TMI Blog2013 (3) TMI 480X X X X Extracts X X X X X X X X Extracts X X X X ..... I 40 - SUPREME COURT OF INDIA], 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. Held that:- In the light of the aforesaid discussion, in the opinion of this court, though Rule 16 of the Drawback Rules does not provide for any period of limitation, a reasonable period has to be read into the said rule. As observed hereinabove, in the facts of the present case, the show cause notices which have been issued after a period of more than three years from the date when the drawback came to be paid to the petitioners, cannot by any stretch of imagination be said to have been issued within a reasonable period of time. Under the circumstances, the show cause notices have to be held to be bad on the ground of being time barred. Once the show cause notices are held to be invalid, the very substratum of all the orders passed pursuant thereto, including the impugned orders would fall, rendering the same unsustainable.For the foregoing reasons, the petitions succeed and are, accordingly, allowed. - Special Civil Applicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ads as under : 5404 2605 (1) All fabrics including sarees, dhoties and odhanies made of man made, staple fibers and filament yarn (i) Made with 100% polyester filament yarn. 20% (Twenty per cent only) of FOB value, subject to a maximum Rs. 62.00 (Rs. Sixty two only) per kg of filament yarn content All C.Ex. Note : The rate against above S.S. No. 5404 shall apply subject to the following conditions :- (a) The denier of such polyester filament yarn is less than 750 and its tenacity does not exceed 6.5 gram per Denier. (b) The goods are exported under AR4 and a certification is made in its by the Superintendent of Central Excise/Customs that polyester filament yarn used in the export product have paid the appropriate rate of Central Excise duty of the additional Customs duty (as the case may be) effective from 1-4-1995, i.e. at the rate of Basic Excise duty 50% (fifty per cent only) ad valorem plus 15% (fifteen per cent only) additional duties on Textiles. *(c) If the goods are not exported under AR-4 and/or exporter is unable to give the certificate as required under (b) above, reduced rate of drawback 17% (Seventeen per cent o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sting provision and has not laid down any new rule/provision. Therefore, the clarification was operative from the date of issuance of the original notification and thus could not be only prospective. By a letter dated 22-1-1997, the Commissioner, Custom Preventive Collectorate, stated that it had been reported by the Asstt. Commissioner of Customs in Surat that Duty Drawback of 17% without any maximum ceiling was disbursed by him till 1-8-1996. However, in view of the clarification on maximum ceiling vide letter dated 20-9-1996, the differential amount already disbursed is recoverable, as the clarification now is in contradiction with the earlier clarification vide letter 10-4-1996 that ceiling can be applied for pending claims of drawback. He, accordingly, sought clarification as to whether the recovery is to be made in respect of claims finalized by applying clarification vide letter dated 20-9-1996 retrospectively. In response to the said letter, the Commissioner - Drawback by a letter dated 4th March, 1997 replied that in paragraph 3 of the clarification dated 20-9-1996 it has been specifically stated that the pending drawback claims should be finalised in light of this clarifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 187 (Tri.)] for the proposition that when no period of limitation has been prescribed, a reasonable period of limitation has to be read into the provision. 7. Against the common order passed by the Commissioner (Appeals), revenue went in revision before the Government of India. In the revision proceedings, initially an interim order dated 30-3-2001 came to be made whereby the revisional authority after discussing the merits of the case observed that since the matter is sub-judice, the applications are consigned to call-book to be taken up after finalization of the petitions before the High Court. Subsequently, by a common order dated 28-6-2002, the revision came to be allowed. However, it appears that at the relevant time the sole issue which came to be decided by the revisional authority was on the question of time limit for recovery of drawback. The revisional authority held that the Drawback Rules are a self-contained set of rules made under Section 75 of the Customs Act and are specifically provided to deal with various aspects of drawback. The revisional authority was of the opinion that there is no time limit for issuance of demand notice for recovery of drawback paid erron ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers invited attention to the sub-serial No. 5404(1) of the Drawback Schedule to submit that condition (c) thereunder made provision for reduced rate of drawback at 17% of FOB value if the goods are not exported under AR-4 and/or the exporter is unable to give the certificate as required under condition (b). The said condition did not provide for a maximum cap of Rs. 62 per kg as in the case of goods covered under condition (b). Reference was made to the letter dated 20th September 1996, to submit that initially the authorities had also understood the conditions in the Drawback Schedule to mean that in case of goods were not exported under AR4 and certification as required under condition (b) was not made by the Superintendent of Central Excise/Customs, a reduced rate of drawback of 17% of the FOB value shall be payable on the exported goods without any maximum