Nautilus Metal Craft Pvt. Ltd. & Ors. Vs Additional Commissioner of Customs (Export) New Delhi & Anr. (Delhi High Court)
The Delhi High Court is examining whether show cause notices issued years after exports for alleged wrongful duty drawback claims are barred by delay and laches. The petition challenges two show cause notices dated 11 July 2023 and 17 August 2023, contending that they relate to transactions undertaken between 2011 and 2019 and were issued after an unreasonable lapse of time. The petitioners rely on a recent Supreme Court decision which quashed belated demand notices on the ground that issuance several years after the relevant assessment period was beyond a reasonable time and therefore legally unsustainable.
The petitioners argue that the impugned notices suffer from the same infirmity, as they were issued nearly four to twelve years after the underlying exports, and hence the entire proceedings deserve to be quashed at the threshold. An application for early hearing was moved relying on the Supreme Court ruling, asserting that the delay alone vitiates the proceedings irrespective of merits.
The Department, however, contends that the delay is justified. It submits that the alleged modus operandi involved deliberate overvaluation of readymade garments to claim excess duty drawback and that the true nature of the transactions came to light only in 2019 after investigation. It is argued that time was required to unravel the role of multiple related entities and that the Department is also entitled to exclusion of the COVID-19 pandemic period while computing limitation. On this basis, the Department asserts that the show cause notices cannot be treated as time-barred.
