2004 (7) TMI 105 - HC - Customs

Summary

Issues:
1. Quashing of the order directing refund of encashed bank guarantee.
2. Dismissal of appeal by Commissioner (Appeals) and subsequent Tribunal's decision.
3. Legality of Tribunal's direction to return the amount and maintain status quo ante.
4. Jurisdiction of Tribunal to pass such a direction.

Issue 1: Quashing of the order directing refund of encashed bank guarantee
The Commissioner Customs filed a petition seeking to quash an order directing refund of the amount received through encashment of a bank guarantee, alleging non-compliance with Customs Act provisions. The Tribunal had disposed of an appeal against the order-in-appeal passed by the Commissioner (Appeals), confirming a differential duty demand. Subsequently, the department sought to encash the bank guarantee executed by the assessee, leading to a writ petition and interim order to maintain status quo.

Issue 2: Dismissal of appeal by Commissioner (Appeals) and subsequent Tribunal's decision
The Commissioner (Appeals) dismissed the appeal and stay application, considering the order as mere correspondence, not appealable. The Tribunal found this dismissal erroneous, emphasizing that the order indicated finalization of assessment, leading to encashment of the bank guarantee. The Tribunal set aside the order, restoring the appeal and stay application, which was not challenged by the Revenue.

Issue 3: Legality of Tribunal's direction to return the amount and maintain status quo ante
The Tribunal directed the Revenue to return the amount and reinstate the bank guarantee, citing illegality and reliance on a Bombay High Court decision. The Tribunal's decision was objected to by the Revenue, arguing lack of jurisdiction. However, the Tribunal's direction aimed to maintain status quo ante, ensuring the return of the amount and submission of the bank guarantee by the assessee.

Issue 4: Jurisdiction of Tribunal to pass such a direction
The Tribunal's decision, though challenged by the Revenue, was based on legal principles regarding bank guarantees and the necessity to maintain status quo ante. The Tribunal's direction, though using the term 'refund,' actually required repayment through submission of a bank guarantee by the petitioner. The Tribunal's decision aligned with the Supreme Court's directive in a similar case, emphasizing the nature of bank guarantees and the absence of refund provisions under relevant laws.

In conclusion, the High Court found no need for interference with the Tribunal's decision, maintaining the status quo ante and directing the Revenue to deposit the amount for issuance of a bank guarantee. The related writ petition filed by the assessee was disposed of accordingly, ensuring compliance with legal provisions and maintaining financial security through bank guarantees.