Rajasthan High Court Quashes 14-Year-Old Customs Drawback Proceedings for Unreasonable Delay

Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

Date: 31.10.2026

Rajasthan High Court Quashes 14-Year-Old Customs Drawback Proceedings for Unreasonable Delay

The Rajasthan High Court has set aside a 2008 customs show-cause notice and a 2022 adjudication order, holding that a 14-year delay without explanation or communication violated procedural fairness and natural justice.

Case at a glance

In Shivek Sharma v. Union of India (D.B. Civil Writ Petition No. 19485/2022), decided on 9 September 2025, the Rajasthan High Court at Jaipur examined whether Customs authorities could revive and adjudicate a long-pending allegation concerning duty drawback and DEPB benefits after more than a decade of inactivity.

The petitioner, Shivek Sharma, was the legal heir of the late proprietor of M/s J. Minakshi International. The Directorate of Revenue Intelligence had investigated alleged misuse of export-promotion schemes involving exports of goods such as readymade garments, leather items and brass items. A show-cause notice was issued on 31 March 2008, but the department did not proceed to adjudicate it until 2021-22. An Order-in-Original creating recovery demands was eventually issued on 18 October 2022.

The Court ruled that this prolonged, unexplained delay made the proceedings legally unsustainable.

Background of the dispute

The DRI’s investigation concerned alleged fraudulent export transactions during 2001-05. It resulted in a show-cause notice against several parties, including M/s J. Minakshi International, a proprietary concern of the petitioner’s father.

Several developments made the delay especially significant:

• The notice was issued in 2008, when the petitioner was 13 years old.
• The proprietor, Pawan Kumar Sharma, died in April 2021.
• The department began hearing-related action only after approximately 13 years of silence.
• The petitioner stated that he had neither inherited nor carried on the business and was unaware of the pending proceedings.
• After receiving hearing notices, he sought the underlying notice and relied-on documents, explaining that he could not reasonably understand or answer transactions dating back many years.

Despite these objections, Customs passed an order in October 2022, seeking recovery of duty drawback and interest from the petitioner as legal heir.

The legal issue: Can Customs adjudicate after 14 years?

The central issue was not merely whether the Customs Act or Drawback Rules contained a fixed limitation period. It was whether administrative and quasi-judicial powers can be exercised after such an extreme delay when the affected party was not informed of the status of the case.

The petitioner argued that even where legislation does not prescribe a specific deadline, adjudication must occur within a reasonable period. He also relied on the statutory timelines reflected in Section 28(9) of the Customs Act to emphasize the importance of prompt decision-making in customs matters.

The Customs department argued that the case involved recovery of drawback and DEPB benefits under the Drawback Rules, rather than an ordinary duty-demand case. It also argued that the 2018 amendment introducing timelines under Section 28(9) did not apply retrospectively and that an appellate remedy was available.

What the Court held

The High Court rejected the department’s position and held that the doctrine of reasonable time applies to adjudication proceedings generally. The absence of an express statutory deadline does not permit authorities to keep a show-cause notice alive indefinitely.

The Court identified several decisive failures:

• Inordinate delay: The order was passed more than 14 years after the show-cause notice.
• No explanation: Customs did not provide a cogent reason for the delay.
• No communication: The petitioner and his father were not told that the matter remained pending or had been placed in a “call book.”
• No supporting record: The department did not produce material proving any transfer to the call book or explaining the basis for it.
• No fault of the petitioner: The delay was not attributed to the petitioner or his late father.
• Ignored submissions: The adjudicating authority did not meaningfully address the petitioner’s arguments and cited case law on stale proceedings.

The Court described the 14-year delay as incompatible with lawful, fair and effective quasi-judicial adjudication. It reiterated the principle expressed in the maxim lex dilationes abhorret—the law abhors delay.

Why lack of communication mattered

A key part of the ruling is that delay becomes particularly unfair when the noticee is left uninformed. The Court noted that communication is necessary where proceedings are kept in abeyance or transferred to a call book.

Without notice, the affected person may lose access to records, witnesses and other evidence needed for a proper defence. Long silence can also reasonably lead a person to believe that the proceedings have been abandoned or concluded.

Here, the department was silent for more than a decade. The Court found that this lack of transparency caused grave prejudice and violated natural justice.

Writ petition allowed despite an appellate remedy

The department argued that the petitioner should pursue an appeal against the Order-in-Original. The Court held that the availability of an appeal did not bar the writ petition in these circumstances.

The challenge was based on a fundamental procedural defect: the arbitrary and delayed revival of proceedings, coupled with a breach of natural justice. Because the very adjudication process was found to be vitiated, the Court considered writ jurisdiction appropriate.

Final outcome

The Rajasthan High Court allowed the writ petition and quashed:

1. The show-cause notice dated 31 March 2008, insofar as it concerned the petitioner; and
2. The Order-in-Original dated 18 October 2022 passed under Section 122 of the Customs Act.

The Court concluded that the petitioner was justified in treating the long-dormant proceedings as abandoned.

Significance of the ruling

This decision reinforces an important safeguard in customs and tax administration: authorities must adjudicate show-cause notices within a reasonable time, even where the governing provision does not specify a strict deadline.

For businesses, proprietors, legal heirs and other noticees, the judgment confirms that a prolonged and unexplained revival of old proceedings can be challenged when it causes prejudice, particularly where the department failed to disclose the status of the case or preserve procedural fairness.

For revenue authorities, it underscores that public-revenue objectives require diligence and timely action, not indefinite pendency.

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Source: Rajasthan High Court

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Ravi Shekhar Jha – Advocate, Bar Council of Delhi