Cus - although BG executed was valid upto year 2015, Revenue had encashed same - since Stay granted in 2006 has been extended, Revenue directed to refund sum of Rs 50L within 7 days and BG to be kept alive BG till disposal of appeal: CESTAT
By TIOL News Service
MUMBAI, JAN 23, 2013: IN this Customs case, the CESTAT had granted the applicant a Stay in the matter in December, 2006. The Bench had directed the applicant to furnish a Bank Guarantee of Rs.50 lakhs.
Incidentally, the appeal is still pending before the CESTAT.
In the meantime, in the year 2009, the Revenue was scared that the applicant would do the vanishing trick. So, they filed a Miscellaneous application before the CESTAT praying that the stay of recovery already granted by the Bench be vacated.
The matter was heard by the Bench in May, 2010. The assessee submitted that the bank guarantee had been renewed for a period up to 4.1.2011 and filed the documents to evidence the same.
But the Revenue representative was not reassured - he pleaded before the Bench that unless the assessee is directed to get the bank guarantee extended in absolute terms till final disposal of the appeal, the Revenue will be at peril.
The Bench was not impressed and observed -
"...We are not in a position to accept this plea. The bank guarantee categorically says that any claim or demand for the guaranteed amount or any part thereof should be made on or before 4.1.2011, failing which the guarantee would cease to be in effect. This clear condition attached to the bank guarantee is enough to keep the Revenue diligent in the matter. In the event of the bank guarantee not being further renewed, there is the clear prospect of the appeal getting dismissed for non-compliance with section 129E of the Customs Act, in which event it is open to the department to initiate recovery proceedings against the assessee on the strength of the impugned order. In any case, the Revenue is not at peril."
Saying so, the Revenue application was dismissed.
However, as a reassurance to the restless department, the Bench mentioned the following "...it is reiterated that it is the appellant's burden to keep the bank guarantee alive till final disposal of the appeal."
This was more than 2 ˝ years ago. Please see - (2010-TIOL-821-CESTAT-MUM).
Now, it is the turn of the appellant.
The applicant moved an application before the CESTAT for issuing direction to the respondent Revenue to return the amount of Rs.50,00,000/- received by encashing the bank guarantee executed by the applicant.
The appellant narrated the sequence of events and submitted that although the bank guarantee was valid till 2015 the Revenue went ahead and encashed the Bank guarantee.
It is also submitted that they had also moved an application before the CESTAT on 18.07.2012 for seeking an extension of the Stay granted and had kept the Revenue informed about the same. In spite of the same, the BG was encashed on 19.07.2012. The appellant further mentioned that application for extension of stay was listed before the Bench on 01.08.2012 and the Tribunal vide order no. M/798/2012/CSTB/C-I dated 01.08.2012 extended the Stay.
So, it is their submission that the amount recovered by the department be refunded to them.
The Bench observed -
"2. As the applicant has complied with the condition of the stay order dated 18.12.2006 by executing bank guarantee of Rs.50 lakhs and the same is alive till 2015 and also obtained extension of stay vide order dated 01.08.2012, we direct the respondent to refund the amount of Rs.50 lakhs within seven days of communication of this order subject to the condition that the bank guarantee shall keep alive till disposal of the appeal."
The Miscellaneous application was disposed of in the above terms.
Seven years and counting…
(See 2013-TIOL-138-CESTAT-MUM)
