. Such power must nevertheless be exercised within a reasonable period, dependent on the facts. The recovery was initiated in 2017 for drawback last availed in 2010, and the adjudication order followed in 2022, without explanation for the delay. There was no allegation that the drawback had been obtained through fraud or suppression; non-production of export-realisation proof alone did not attract the principle that fraud defeats limitation.

Conclusion: The delayed recovery proceedings were barred by limitation and were in favour of the assessee.

Issue (ii): Whether the petitioner should be relegated to the statutory appellate remedy.

Analysis: Although an appeal was available under Section 128(1) of the Customs Act, the recovery proceedings had been initiated beyond a reasonable period and the impugned order lacked statutory authority.

Conclusion: The petitioner could not be relegated to the appellate remedy, in favour of the assessee.

Final Conclusion: The drawback-recovery demand and consequential action could not be sustained because the recovery power was exercised after an unexplained and unreasonable delay.

Ratio Decidendi: Where a statute confers recovery power without prescribing limitation, the power must be exercised within a reasonable period; an unexplained prolonged delay is impermissible absent fraud or suppression.

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