Legal principle

Where Rule 16 of the Duty Drawback Rules prescribes no period of limitation, the general three-year limitation cannot be presumed to apply by default, especially where there are strong suspicions of fraudulent availment of drawback and knowledge of such availment is acquired much later.

Court decision

The Court declined to entertain the challenge to the OIO dated 14.01.2025 in the writ petition under Article 226, but permitted the Petitioner to avail the statutory appellate remedy under Section 128 of the Customs Act, 1962 on grounds of parity with the co-noticee and the decision in Commr. of Customs v. Sans Frontiers. It held that the impugned SCNs could not be held barred by limitation, since Rule 16 of the Drawback Rules prescribes no limitation and a general three-year period cannot be presumed by default where fraudulent availment is suspected and knowledge was acquired much later. The petition was disposed of accordingly, with all observations left without bearing on the appellate adjudication, and the duress/coercion claim left to be raised before the Appellate Authority.

Facts

The Petitioner, proprietor of M/s Abhishek Exim India, exported goods (including inflated soccer balls made of Polyurethane) and claimed duty drawback under Sections 74 and 75 of the Customs Act, 1962. The Department alleged he created parallel invoices for the same exports—one set at original value submitted to the Delhi Chamber of Commerce and another overvalued set (approx. 27 times, e.g., 0.36 USD vs 9.70 USD per unit) submitted to the Department—in connivance with two staff members including a Chartered Accountant, solely to claim higher drawback. Two Show Cause Notices dated 14.01.2021 and 30.12.2021 culminated in an Order-in-Original dated 14.01.2025 rejecting the declared value, redetermining FOB value under Rules 5 and 6 of the Customs Valuation (Export Goods) Rules, 2007 read with Section 14, ordering recovery of drawback with interest under Section 75A(2), holding the goods liable to confiscation under Section 113(i), refraining from redemption fine under Section 125 (goods not seized under Section 110), and imposing penalties under Sections 114(iii) and 114AA on the exporter, other proprietors and a CHA. The Petitioner filed a writ petition under Article 226 seeking quashing of the SCNs and the OIO.

Key provisions

• Section 114(iii), Customs Act, 1962 — Penalty for attempt to export goods improperly etc
• Section 114AA, Customs Act, 1962 — Penalty for use of false and incorrect material
• Rule 16, Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 — Repayment of erroneous or excess payment of drawback and interest
• Section 75, Customs Act, 1962 — Drawback on imported materials used in the manufacture of goods which are exported
• Section 129DD, Customs Act, 1962 — Revision by Central Government
• Section 128, Customs Act, 1962 — Appeal to Commissioner (Appeals)
• Section 14, Customs Act, 1962 — Valuation of goods
• Section 113(i), Customs Act, 1962 — Confiscation of goods attempted to be improperly exported
• Section 11, Customs Act, 1962 — Power to prohibit importation or exportation of goods
• Section 110, Customs Act, 1962 — Seizure of goods, documents and things
• Rule 5, Customs Valuation (Determination of Value of Export Goods) Rules, 2007 — Computed value method
• Rule 6, Customs Valuation (Determination of Value of Export Goods) Rules, 2007 — Residual method