1989 (3) TMI 145 - HC - Central Excise

Summary

Issues:
1. Challenge to letters Annexures-J and K issued by State Bank of Indore and Assistant Collector, Central Excise, Ujjain.
2. Dispute over interpretation and applicability of term 'manufacture' under Central Excise Act, 1944.
3. Encashment of bank guarantees by Assistant Collector without producing certified copy of Supreme Court judgment.
4. Authority of Assistant Collector to encash bank guarantees without formal adjudication.
5. Validity of petition challenging encashment of bank guarantees.

Analysis:
The petitioners challenged letters Annexures-J and K issued by State Bank of Indore and Assistant Collector, Central Excise, Ujjain, regarding the encashment of bank guarantees. The dispute arose from the interpretation of the term 'manufacture' under the Central Excise Act, 1944, leading to a Supreme Court case where the petitioners were granted a stay order. The petitioners argued that the encashment was improper as the Assistant Collector did not produce a certified copy of the Supreme Court judgment. However, the Union of India contended that the Supreme Court judgment authorized the encashment based on the difference between the sale price and processing value of fabrics for excise duty determination.

The Union of India maintained that the encashment was justified as per the Supreme Court judgment, which directed recovery of excise duty and enforcement of bank guarantees. The Court noted the Supreme Court's directions regarding recovery, including entitlement to realize dues and encash bank guarantees within six months of notice issuance. As notices under Section 11A were served within the six-month period, the Assistant Collector was authorized to encash the bank guarantees. The Court emphasized that the bank guarantees were furnished after determining the payment difference, eliminating the need for fresh adjudication.

Ultimately, the Court found the petition lacking merit and dismissed it, upholding the Assistant Collector's authority to encash the bank guarantees based on the Supreme Court judgment and the Central Excise Act provisions. The Court rejected the petitioners' arguments against the encashment, affirming the legality and validity of the Assistant Collector's actions in enforcing the bank guarantees for excise duty recovery.