9911796707
TMI Blog1996 (5) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... tariff heading 44.10 (sub-heading 4410.90), not under hearing 44.08 (sub-heading 4408.90) for the period from 1-3-92 onwards". There was a Writ Appeal being numbered as Writ Appeal No. 11/93 and others and that was dismissed by Judgment dated 17-3-93. Thereafter Special Leave Petitions were filed before the Apex Court and the interim order quoted above was passed. The matters ultimately were disposed of by the Apex Court on 20-3-95 and the Judgment is reported in 1995 (77) E.L.T. 23 (S.C.) = 1995 (3) SCC 454 (Collector of Central Excise, Shillong, Appellants v. Wood Craft Products Limited, Respondent). In terms of the interim order the petitioners herein furnished the bank Guarantees for different amount in filing all the Civil Rules and one of the conditions mentioned in the Bank Guarantee is as follows :- "And whereas the said petitioner have requested to furnish the required Bank Guarantee to the satisfaction of the Collector of Central Excise, Shillong to the President of India, hereinafter called the Central Government for a sum of Rs. 85,00,322/-(Rupees eighty five Lakhs three hundred twenty two only) and accordingly we do as primary obliger and not merely as surety, hereb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t since the assessment was finalised in pursuance of order dated 9-2-93 of this Hon'ble Court in C.R.No. 833/92, the question of application of 11A does not arise inasmuch as Section 11A does not envisage of a notice where the assessment is finalised and demand is made in terms of the order of the Court. 4.Let us take up the first contention of Shri Gogoi. In short, the contention of Shri Gogoi is that the Bank Guarantees were not enforceable in terms of the order of the Supreme Court. The interim order of the Supreme Court, inter-alia, is as follows :- "That the Bank guarantees shall be furnished for the amount of arrear within 6 weeks and if that amount of arrear were not paid by the petitioners and/or of them furnish the Bank Guarantee for that particular case". So the Bank Guarantee not being in consonance with interim order of the Apex Court, does not hold good and this contention shall stand rejected. 5.The next contention of Shri Gogoi is that the Bank Guarantee is in pursuance of the Circular and Rules of the Department and that ought not to be enforced on the ground unequal bargaining between the parties. This contention of Shri Gogoi has no force at all inasmuch as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court has laid down the law as quoted above. Even if the decision of the Delhi High Court wants to lay down the law that Bank Guarantee losts it's enforceability at a subsequent point of time because of the unequal bargaining between the parties. I do not agree with that view. If it is accepted to be correct proposition of law that will lead to chaotic condition and as a result the purpose of Bank Guarantee shall be frustrated. The question of Bank Guarantee came up for consideration before the Supreme Court in the case reported in AIR 1981 S.C. Page-1426 (United Commercial Bank, Appellant v. Bank of India and others, Respondents) wherein in paragraphs-38 and 41 it has been pointed out as follows that is quoted below :- In the light of these principles, the rule is well"38. established that a bank issuing or confirming a letter of credit is not concerned with the underlying contract between the buyer and seller. Duties of a bank under a letter of credit are created by the document itself, but in any case it has the power and is subject to the limitations which are given or imposed by it, in the absence of the appropriate provisions in the letter of credit." A bank which fives ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly insist upon enforcement of the bank guarantee and the Courts should not interfere with the enforcement of the contract of guarantee unless there is specific plea of fraud or special equities in favour of the plaintiff. He must necessarily plead and produce all the necessary evidence in proof of the fraud in execution of the contract of the guarantee, but not the contract either of the original contract or any of the subsequent events that may happen as a ground for fraud." 7.The only two grounds on which a Court can interfere is that there must be fraud in the Bank Guarantee and there must be special equity in favour of the party who resists outside of the enforceability of such a Bank guarantee. In the instant case the question of fraud has not been raised, what is urged by Shri Gogoi is that there is special equity in favour of the petitioners. But on perusal of the facts it appears to me that in this case I do not find any such special equity. Having arrived at this finding it really not necessary to consider the third grounds urged by Shri Gogoi. But as the points has been raised by the learned counsel for the petitioner. I am giving my decision on the matters. Section 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case. 9. No notice seems to have been issued in this case in regard to the period in question. Instead thereof an outright demand had been served. The provisions of Section 11A(1) and (2) make it clear that the statutory scheme is that in the situations covered by sub-section (1), a notice of show cause has to be issued and sub-section (2) requires that the cause shown by way of representation has to be considered by the prescribed authority and then only the amount has to be determined. The Scheme is in consonance with the rules of natural justice. An opportunity to be heard is intended to be afforded to the person who is likely to be predicted when the order is made before making the order thereof. Notice is thus a condition precedent to a demand under sub-section(2). In the instant case, compliance with this statutory requirement has not been made, and therefore, the demand is in contravention of the statutory provision. Certain other authorities have been cited at the hearing by counsel for both sides. Reference to them, we consider, is not necessary." That was a case in which the High Court passed an order in a Writ Application staying collection of excise duty as a fabric ..... X X X X Extracts X X X X X X X X Extracts X X X X
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