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Issues:
Enforcement of bank guarantees under the Customs Act, 1962 based on a duty demand, interpretation of Circular No. 396/29/98-CX regarding coercive measures for recovery of dues during pendency of stay applications, binding effect of departmental circulars on revenue authorities. Analysis: The judgment in this case revolves around the enforcement of bank guarantees by the Deputy Commissioner of Customs under the Customs Act, 1962. The petitioner had filed a Bill of Entry seeking clearance of goods, which were provisionally assessed against a bank guarantee. Subsequently, a duty demand was confirmed, and enforcement of the bank guarantee was directed. The petitioner then filed an appeal and a stay application before the Commissioner of Customs (Appeals). The key contention was whether the direction for enforcement of the bank guarantee was justified. The petitioner relied on Circular No. 396/29/98-CX, arguing that coercive measures for recovery of dues should not be taken until the disposal of stay applications. The respondents, however, highlighted situations where enforcement of bank guarantees becomes necessary due to the expiry of the guarantee's currency after an adverse adjudication. The court examined the Circular, which emphasized refraining from coercive actions until the stay application is disposed of by the Commissioner (Appeals). The Circular's binding effect was underscored, citing precedents where departmental circulars were deemed binding on revenue authorities. Considering the precedents and the binding nature of the Circular, the court held that the action of seeking enforcement of the bank guarantee by the Deputy Commissioner could not be sustained. The bank guarantee would remain operative until the stay application is disposed of, as per the Circular's directives. However, the decision on the stay application was to be made by the Appellate Authority, and the court's ruling did not influence that decision. Consequently, the writ petition was allowed to the extent that the bank guarantee would continue to be in force until the stay application's resolution. The order was directed to be provided to the counsels for the respondents. In conclusion, the judgment clarified the application of the Circular regarding coercive actions for recovery of dues during the pendency of stay applications, emphasizing the binding effect of departmental circulars on revenue authorities and ensuring the continued operability of the bank guarantee until the stay application is determined by the Appellate Authority.
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