2015 (9) TMI 204 - HC - Central Excise

Renewal/Encashment of Bank Guarantee Finalization of Contract Petitioner addressed letter to Respondent No.1 stating that since everything at Petitioner s end was complied with, assessment was required to be completed within sixty days and as such, requested for finalization of contract and further requested that renewal of bank guarantees may not be insisted upon However, Respondent No.1 addressed letter to Respondent No.2 for renewal of bank guarantees Held that - Constitutional Bench of Apex Court in case of Collector of C. Ex, Vadodara v. Dhiren Chemical Industries 2001 (12) TMI 3 - SUPREME COURT OF INDIA and Steel Authority of India v. Collector of Customs, Bombay 1999 (10) TMI 67 - SUPREME COURT OF INDIA held that circulars issued by Central Board of Excise and Customs are binding on all sub-ordinate authorities Circular clearly provides that if everything which is required to be done at end of concerned party is done and inspite of that if assessment is not completed within period of six months, authorities will not insist upon renewal of bank guarantees Aforesaid narration clearly shows that in Petitioner had done everything which is required to be done, even after that Respondent No.1 has not taken any steps for completing assessment Therefore Petitioner cannot be penalized for non-compliance of direction and is entitled to benefit of circular issued by CBEC Respondent Nos.1 and 2 directed not to renew/encash bank guarantees till finalization of project Decided in favour of Appellant.

Summary

Issues:
1. Grant of interim relief regarding renewal of bank guarantees and refund of cash deposit.
2. Direction to restrain encashment of bank guarantees till project finalization.

Analysis:
1. The Petitioner sought relief from the Court to prevent the Respondents from insisting on the renewal of bank guarantees and to refund a cash deposit. The Petitioner's contract for unit expansion was registered in 2008, with subsequent imports and installations completed by 2011. Despite providing all necessary documentation, the Respondents delayed the assessment process, prompting the Petitioner to approach the Court for relief.

2. The Petitioner argued that as per Circulars issued by the Central Board of Excise and Customs, the assessment under Project Import Regulations should be finalized within 60 days of document submission. Referring to Supreme Court judgments, the Petitioner contended that if all requirements are met, authorities cannot insist on bank guarantee renewals. The Respondent, however, claimed the Petitioner did not qualify as a small-scale industry and cited delays in scrutinizing reports and recommendation letters.

3. The Court examined the Project Import Regulations and Circulars, noting that the Petitioner had fulfilled all obligations promptly. The Assistant Commissioner confirmed installation and operation of imported machinery, emphasizing that the delay in assessment was unwarranted. Citing Supreme Court precedents, the Court held that Circulars binding on authorities precluded the need for bank guarantee renewals if all requirements were met, ruling in favor of the Petitioner.

4. Consequently, the Court issued an interim order directing the Respondents not to encash bank guarantees or insist on renewals until project finalization. The parties were given the liberty to seek further court action after the assessment's completion, ensuring the Petitioner's rights were protected pending resolution of the matter.