Order Date: 5 August 2022

Facts-

• The Petitioner, S. J. Enterprises in the present writ petition has context the respondents adopting coercive measures and encashing the Bank Guarantee furnished by the petitioners on the date of service of the order in original upon the petitioner and before the petitioner could avail of the opportunity to appeal the said order.
• The petitioners contend that such coercive action contradicts the CBIC Circular no.984/08/2014-CX dated 16.09.2014.
• The petitioners relied on several decisions where this circular or similar circulars have been enforced and directions issued to the respondents to refrain from taking coercive action before the expiry of limitation to institute an appeal or during the pendency of the appeal.

Issue-

• Whether the bank guarantee encashment before the appeal filing period expiry is justified? 

Order-

• The Division Bench of Hon’ble High Court relied in the case of Mahindra & Mahindra Ltd. Vs. Union of India deprecated the encashment of Bank Guarantees even before the expiry of the statutory period of 3 months for instituting appeals against the order. 
• In the case of Ocean Driving Centre Vs. Union of India & Ors., another coordinate Bench, after referring to the declared policy of the Customs Authorities not to resort to coercive action to recover duty during the appeal period, held that the authorities cannot encash the Bank Guarantee given by the Assessee before the expiry of the statutory period available for filing an appeal along with an application for stay or waiver to pre-deposit.
• In the present case, the respondents have acted not only in breach of the Circular of CBEC, which was binding on them but also in breach of the law laid down by the several decisions referred. The CBIC circular and the instructions bind the Customs Authorities. In any case, the Customs Authorities are bound by the various decisions referred, not to mention the solemn assurance on behalf of the Union of India that in the future, adequate care would be taken to follow the law laid down by this Court scrupulously. Therefore, the impugned action is unsustainable.
• The Court quashed the impugned letter/order and directed the respondents to restore the petitioner’s Bank Guarantee and maintain status quo ante till the disposal of an appeal instituted by the petitioners before the appellate authority.