TMI Blog2022 (4) TMI 1306X X X X Extracts X X X X X X X X Extracts X X X X ..... JUDGMENT PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA 1. By this writ application under Article 226 of the Constitution of India, the writ applicant have prayed for the following reliefs: a) This Hon ble Court be pleased to allow this petition; b) This Hon ble Court be pleased to issue a writ of mandamus or certiorari or in the nature of mandamus or certiorari or any other appropriate writ, order or direction, quashing and set aside the notice dated 9th February, 2018 and declare the same to be null and void; c) This Hon ble Court be pleased to issue a writ of mandamus or certiorari or in the nature of mandamus or certiorari or any other appropriate writ, order or direction, quashing and setting aside the order in original dated 26th / 27th September, 2019 and declare the same to be null and void; d) Pending the admission and final disposal of the petition, this Hon ble Court be pleased to stay the execution and implementation of the notice at Annexure A to the petition; e) Pending the admission and final disposal of the petition, this Hon ble Court be pleased to stay the execution and implementation of the order in original at Annexure B to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the consignment will be examined and if the same is found in order, the export order will be issued by the Docks Appraiser under Section 51 of the Act. The Government has declared various incentive schemes which included the duty drawback scheme under Sections 75 and 76 of the Act. 2.3. On 08.01.2015 the DRI on the basis of intelligence seized two containers of the petitioners on two grounds that the goods were over weighed and were not properly classified. According to them, the classification which is done under 7308 ought to have been under 7318 and hence, the goods were branded as mis-declared goods. The SCN was issued for the period from 01.01.2011 to 30.06.2015 to the petitioners. 2.4. For the provisional release of the seized goods, the authorities imposed stringent conditions which were challenged before the Customs Excise and Service Tax Appellate Tribunal ( the CESTAT hereinafter) by the petitioners wherein the condition was relaxed and upon furnishing 100% value of the goods, the goods were released. They are finally assessed by the competent authority and duty drawback withheld was granted to the petitioners by order of this Court dated 13.08.2015. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he SCN is issued by the Additional Commissioner of Custom who is the proper officer as per the monetary limit fixed by Central Board of Indirect Taxes and Customs, since the cause of action has arisen in the territorial jurisdiction of the Commissionerate. According to the respondents, as per the Madras High Court decision rendered in case of K.P. ABDUL MAJEED VS. COLLECTOR OF CUSTOMS CENTRAL EXCISE, COCHIN, reported in [1995 (80) E.L.T. 35 (MADRAS)] the jurisdictional Commissioner has investigated and adjudicated the matter. The petitioners have not given any reason as to why the SCN and Order-in-Original are without jurisdiction. 3.2. It is further contended that the Additional Commissioner of Customs has rightly issued and adjudicated the SCN which was within his powers. It is also contended further that Rule 16 of the Customs and Central Excise Duties Drawback Rules, 1995 ( the Drawback Rules hereinafter) empowers the department to recover the erroneous payment of drawback without any time limit and it can initiate the recovery proceedings under Section 142 of the Act. 3.3. In the era of self-assessment, the department relied on the information provided by the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the reason why the exporters have resorted to misclassification. After DRI investigation, it changed to CTH 7308 4000 on its own and that will not help the cause of the petitioners. 3.7 The Commissioner s (Appeal) order dated 24.11.2015 also would not apply in the case of the present petitioners where the classification was rejected by the lower authority for want of end use certificate. Whereas in the instant case, the classification has been accepted by the exporters on their own after DRI investigation. The parallel invoices have also been found in the premises during the search. 3.8 It is also contended that the petitioners can certainly avail the alternative remedy under Section 128 of the Act for appeal before the Commissioner (Appeal) against the order passed by the adjudicating authority and since the petitioners have been engaged in export of the goods by mis-declaring the value, quality and the classification, no interference is desired. 4. Affidavit-in-rejoinder has been filed by the petitioner No.2 denying all the contentions. 5. This Court has heard extensively the learned advocates on both the sides and also have examined the pleadings and supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , which has attained finality, to once again revisit the same. 7. Taking firstly the aspect of jurisdiction as contended before this Court, the SCN has been issued on 09.02.2018 by the Additional Commissioner of Customs, Customs Commissionerate, Mundra. Since the goods were exported from Mundra Port vide various shipping bills filed with Mundra Customs House, therefore, the jurisdiction would come of the office of the Principal Commissioner of Customs, Mundra and the notices have been issued by the proper officer as per the monetary limit fixed by Central Board of Indirect Taxes and Customs. The reliance is placed on the decision of the Madras High Court rendered in case of K.P. ABDUL MAJEED VS. COLLECTOR OF CUSTOMS CENTRAL EXCISE, COCHIN [1995 (80) E.L.T. 35 (MADRAS)] wherein it is held that if a cause of action has arisen in the territorial jurisdiction of the Commissionerate, the jurisdictional Commissioner can investigate and adjudicate the matter. 