1984 (4) TMI 60 - HC - Central Excise

Summary

Issues:
- Interpretation of the proviso to Section 35 of the Central Excises and Salt Act
- Applicability of bank guarantee requirements by State Bank of India
- Compliance with appellate Tribunal's order
- Threat of recovery proceedings by Superintendent of Central Excise

Interpretation of the Proviso to Section 35 of the Central Excises and Salt Act:
The petitioner sought the benefit of the proviso to Section 35 of the Act, which allowed for a modified payment arrangement. The appellate Tribunal directed the petitioner to deposit 25% of the demand in cash and provide a bank guarantee for the remaining amount. However, the State Bank of India required additional security measures, including cash margin and guarantees, which the petitioner could not fulfill. The court noted the Tribunal's oversight in not considering the bank's requirements and emphasized the necessity of cash deposits as insisted by the bank. The court deemed it necessary for the Tribunal to reassess the petitioner's application in light of the bank's conditions.

Applicability of Bank Guarantee Requirements by State Bank of India:
The State Bank of India mandated specific conditions, such as cash margin, title deeds, and guarantees, for issuing a bank guarantee to the petitioner. Despite the petitioner's inability to meet these requirements, the bank refused to provide the guarantee. The court highlighted the bank's insistence on cash deposits and criticized the Tribunal for not acknowledging this primary condition. The court emphasized the significance of complying with the bank's demands for a successful guarantee issuance.

Compliance with Appellate Tribunal's Order:
The petitioner's request for modification of the Tribunal's order due to inability to fulfill the bank's conditions was rejected. Subsequently, the Superintendent of Central Excise issued a notice directing compliance with the Tribunal's order within three days, threatening recovery proceedings under Rule 230 of the Central Excise Rules. The court intervened, recognizing the petitioner's predicament and stayed the recovery proceedings until the Tribunal reevaluated the application in consideration of the bank's requirements.

Threat of Recovery Proceedings by Superintendent of Central Excise:
The Superintendent of Central Excise's notice to the petitioner emphasized the enforcement of recovery proceedings if the Tribunal's order was not complied with. However, the court, upon considering the petitioner's challenges in meeting the bank's conditions, instructed the Superintendent to refrain from initiating recovery proceedings until the Tribunal reviewed the matter. The court's decision aimed to ensure fairness and justice in light of the petitioner's financial constraints.