Legal principle

Where the law prescribes no time limit for recovering drawback, customs must act within a reasonable period (generally up to three years) unless fraud or suppression is alleged.

Court decision

The writ petition was allowed and the order dated 26.12.2023 was set aside. Customs must refund Rs.30,729 to the exporter within four weeks, failing which the amount carries interest at 8% per annum from the date of default until payment. The exporter was not sent to the appeal remedy.

Facts

International Clothing House exported textile garments under seven shipping bills in 2011 and received duty drawback (a refund of duties on inputs used in exports). In 2018 customs issued a show cause notice saying it had not produced proof that the export money had been received in India, and proposed recovery under Rule 16A(2) and (3) of the Drawback Rules and a penalty under Section 117. The exporter did not reply, saying it never received the notice. On 26.12.2023 the Assistant Commissioner (BRC Cell-Air), Chennai confirmed recovery of Rs.30,729 with interest under Section 75(1) and Rule 16. The exporter filed a writ petition in the Madras High Court.

Key provisions

• Rule 16, Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 — Repayment of erroneous or excess payment of drawback and interest