2026-VIL-950-MAD-CU
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CUSTOMS High Court Cases

Customs - Recovery of drawback erroneously paid - Limitation period for recovery of drawback - Whether recovery proceedings initiated more than ten years after drawback was availed can be sustained when no statutory period of limitation is prescribed in Rule 16 of Customs, Central Excise Duties and Service Tax Drawback Rules - HELD - It is a settled principle of law that fraud vitiates all solemn acts and that a person cannot be permitted to take advantage of his own fraud, irrespective of the passage of time. However, in the present case, there is no allegation that petitioner fraudulently obtained the drawback or suppressed any material facts. The only allegation is that petitioner had not produced proof of realisation of export proceeds - Where the statute does not prescribe a period of limitation, the proceedings must nevertheless be initiated within a reasonable time. What constitutes a reasonable time would depend upon the facts and circumstances of each case. The drawback was availed during the period from 2004 to 2007 and last payment was made on 28.12.2007. The show cause notice was allegedly issued only in 2018 and the impugned order was passed in 2022. No reason has been assigned for the delay in initiating the recovery proceedings. There is also no explanation for the considerable delay between the alleged issue of the show cause notice and passing of the impugned order - Recovery proceedings initiated after such an inordinate delay cannot be sustained - The impugned order passed for recovery of drawback is set aside. Consequently, the attachment of the petitioner's bank account is also set aside - The Writ Petition is allowed
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