The Bombay High Court has quashed the notice issued to Mahindra & Mahindra for non-submission of export obligation discharge certificate after almost 26 years.
The bench of Justice M. S. Sonak and Justice Jitendra Jain has observed that on a reading of the Customs Act, the reasonable period for initiating any proceedings for recovery of dues can certainly not be 26 years, even where a bond may have been executed. Section 28 of the Customs Act, and that too, in a case where suppression or fraud is alleged, provides a time limit of 5 years. This period gives a clue and could, therefore, provide guidance in determining a reasonable time when the legislature offers no specific time limit. In this case, there are no allegations of any fraud or suppression. Therefore, there is nothing reasonable in seeking to make recoveries after 26 years. Not even an attempt is made to explain this inordinate delay.
Table of Contents
Background
The petitioner/assessee, Mahindra & Mahindra is a leading manufacturer of motor vehicles. An advance license was issued by the DGFT in 1996. Duty free imports were made under the export obligation scheme.
The customs authorities issued a notice dated 15.12.2022 proposing recovery of the duty forgone on the ground that export obligation discharge certificate (EODC) has not been submitted.
The notice was challenged in writ petition before the High Court.
Arguments
The assessee argued that the notice is issued to recover the duty for the non- submission of the Export Obligation Discharge Certificate dated 23 September 1996. It is his submission that the impugned proceedings are hopelessly barred by delay inasmuch as the proceedings are initiated after almost 26 years. Although there is no limitation provided under the Customs Act, the proceedings ought to have been taken within a reasonable period and a period of 26 years cannot be treated as a reasonable period in the facts and circumstances of the case.
The department contended that under Section 143 of the Customs Act, no time limit is provided for enforcement of the bond executed. Therefore, the impugned notice is not barred by limitation. Thus, the petition is devoid of any merit on the grounds of limitation.
Conclusion
The court noted that no time limit is provided under Section 143 of the Customs Act for recovery of duty foregone. However, it is a settled position that where the Act is silent on the limitation, the proceedings have to be initiated within a reasonable period, and the said reasonable period has to be ascertained based on a holistic reading of the Scheme of the Act.
The court stated that the notice is issued for non-submission of Export Obligation Discharge Certificate dated 23 September 1996, after almost 26 years and there is nothing reasonable in seeking to make recoveries after 26 years.
Case Details
Case Title: Mahindra and Mahindra Ltd. Versus Union of India
Case No.: Writ Petition No.4339 Of 2024
Date: 19/11/2024
Counsel For Petitioner: Bharat Raichandani
Counsel For Respondent: Karan Adik
