2005 (2) TMI 153 - HC - Central Excise

Issues:
1. Recovery of amount challenged by petitioner before exercising right of appeal.
2. Encashment of Bank Guarantee before appeal process completed.
3. Court's direction to restrain encashment of draft pending admission hearing.
4. Discrepancy in figures and realization of Demand Draft.
5. Conscious default by senior officers in violating court directions.
6. Officers tendering unconditional apology to close the matter.
7. Petitioner's appeal before CESTAT and stay application.
8. Request to withdraw deposited amount to revive Bank Guarantee.
9. Direction to await CESTAT's decision before recovery proceedings.
10. Return of deposited amount and obtaining a fresh Bank Guarantee.
11. Disposal of the petition with no order as to costs.

Analysis:
1. The petition challenged the recovery of an amount based on an Order-in-Original dated 17th December 2004 before the petitioner could appeal. The respondents directed the encashment of a Bank Guarantee of Rs. 50,00,000 before the appeal process was initiated, leading to the petitioner seeking relief from the Court.

2. The Court intervened to restrain the encashment of the draft pending the admission hearing of the petition. The respondents were directed not to take coercive action until the matter was heard, emphasizing the importance of due process and fair opportunity for appeal.

3. A discrepancy in figures and the realization of the Demand Draft prompted the Court to direct the respondents to reconcile the numbers. Despite specific orders, the draft had been deposited and realized, leading to further scrutiny of the actions of the respondent officers.

4. The Court observed a conscious default by senior officers in violating its directions, noting the lack of a reasonable explanation for their conduct. The officers were required to appear before the Court, and their demeanor indicated a serious lapse in following court orders.

5. The senior officers eventually tendered unconditional apologies, leading to the closure of the matter by the Court. The Court emphasized the need for officers in charge of revenue collection to adhere to directives and not act in a manner that could be deemed overzealous or culpable.

6. The petition also involved the petitioner's appeal before the CESTAT and an application for a stay of recovery. The Court directed the respondents to await the outcome of the stay application before taking any recovery actions, ensuring a fair process for the petitioner.

7. To restore the status quo ante, the Court permitted the withdrawal of the deposited amount to revive the Bank Guarantee that was encashed earlier. This step aimed to provide the petitioner with the necessary financial security during the appeal process.

8. The Court ordered the return of the deposited amount and instructed the respondents to obtain a fresh Bank Guarantee for the same sum, ensuring continued financial security for the petitioner. The new Bank Guarantee was to remain effective for an initial period of six months.

9. The petition was disposed of with no costs imposed, concluding the legal proceedings related to the recovery of the amount and the encashment of the Bank Guarantee. The Court's detailed analysis and directives aimed to uphold fairness, due process, and accountability in the legal proceedings.

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