TaxTMI 
TaxTMI 
2014 (9) TMI 185
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....Schedule to the Central Excise Tariff Act, 1985. The 1st petitioner exports products like readymade garments and claims duty drawback after preparing necessary documents and complying with all requirements stipulated. 5. The second petitioner is a partnership concern. It exports readymade garments to various countries from its factory situated at T. Dasarahalli, Bangalore. It claims duty drawback after preparing necessary documents and complying with all requirements stipulated. 6. The third petitioner is a Private Limited Company incorporated under the Companies Act, 1956. Presently it is known as M/s. Aryan Garments Private Limited. It is engaged in the manufacture of readymade garments and exports to various countries. The third petitioner has been claiming duty drawback after preparing necessary documents and complying with all requirements stipulated. 7. A common show cause notice dated 18-7-2001 was issued to the petitioners along with others alleging that the duty drawback claimed and paid for export of readymade garments of cotton was irregular/fraudulent. The same was proposed to be recovered from the 100% EOU of Gemini Textile industries. The petit....
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....enalty should not be imposed. The addendum was issued on 2-5-2002. The duty drawback drawn by the petitioners relate to the year 1996-97. Therefore, the addendum was clearly barred by limitation. The addendum cannot be read into the original show cause notice. It is a fresh demand beyond the period of limitation. The addendum completely changes the structure of the original show cause notice and therefore, barred by limitation. In the original show cause notice, the petitioners were asked to show cause as to why penalty should not be imposed, but in the addendum the petitioners have been asked to show cause as to why duty drawback should not be recovered. It is clearly afterthought and beyond limitation. Further he also submitted that though limitation is not prescribed to recover duty drawback, the reasonable time could not be beyond five years. He also submitted that the authorities have failed to consider the matter in proper perspective and the impugned order is devoid of reasons and therefore, it cannot be sustained in law. 14. Placing reliance on the decision of the Gujarat High Court reported in 2013 (287) E.L.T. page 290, the learned counsel for the petitioners subm....
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.... learned counsel for the respondents submitted that no limitation is provided for recovery of duty drawbacks in Customs, Central Excise Duties and Service Tax Drawback Rules, 1995. When limitation is not provided by the Statute, the Court cannot prescribe any limitation. For recovery of drawbacks, no limitation has been prescribed. However, even assuming that under Section 28 of the Customs Act the limitation prescribed is five years, then also, the show cause notice is within time. Therefore, the impugned order does not call for interference. 17. I have carefully considered the submissions made by the learned counsel for the parties. 18. The point that arises for my consideration is, Whether the impugned order calls for interference? 19.  It is relevant to note, show cause notice dated 18-7-2001 has been issued to M/s. Gemini Textile Industries along with 15 others including the petitioners herein. The allegations made in the show cause notice against the petitioners are at para 22(i) to (vi). They read as follows : 22. Now therefore, M/s. Gemini Textile Industries, Bangalore are hereby required to show cause to the Commissioner o....
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.... without obtaining permission from the Customs Department and the same were not sent back after completion of job work but were exported in the name of DTA unit of Gemini Group claiming duty drawback. (v) The duty amounting to Rs. 53,618/- in respect of goods valued at Rs. 2,55,322/- exported through Bangalore Air Cargo Complex, which has been claimed as drawback amount by M/s. Gemini Dyeing and Printing Mills Ltd. (GDPM) a DTA unit of Gemini group should not be demanded under sub-section (2) of Section 75A of Customs Act, 1962 read with Rule 2(d) of Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 as contemplated in Notification 49/96-Cus. (N.T.), dated 1-10-1996 inasmuch as M/s. Gemini Textile Industries had sent readymade garments for some specific job work without obtaining permission from the Customs Department and the same were not sent back after completion of job work but were exported in the name of DTA unit of Gemini group claiming duty drawback. (vi) The duty amounting to Rs. 21,625/ - in respect of goods valued at Rs. 1,02,974/- exported through Bangalore Air Cargo Complex, which has been claimed as draw....
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....i) to (ix) in pages 18, 19 and 20 may be deleted and the following be substituted : Para 22. Now therefore, M/s. Gemini Textile Industries, Bangalore are hereby required to show cause to the Additional Commissioner of Customs, C.R. Building, P.B. No. 5400, Queens Road, Bangalore-1, as to why; (i) License bearing No. 26/96, dated 1-5-1996 should not be cancelled inasmuch as they have violated the conditions of the provisions relating to 100 EOUs. (ii) Duty amounting to Rs. 3,04,788/- on the raw materials valued at Rs. 4,29,652/- should not be recovered under Section 72 of Customs Act, 1962 inasmuch as M/s. Gemini Textile Industries had removed duty free raw materials under their own private Delivery challans to various other DTA units and also had not received back the said duty free materials and no permission was obtained from the Customs Department thereby M/s. Gemini Textile Industries have violated the provisions of sub-section (4b) of Section 72 of Customs Act, 1962. (iii) The 1329 nos. of readymade garments valued at Rs. 1,32,900/- found in the premises on the day of visit of officers of Custo....