7.1 So far as the Rule 16 of the Drawback Rules is concerned, it provides the recovery of payment of drawback and it also permits the initiation of recovery proceedings under Section 142 of the Act. 7.2 Here, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e recovered in the manner provided under Sub-section (1) of Section 142 of the Act. It is quite clear from Rule 16 of the Drawback Rules that what all it provides for is the recovery of excess drawback paid erroneously, but choses not to prescribe the time limit. The question which has come up for consideration as to whether in absence of any period of limitation provided under Rule 16 of the Drawback Rules, any reasonable time period could be read into the said Rule. It also provides for statutory mechanism of recovery under Section 142 of the Act. 8. This Court in Special Civil Application No.2039 of 2004 and allied matters needed to consider the very issue where the petitioners before the Court had challenged the order passed by the Revisional Authority which had held that the drawback paid erroneously to the petitioners was liable to be recovered. After a period of more than three years since the disbursement of the Drawback, SCNs came to be issued to each of the petitioners proposing to recover from them the differential amount of drawback erroneously paid to them under section 142 of the Customs Act read with Rule 16 of the Drawback Rules on the ground that the drawback ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed under condition (b) of the Note to SS No.5404 (1) in respect of which drawback is payable at the rate of 17% of the FOB value. Thus, while issuing the initial clarification on 20th September 1996, the instructions issued by the CBEC were to the effect that the same should be applicable only to pending drawback claims. Subsequently, by the clarification issued vide letter dated 19th August 1999, CBEC clarified that the earlier clarification of 20th September 1996 was operative from the date of issuance of the original notification and was not only prospective. It appears that it is only pursuant to the subsequent letter dated 19th August 1999, that the show cause notices have been issued in February 2000. Thus, though the Customs Authorities were well aware about the clarification in respect of the drawback paid on goods falling under condition (c) of the Note below subserial No.5404 (1) of the Schedule, no action was taken at the relevant time to recover the drawback paid to the petitioner beyond the ceiling limit provided thereunder. It is only in February 2000, after a period of more than three years that by issuance of show cause notices, differential amount of drawback was s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Article 14 of the Constitution. In the absence of any period of limitation it is settled that every authority is to exercise the power within a reasonable period. What would be reasonable period would depend upon the facts of each case. Whenever a question regarding the inordinate delay in issuance of notice of demand is raised. it would be open to the assessee to contend that it is bad on the ground of delay and it will be for the relevant officer to consider the question whether in the facts and circumstances of the case notice or demand for recovery was made within reasonable period. No hard and fast rules can be laid down in this regard as the determination of the question will depend upon the facts of each case. 20. In Collector of Central Excise, Jaipur v. M/s.Raghuvar (India) Ltd. (supra), the Supreme Court held that any law or stipulation prescribing a period of limitation to do or not to do a thing after the expiry of period so stipulated has the consequence of creation and destruction of rights and, therefore, must be specifically enacted and prescribed therefor. It is not for the courts to import any specific period of limitation by implication, where there is r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity and arrange their finances accordingly. Now, when after a period of more than three years has elapsed, if the respondents seek to recover the amount of drawback paid, it cannot be gainsaid that such exercise of powers would have the effect of disturbing their rights. Under the circumstances, reading in the concept of reasonable period in rule 16 of the Rules, this court is of the view that the show cause notices in question were clearly time barred. 24. Insofar as the decision of this court in the case of Dadri Inorganics Pvt. Ltd v. Commissioner of Customs (supra) on which reliance has been placed by the learned counsel for the respondents is concerned, a perusal of the said decision indicates that the said case fell within the ambit of willful misstatement or suppression of fact as envisaged under the proviso to section 28 of the Customs Act. It is, therefore, in the light of the peculiar facts of the said case that the court had held that the contention that the extended period of limitation could not be invoked was misconceived. The decision cannot be said to be laying down any absolute proposition of law to the effect that since rule 16 of the Drawback Rules does not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 9.3 This decision has also been followed in case of PADMINI EXPORTS 1 vs UNION OF INDIA 2 in Special Civil Application No.17812 of 2003. 