2025 (1) TMI 609 - HC - Customs

Seeking issuance of a writ in the nature of mandamus for staying the encashment of the subject bank guarantee - HELD THAT - A perusal of Circular No. 984/08/2014-CX dated 16th September, 2024 and the clauses extracted above would show that no coercive measures can be taken against the Appellant during the period when the limitation for filing of the appeal has not expired. In addition, if the pre-deposit has already been made the remaining amount cannot be recovered by encashment of the bank guarantee. Either way, the impugned Order-in-Original is of 6th December, 2024 and the period for filing the appeal is three months in terms of Section 129A of the Customs Act, 1962. Conclusion - Considering the fact that a substantial sum has already been appropriated by the Department, the Court is of the view that the encashment of the subject bank guarantee deserves to be restrained subject to the Petitioner keeping the said bank guarantee alive. Petition disposed off.

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

Whether the encashment of the bank guarantee by the Customs Department should be stayed pending the filing and disposal of an appeal against the Order-in-Original.
Whether the Circular No. 984/08/2014-CX applies to prevent coercive recovery actions during the pendency of an appeal.
Whether the Department can initiate recovery actions before the expiration of the appeal filing period.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Stay on Encashment of Bank Guarantee

Relevant Legal Framework and Precedents: The petition was filed under Article 226 of the Constitution of India, seeking a writ of mandamus to stay the encashment of the bank guarantee. The legal framework includes the Customs Act, 1962, specifically Section 129A, which provides the timeline for filing an appeal.
Court's Interpretation and Reasoning: The court interpreted the Circular and the Customs Act to determine that coercive measures should not be taken during the appeal filing period. The court noted that the Circular explicitly states that recovery actions should be stayed if the pre-deposit requirement is met and the appeal is pending.
Key Evidence and Findings: The court considered the fact that a substantial sum had already been appropriated by the Department and that the Petitioner intended to file an appeal within the statutory period.
Application of Law to Facts: The court applied the provisions of the Circular and the Customs Act to conclude that the encashment of the bank guarantee should be restrained, provided the Petitioner keeps it active.
Treatment of Competing Arguments: The court acknowledged the Department's argument that a sum had already been attached but emphasized the protection offered by the Circular during the appeal filing period.
Conclusions: The encashment of the bank guarantee was restrained, subject to the Petitioner maintaining the guarantee and filing an appeal.

Issue 2: Applicability of Circular No. 984/08/2014-CX

Relevant Legal Framework and Precedents: The Circular outlines the procedure for recovery actions during the pendency of appeals, emphasizing that coercive measures should not be taken if the pre-deposit is made.
Court's Interpretation and Reasoning: The court interpreted the Circular to mean that no coercive recovery actions should occur during the appeal period if the pre-deposit is made.
Key Evidence and Findings: The court found that the Circular was applicable as the Department had already attached a portion of the sum due.
Application of Law to Facts: The court applied the Circular's provisions to conclude that coercive measures were inappropriate during the appeal period.
Treatment of Competing Arguments: The court considered the Department's stance but prioritized the Circular's guidelines.
Conclusions: The Circular was applicable, preventing coercive recovery actions during the appeal period.

Issue 3: Timing of Recovery Actions

Relevant Legal Framework and Precedents: Section 129A of the Customs Act provides a three-month period for filing an appeal against an Order-in-Original.
Court's Interpretation and Reasoning: The court reasoned that recovery actions should not commence before the expiration of the appeal filing period.
Key Evidence and Findings: The court noted that the Order-in-Original was dated 6th December, 2024, and the appeal period had not yet expired.
Application of Law to Facts: The court applied Section 129A to determine that recovery actions were premature.
Treatment of Competing Arguments: The court considered the Department's readiness to recover but emphasized the statutory appeal period.
Conclusions: Recovery actions were deemed premature before the expiration of the appeal period.

3. SIGNIFICANT HOLDINGS

Preserve verbatim quotes of crucial legal reasoning: "A perusal of the Circular and the clauses extracted above would show that no coercive measures can be taken against the Appellant during the period when the limitation for filing of the appeal has not expired."
Core principles established: The court established that coercive recovery actions should be restrained during the appeal filing period if the pre-deposit is made, as per the Circular.
Final determinations on each issue: The court restrained the encashment of the bank guarantee, applied the Circular to prevent coercive actions, and determined that recovery actions were premature before the appeal period expired.

The judgment emphasizes the protection offered to appellants during the statutory appeal period and the importance of adhering to procedural guidelines outlined in the relevant Circular.

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