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....toms Department and the same were not sent back after completion of job work but exported in the name of DTA unit of Gemini Group claiming duty drawback. (iii) Why penalty should not be imposed on them under Section 114(iii) of Customs Act, 1962, inasmuch as they had received and sent raw materials as well as finished goods from M/s. Gemini Textile Industries and claimed undue benefit of duty drawback in respect of goods manufactured by M/s. Gemini Textile Industries, thereby contravening the provisions of Section 75 of the Customs Act, 1962 read with Rule 16 of the Customs Act and Central Excise Duties Drawback Rules, 1995. Para 24. M/s. R.V. Corporation, VPK No. 108, Survey No. 21/22/23, Dasarahalli, Bangalore-57 is hereby required to show cause to the Additional Commissioner of Customs, Bangalore, as to : (i) Why the duty drawback amounting to Rs. 64,432/- in respect of goods valued at Rs. 4,29,549/- exported through Bangalore Air Cargo Complex should not be recovered as per the provisions of sub-section (2) of Section 75A and also the interest on the same as contemplated under Section 28AA of the Customs Act, 1962, r....
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....es and Service Tax Drawback Rules, 1995, as contemplated in Notfn. No. 49/96-Customs (N.T.), dated 1-10-1996 inasmuch M/s. Gemini Textile Industries had sent readymade garments for some specific job work without obtaining permission from the Customs Department and the same were not sent back after completion of job work but were exported in the name of DTA unit of Gemini Group claiming duty drawback. (ii) Why penalty should not be imposed on them under Section 114(iii) of the Customs Act, 1962 inasmuch as they have received and sent raw materials as well as finished goods from M/s. Gemini Textile Industries and claimed undue benefit of duty drawback in respect of goods manufactured by M/s. Gemini Textile Industries, thereby contravening the provisions of Section 75 of the Customs Act, 1962 read with Rule 16 of the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995. 22. The learned counsel for the petitioners contended that the addendum completely changes the structure of the original show cause notice and it is barred by limitation. Placing reliance on the decision of the Gujarat High Court reported in 2013 (287) E.L.T. page 290, ....
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....ssued as regards the interpretation of condition (c) of the Note under SS No. 5404(1)(i) of the Drawback Schedule, no action was taken by the concerned authorities at the relevant time. It is only after a period of more than three years that show cause notices came to be issued to the petitioners seeking to recover the differential amount of drawback erroneously paid to them. Judging the period of delay from the armchair of a reasonable man, under no circumstances can the period of more than three years be termed to be a reasonable period for recovery of the amount erroneously paid. As held by the Supreme Court in the case of Collector of Central Excise, Jaipur v. M/s.Raghuvar (India) Ltd. (supra), where no period of limitation is prescribed, the courts may always hold that any such exercise of powers which has the effect of disturbing the rights of citizen should be exercised within a reasonable period of time. In the present case, the drawback had been paid more than three years prior to the issuance of the show cause notices, and despite the fact that clarification in respect of condition (c) of the Note under SS No. 5404 (l)(i) of the Schedule had been issued way back in the ye....
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....ontention that the extended period of limitation could not have been invoked is misconceived. Even otherwise, in light of the fact that the appellant had claimed drawback on the excise duty component without there being any supporting manufacture, the claim would squarely fall within the ambit of wilful misstatement or suppression of fact as envisaged under the proviso to Section 28 of the Act. Hence, even if the provisions of Section 28 were applicable, the extended period of limitation could have been validly invoked. 26. The Division Bench of this Court in N. Subba Rao v. Third Income-Tax Officer, City Circle-II, Bangalore reported in 1963 Income Tax Reports page 808, has observed as follows : We may now proceed to consider the second contention of Sri Srinivasan. He strenuously urged that a notice of demand issued four years after the assessment was made is clearly illegal. Section 29 does not prescribe any period of limitation for issuing a notice. Wherever the legislature thought it necessary, it has prescribed periods of limitation in the Act. No support for the contention of Sri Srinivasan can be gathered from the language of Section 29. But he bases his contenti....
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....ly on the further observation : "Although no time is prescribed for issuing the notice in question I suppose it may be said that such a notice must be issued within a reasonable time. What would be a reasonable time might vary according to circumstances." This observation of the learned Chief Justice is clearly obiter. If the legislature did not choose to prescribe any period of limitation, we very much doubt whether the Court could step in and prescribe its own period of limitation by bringing in the idea of "reasonable time". It would not be correct to assume that every claim, to be valid, must be made within some period and that is no period of limitation is prescribed by the statute, then it should be done within a reasonable time. Unless a period of limitation is prescribed, the courts are not justified in prescribing any period in the nature of limitation. We do not think that the observation of the learned Chief Justice can be taken advantage of for contending that the period taken in the instant case is an unreasonable period. If the decision above referred to had stood by itself Sri Srinivasan's contentions would have been extremely weak. But fortunately for him a Be....
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....petitioners along with others on 18-7-2001. In the show cause notice all facts have been mentioned. The petitioners have been called upon to show cause as to why penalty should not be imposed on them under Section 114(iii) of the Customs Act, 1962. In the original show cause notice, the petitioners were not asked to show cause as to why the duty drawbacks should not be recovered. However, in the addendum dated 2-5-2002, the petitioners have been asked to show cause as to why the duty drawbacks drawn by them should not be recovered. A careful reading of the addendum shows that the changes to the original show cause notice do not structurally alter the show cause notice. Whatever is alleged in the show cause notice is virtually repeated in the addendum except calling upon the petitioners to show cause as to why the duty drawbacks should not be recovered. Therefore, it cannot be said that the addendum structurally alters the nature of the show cause notice and it is barred by limitation. In fact no limitation has been prescribed for recovery of duty drawbacks. Therefore, I do not find any merit in the contention that the addendum structurally alters the nature of show cause notice and....