9.4 It is apt to note that these are binding precedents from 2012. The authority concerned ought to have followed the same when the same have attained finality. 9.5 In Special Civil Application No.14917 of 2013 to 14921 of 2013 this Court (Coram: Justice M.R.Shah, as His Lordship then was Justice Sonia Gokani) in case of E I DUPONT INDIA PRIVATE LIMITED 1 vs UNION OF INDIA 3. had noticed the case of Commissioner of Central Excise and Customs vs. NBM Industries, reported in 2013(29) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Hon ble Supreme Court as well as various High Courts and this Court have disapproved such conduct/act on the part of the lower authorities in ignoring the binding decisions/orders passed by the higher appellate authorities/courts. Still it appears that message has not reached the concerned authorities. In the recent decision in the case of Claris Lifesciences Ltd. (Supra) in para 26 this Court has observed as under: 26. Despite such clear and specific directions and authoritative pronouncements, act of issuance of show cause notice by the Deputy Commissioner is wholly impermissible and unpalatable and deserves to be quashed and struck down with a specific note of strong disapproval. The respondents simply could not have exercised the powers contained under the statute in such arbitrary exercise and in complete disregard to the pronouncement of this Court particularly reminding the Revenue authorities of the binding effect of decision of Tribunal on the identical question of law. This not only led to multiplicity of proceedings but also speaks of disregard to the direction of this Court rendered in the earlier petition of this very petitioner. Resultantly, petition stands ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss quantity of goods than what was declared and over valuing of the export products. After the proper officer had allowed the export to be made, the DRI has initiated the action. 11. Admittedly, the export of goods covered under shipping Bill Nos.6982047 and 6982039 both dated 01.01.2015 and export goods covered under shipping Bill Nos.6998694 and 6997757 both dated 02.01.2015 had been seized carrying out the panchnama dated 08.01.2015. The DRI had allegedly noticed the shortage of 3205 Kg and 2990 Kg than what had been declared in the shipping bills. The goods were detained pending the inquiry and were handed over for safe custody. After the seizure of the goods as per Section 110 of the Customs Act, the DRI, Ahmedabad wrote a letter to the Joint/ Additional Commissioner of Customs for giving No Objection for provisional release of seized goods. 11.1 On execution of bond of 100% FOB value of goods along with 25% security in the form of Bank Guarantee, the same had been permitted. 11.2 The petitioners had challenged this provisional release by approaching the CESTAT, which vide order dated 01.05.2015 released the seized goods on furnishing the bond of 100% value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been given barring a very few shipping bills which have been submitted here duty drawback has been paid to the petitioner for numerous shipping bills from 2011 to 2014 long before and therefore, any show cause notice issued after a period of three years from the date when drawback came to be paid, cannot be sustained. This is also one serious breach deserving indulgence. In relation to most of the shipping bills, duty drawbacks have been paid where this decision would come to the rescue of the petitioner. And, where completion of 3 years is not happening for those payments of duty drawbacks made in the year 2016 there appears to be no breach of required time period. Assuming that for the some of the shipping bills for which the show cause notice has been issued, the decision of this Court for limitation will apply as the payment is of 2016 and the SCN is of 2018, period prescribed for payment is three days on presentation and delay on the part of the respondent also cannot take away the right of party. 16. As held above in case of those shipping bills as the show cause notice essentially cannot be issued beyond the period of three years of payment of the duty drawback, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of M/S.CANNON INDIA PRIVATE LIMITED V/ S. COMMISSIONER OF CUSTOMS, reported in 2021 AIR 1699 to urge that the DRI has no powers to initiate action against the petitioner. This surely is an additional and potent ground for the Court to regard the binding decision of the Apex Court and hold in favour of the petitioner. 19.1 Even without touching the ratio laid down in case of M/s.Cannon India Private Limited (supra) as this decision came recently, on non consideration of the ground of limitation also, interference is desirable. 20. Resultantly, this petition is allowed partly. The action of the respondent authority of issuance of the SCN dated 09.02.2018 is interfered with. The SCN in the present form is quashed and set aside with all consequential actions with a clarification that for the shipping bills not covered by the decision of PRATIBHA SYNTEX LIMITED (supra), the authority shall be permitted to proceed if allowed otherwise under the law. This writ application is also disposed of in terms of the aforesaid judgment and order. 3. This writ application is accordingly allowed. The action of the respondent authority of issuance of the show cause notice dated ..... X X X X Extracts X X X X X X X X Extracts X X X X
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