ceiling. However, subsequently, a clarification came to be issued on 20-9-1996 that the maximum ceiling of Rs. 62.00 per kg filament yarn content would be applicable even to cases falling under condition (c) of the Schedule. It was pointed out that initially when such clarification came to be issued, it was stated that pendin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Section 28 of the Act, should be made applicable to such cases. In support of his submissions, the learned counsel placed reliance upon the decision of the Supreme Court in the case of Government of India v. Citedal Fine Pharmaceuticals, Madras, AIR 1989 SC 1771 = 1989 (42) E.L.T. 515 (S.C.), for the proposition that in the absence of any period of limitation, it is well settled that every authority is to exercise the power within a reasonable time. Reliance was also placed upon a decision of the Supreme Court in the case of Collector of Central Excise, Jaipur v. M/s. Raghuvar (India) Ltd., AIR 2000 SC 2027 = 2000 (118) E.L.T. 311 (S.C.) and more particularly, paragraph 13 thereof. The decision of this Court in the case of Torrent Laboratories Pvt. Ltd. v. Union of India, 1991 (55) E.L.T. 25 (Guj.), was cited for the proposition that in the absence of any provision with regard to specific period of limitation, reasonable period of limitation has to be read into the rule. It was submitted that in the light of the principles enunciated in the above referred decisions, the revisional authority was not justified in holding that there is no time for issue of demand notice for recover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Dadri Inorganics Pvt. Ltd. v. Commissioner of Customs, 2010 (260) E.L.T. 61 (Guj.) wherein the Court has observed that the Drawback Rules nowhere provide for any limitation for recovering any amount of drawback erroneously paid. It was submitted that under the circumstances, that contention that a reasonable period of limitation has to be read into Rule 16 of the Drawback Rules deserves to be rejected on this ground alone. It was, accordingly, urged that the petitions being devoid of merit deserve to be rejected. 16. In the light of the facts and contentions noted hereinabove, the sole question that arises for consideration in this group of petitions is as to whether the concept of reasonable period is required to be read into Rule 16 of the Drawback Rules which does not prescribed any period of limitation for recovery of drawback erroneously paid. 17. As noticed earlier, the drawback claims in all these petitions relate to the period between December 1995 to 1996, in relation to which, show cause notices came to be issued in February 2000. Thus, in all the cases, drawback claims had been processed and cleared before issuance of the clarification vide letter dated 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n sub-section (1) of Section 142 of the Customs Act, 1962. Thus, apparently Rule 16 of the Rules does not provide for any time limit for making recovery of excess drawback paid erroneously. The question, therefore, is when Rule 16 does not prescribe any period of limitation, whether action can be taken thereunder after any length of time, or whether the concept of reasonable period has to be read into it. In this regard, it is by now well settled by the Supreme Court in a catena of decisions that if the statute does not prescribe any period of limitation, the power thereunder has to be exercised within a reasonable time. What would be a reasonable period would, of course, depend upon the facts of each case. 19. In Government of India v. Citedal Fine Pharmaceuticals, Madras (supra), the Supreme Court has, in the context of Rule 12 of the Medicinal and Toilet Preparations (Excise Duties) Rules, 1956, which did not provide for any period of limitation, held thus : 6. Learned counsel appearing for the respondents urged that Rule 12 is unreasonable and violative of Article 14 of the Constitution, as it does not provide for any period of limitation for the recovery of duty. He urged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 23. Examining the facts of the present cases in the light of the aforesaid legal position, in all these cases, drawback had been paid to the petitioners between December 1995 and August 1996. Thereafter, despite a clarification having been issued 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 drawba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sional authority observed that the issues were already decided by the Government in the interim order. The sole issue that was decided by the revisional authority in the said order was on the question of time limit for recovery of drawback. When the petitioners challenged the said decision before this court, the petitions were withdrawn with a view to file review applications before the revisional authority on the merits of the applicability of the maximum ceiling of Rs. 62/- in cases falling under condition (c) of the Note under SS No. 5404(1)(i) of the Drawback Schedule, on the ground that the revisional authority had not considered the said aspect and had laid emphasis on the limitation aspect of the matter. Thus, it is apparent that since in the earlier order, the revisional authority had considered the aspect of limitation only, review applications came to be filed before the revisional authority inviting a decision on merits as regards the applicability of the maximum ceiling to the cases of the petitioners. Viewed in the aforesaid context, the contention that as the question of limitation had not been raised before the revisional authority in the review applications, the pet ..... 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