Mahindra and Mahindra Ltd. Vs Union of India (Bombay High Court)
The Bombay High Court recently addressed Mahindra and Mahindra Ltd. vs Union of India, involving a customs notice issued after 26 years for non-submission of the Export Obligation Discharge Certificate (EODC). Mahindra, a motor vehicle manufacturer, had availed duty-free imports in 1996 under an advance license issued by the Directorate General of Foreign Trade (DGFT). The Customs Department issued the notice in December 2022, seeking recovery of duty forgone due to alleged non-compliance. Mahindra challenged this notice under Article 226 of the Constitution, citing unreasonable delay.
The High Court quashed the notice, emphasizing that while the Customs Act does not specify a time limit for enforcing bonds under Section 143, actions must be initiated within a reasonable period. Referring to Section 28 of the Act, which allows a maximum of five years for recovering duties in fraud cases, the court held that the 26-year delay was excessive, especially as there were no allegations of fraud or suppression against Mahindra. The court also relied on precedent, including the Supreme Court’s ruling in Union of India vs. Citibank, which deemed a 10-year delay under FERA unreasonable, and a similar Bombay High Court decision in Coventry Estates Pvt. Ltd.
