2000 (5) TMI 52 - HC - Customs

Summary

Issues:
Adjudication of enforcement of bank guarantees under the Customs Act, 1962 based on Circular No. 396/29/98/CX.

Analysis:
The High Court of Delhi, comprising Arijit Pasayat, C.J. and D.K. Jain, J., addressed the issue of whether the Deputy Commissioner of Customs was justified in seeking enforcement of bank guarantees in relation to two orders passed under the Customs Act, 1962. The petitioner had filed Bill of Entry No. 311874 seeking clearance of goods, followed by another Bill of Entry No. 313508. The Deputy Commissioner confirmed a duty demand and directed enforcement of bank guarantees. The petitioner then filed appeals under Section 128(1) of the Act with stay applications before the Commissioner of Customs (Appeals). The petitioner argued against the enforcement, citing Circular No. 396/29/98/CX, stating that coercive measures for recovery should not be taken until disposal of stay applications.

The Court considered the Circular, which emphasized that no coercive action should be taken to realize dues until the disposal of stay applications by the Commissioner (Appeals). It highlighted that departmental Circulars are binding on Revenue Authorities, as established in previous judgments. The Court concluded that the action of seeking enforcement of bank guarantees by the Deputy Commissioner could not be sustained. The bank guarantees would remain operative until the disposal of the stay applications. However, the decision on the stay applications would be independent of the Court's ruling, as they need to be considered by the Commissioner of Customs (Appeals) in the appropriate context. Consequently, the writ petition was allowed to the extent of maintaining the bank guarantees until the stay applications were resolved.

In summary, the judgment clarified the application of Circular No. 396/29/98/CX in relation to the enforcement of bank guarantees under the Customs Act, 1962. It underscored the binding nature of departmental Circulars on Revenue Authorities and emphasized that coercive measures for recovery should be withheld until the disposal of stay applications. The Court ruled in favor of the petitioner, directing that the bank guarantees would remain in effect until the stay applications were decided by the Commissioner of Customs (Appeals). The judgment highlighted the importance of following established Circulars and maintaining procedural fairness in customs enforcement actions.