2013 (12) TMI 349 - AT - Customs

Convert the encashment of the bank guarantee into the bank guarantee - Tribunal instructed the department not to encash the bank guarantee during the pendency of appeal but Revenue encashed the bank guarantee - Held that - before the said stay order was passed on 15-3-2011, the Assistant Commissioner had already written to the bank on 7-3-2011 for encashment of the bank guarantee. Presumably, the letter written by the appellant to the department on 15-3-2011 must have been filed in the late hours of the day inasmuch as the order was pronounced in the early hours of the day. It is not necessary that the letter filed in the Receipt Section of the department reaches in the hands of the concerned officer on the same very day itself, especially when it was filed in the late hours of the day. As such, the earliest time at which the said letter intimating the Tribunal s decision would have reached in the hands of the concerned officer would be the next morning i.e. on 16-3-2011. Before the action could be taken by the concerned officer, the bank has already converted the bank guarantee into the demand draft on 17-3-2011. In these circumstances, it cannot be concluded that the action on the part of the Revenue for getting the bank guarantee encashed was after their knowledge of the Tribunal s stay order, and was an intentional defiance of the Tribunal s stay order. The benefit of doubt has to be extended to them - Decided against appellant.

Summary

Issues:
1. Tribunal's instruction on bank guarantee encashment during appeal
2. Alleged encashment of bank guarantee by Revenue despite Tribunal's instruction
3. Timeline of events regarding the Tribunal's order and bank guarantee encashment
4. Compliance with Tribunal's orders by lower authorities
5. Appellant's request to convert encashed bank guarantee back
6. Scheduling of appeal hearing on an expedited basis

Analysis:
1. The applicant filed an application citing the Revenue's encashment of the bank guarantee despite the Tribunal's instruction not to do so during the appeal. The Tribunal had considered the bank guarantee of Rs. Five crores sufficient for stay purposes and directed the Revenue not to encash it during the appeal's pendency.

2. The Revenue had written to the bank for encashment on 7-3-2011, while the Tribunal's order was pronounced on 15-3-2011 and subsequently signed and issued. The bank converted the guarantee into a demand draft on 17-3-2011, causing grievance to the appellant.

3. The Tribunal noted that its orders must be followed by lower authorities. However, the Assistant Commissioner had already initiated the encashment process before the Tribunal's stay order was passed. The appellant's letter informing about the Tribunal's decision reached the department late on 15-3-2011, and the bank had already converted the guarantee by 17-3-2011.

4. Considering the timeline, it was deemed that the Revenue's action of encashment was not intentional defiance of the Tribunal's order but a result of the sequence of events. The Tribunal extended the benefit of doubt to the Revenue in this regard.

5. The Tribunal found no merit in the appellant's plea to reconvert the encashed bank guarantee. Instead, the remedy suggested was to expedite the appeal hearing process. The matter was scheduled for an early hearing on 16-6-2011, with no objection from the Revenue's side, emphasizing the need to resolve the issue promptly.