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Ridhi Sidhi Overseas vs. Principal Commissioner of Customs & Ors.

Writ Petition (Civil) · 2026:DHC:7850-DBDecided 16 Sept 2026New Delhi Bench
W.P.(C) 3391/2018CNR: DLHC010986722018
Justice Anil Kshetarpal · Justice Shail Jain

Background

A DRI probe found that Ridhi Sidhi Overseas, an importer of confectionery, had under-invoiced 21 consignments to evade customs duty, with the price difference routed through informal channels to the overseas supplier. During the investigation the firm's proprietor admitted a total unpaid duty of about ₹1.16 crore and voluntarily deposited ₹85 lakh, asking that it be adjusted against the older part of that liability (imports beyond the normal 5-year demand period). The Settlement Commission later formally appropriated that deposit exactly as he had requested. The firm then challenged this before the High Court, arguing the Commission had effectively let the Department recover a time-barred demand.

Decision Breakdown

The Court distinguished between the Department's statutory power to raise a fresh demand after the 5-year limitation period (which is indeed barred) and simply applying money the taxpayer had already voluntarily paid and asked to have adjusted in a particular way. Since the firm's own proprietor had, in a recorded and never-retracted statement, asked for the ₹85 lakh to be set off first against the older liability, the Commission was entitled to honour that request. The Court found no fresh demand had actually been raised for the time-barred period, only an already-paid amount was being accounted for, and so declined to interfere with the Settlement Commission's order.

Lesson Learnt

A statutory time-limit that bars the tax department from raising a fresh demand does not stop a taxpayer from voluntarily paying, and then being held to, an admitted liability of their own accord: limitation protects against being compelled to pay, not against honouring one's own admissions.

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