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Date of Decision: 22.08.2022
M/S. CANDEX FILAMENT PRIVATE LIMITED..... Petitioner
Through: Ms Anjali J Manish with Ms Laimon Rani Boro, Advs.
Through: Mr Harpreet Singh, Sr Standing Counsel with Ms Suhani Mathur, Mr
Jatin Gaur and Mr Akshay Saxena, Advs.
HON'BLE MS JUSTICE TARA VITASTA GANJU [Physical Court hearing/ Hybrid hearing (as per request)]
RAJIV SHAKDHER, J (ORAL):
JUDGMENT
1. The substantive prayers made in the petition read as follows: “(a) Issue a writ, order or direction in the nature of certiorari to quash and set-aside the order dated 16.07.2021 passed by the Respondent No.2; and/or (b) Issue a writ, order or direction in the nature of declaration, holding and declaring that the encashing of the bank guarantee furnished by the Petitioner as security at the time of provisional release in reference to the fact that the appeal has been filed before the Appellate Tribunal after depositing the mandatory pre-deposit amount;
(c) Issue a writ, order or direction in the nature of mandamus to the Respondents to release/refund the amount of Rs.24,59,401/to the Petitioner, which they have collected by encashing the bank guarantee;
(d) Grant cost of the petition; and...”
2. The effect of the impugned order dated 16.07.2021 is that the refund sought by the petitioner, with regard to the monies obtained by the respondents/revenue, against the encashment of three bank guarantees furnished by the petitioner, has been declined.
3. The record shows that the petitioner had furnished the following three bank guarantees; the details concerning the same are set forth hereafter: S.No. BG Number Date of BG Amount of BG Shipping Bill No. & Date 1 6041IFIBG180002 21.03.2018 Rs.7,29,858/- 2678044 dt. 06.02.2018 2 6041IFIBG180003 21.03.2018 Rs.8,36,533/- 2677670 dt. 3 6041IFIBG180004 21.03.2018 Rs.8,93,010/- 2677803 dt.
4. Ms Anjali J. Manish, who appears on behalf of the petitioner, informs us that since a detention certificate was issued, the provisional release of goods was not sought, although the aforementioned bank guarantees were furnished.
5. The record discloses (something which is not disputed by the respondents/revenue), that a show-cause notice dated 11.05.2018 was issued to the petitioner and subsequently, an adjudication order was passed on 05.12.2018.
6. The record also reveals that the petitioner preferred an appeal with the Customs, Excise and Service Tax Appellate Tribunal [in short “the Tribunal”] against the aforementioned adjudication order, which was accompanied by a pre-deposit amounting to Rs.1,87,500/-, i.e., a sum equal to 7.5% of the total penalty imposed on the petitioner. The petitioner is mulct with penalty amounting to Rs. 25,00,000/-.
6.1. We are told that the appeal filed with the Tribunal is pending adjudication.
7. Mr Harpreet Singh, who appears on behalf of the respondents/revenue, says that since the validity of the aforementioned bank guarantees was not extended, they were encashed.
7.1. Admittedly, the aforementioned bank guarantees were invoked on 04.12.2020. The amount against the said bank guarantees was received by the respondents/revenue via a demand draft dated 29.12.2020.
8. Ms Manish has brought to our notice, a circular bearing Circular No.984/08/2014-CX, dated 16.09.2014, which, inter alia, states that once a pre-deposit of the requisite amount is made, then, insofar as the balance amount claimed by the respondents/revenue is concerned, a stay qua its recovery would operate, during the pendency of the appeal.
8.1. In this context, our attention is drawn to paragraph 4.[2] of the aforementioned circular, which reads as follows: “4.[2] No coercive measures for the recovery of balance amount i.e., the amount in excess of 7.5% or 10% deposited in terms of Section 35F of Central Excise Act, 1944 or Section 129E of Customs Act, 1962, shall be taken during the pendency of appeal where the party/assessee shows to the jurisdictional authorities:
(i) proof of payment of stipulated amount as pre-deposit of
(ii) the copy of appeal memo filed with the appellate authority.”
8.2. This position is not disputed by Mr Harpreet Singh.
9. Given the fact that there is a stay on the demand raised by the respondents/revenue, as also the undisputed fact which has emerged, that the provisional release of goods was not, ultimately, taken recourse to by the petitioner, to our minds, the aforementioned bank guarantees could not have been encashed.
10. Mr Singh says that while there is a justification, as to why encashment of the aforementioned bank guarantees took place, he cannot but accept the position that the recovery of dues cannot be made, while the appeal of the petitioner is pending consideration before the Tribunal.
11. Thus, having regard to the aforesaid state of affairs, it is clear that the respondents/revenue will have to remit the amount to the petitioner, as reflected in the aforementioned bank guarantees.
12. The respondents/revenue, concededly, can recover the demand raised, only if the petitioner were to ultimately fail in the appeal or in any other proceedings taken out thereafter, before a superior forum.
13. Accordingly, the instant writ petition is disposed of, with the direction that the impugned order dated 16.07.2021 shall stand quashed.
14. The respondents/revenue will remit the amount, which was the subject matter of the aforementioned bank guarantees, as detailed out, in paragraph 3 above, within three weeks, from the date of receipt of a copy of the judgment.
RAJIV SHAKDHER, J TARA VITASTA GANJU, J AUGUST 22, 2022 Click here to check corrigendum, if any