TMI Blog2008 (12) TMI 319X X X X Extracts X X X X X X X X Extracts X X X X ..... y Kumar, J.]. - The petitioner challenges the invocation of its Bank Guarantee during the pendency of the stay petition in the statutory appeal filed by it under the Customs Act, 1962 (for brevity, 'the Act of 1962'). 2. The petitioner, a power generation and distribution company, was subjected to levy of customs duty, interest and penalty in respect of certain product imports by the order-in-original dated 5-5-2008 passed by the Commissioner of Central Excise and Customs, Visakhapatnam. respondent 3 herein. Aggrieved thereby, the petitioner took recourse to the statutory remedy available to it, filing an appeal before the Customs, Excise and Service tax Appellate Tribunal (for brevity. 'CESTAT'), Bangalore, under Section 129A of the Act of 1962. The petitioner also filed a petition for stay and dispensation of the deposit of the duty, interest and penalty payable, under the provisions of Section 129E of the Act of 1962 and the said stay application is stated to be pending consideration on the file of the CESTAT till date. 3. While so, the Assistant Commissioner of Customs, Kakinada, respondent 2 herein, addressed letter dated 20-10-2008 to the Shinhan Bank Limited, Mumbai, re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether the Customs authorities were entitled to invoke the Bank Guarantee furnished by the petitioner before the hearing and disposal of its stay application by the CESTAT? 9. The learned senior counsel appearing for the petitioner placed reliance upon the circulars issued by the Central Board of Excise and Customs, New Delhi, which prescribe initiation of coercive measures during the limitation period for invoking appellate remedies and during the pendency of the stay applications filed in such appellate remedies. He placed reliance upon various Judgments to support his contention in this regard. 10. Per contra, the learned Assistant Solicitor General for India laid a challenge to the maintainability of the writ petition and cited a plethora of decisions in that regard. He also contended that the circulars relied upon by the petitioner had no application to the present case as invocation of a Bank Guarantee would not amount to 'coercive action' against the petitioner. He placed before us various Judgments in support of the proposition that the Courts would not normally injunct the invocation of Bank Guarantees. 11. The issue squarely turns upon the circulars of the Central Bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stay petition before the CESTAT. The issue then would be whether invocation of a Bank Guarantee would fall within the ambit of the prohibited 'coercive action' during the pendency of the petitioner's stay petition. The Judgments of the Bombay High Court in Castrol India Limited v. Union of India [2007 (208) E.L.T. 490 (Bom.) = 2007 (5) S.T.R. 246 (Bom.)]; Ocean Driving Center Ltd. v. Union of India [2005 (180) E.L.T. 313 (Bom.)]; Mahindra Mahindra Ltd. v. Union of India [1992 (59) E.L.T. 505 (Bom.)]; Legrand (India) Pvt.Ltd. v. Union of India [2007 (216) E.L.T. 678 (Bom.)]; and K.N. Guruswami Oil Mills Ltd. v. Union of India [2000 (120) E.L.T. 57 (Bom.)]; all proceeded on the view that encashment of a Bank Guarantee amounted to a 'coercive measure'. Similar was the view taken by the Delhi High Court in Delhi Acrylic Mfg. Co. Pvt. Ltd. v. Commissioner of Cus. (Appeals), New Delhi [2002 (144) E.L.T. 24 (Del.)] and by the Rajasthan High Court in Shree Cement Ltd. v. Union of India [2001 (133) E.L.T. 301 (Raj.)]. There can be no dispute with the fact that the invocation of its Bank Guarantee would have an adverse effect upon the petitioner. Shinhan Bank Limited, Mumbai, would have f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay be made to the Judgments of the Bombay High Court in Mahindra Mahindra Ltd.'s case (supra), Legrand (India) Pvt. Ltd.'s case (supra) and K.N. Guruswami Oil Mills Ltd.'s case (supra) where the court directed refund of the amount unlawfully encashed under the Bank Guarantee. We are therefore of the opinion that the petitioner is entitled to refund of the amount of Rs. 7.15 crores encashed under the subject Bank Guarantee. 15. Apropos the various contentions urged by the learned Assistant Solicitor General for India with regard to the maintainability of this writ petition, we are not impressed. He contended that disputes relating to contracts cannot be agitated under Article 226 of the Constitution of India. He placed reliance upon the Judgment of the Supreme Court in National Highways Authority of India v. Ganga Enterprises And Another [(2003) 7 SCC 410] to support this contention. However, we find that the issue before the Supreme Court in that ease was as to the maintainability of a claim arising out of a breach of contract, in a writ petition filed under Article 226 of the Constitution of India. In the present case, we are not concerned with any breach of contract or claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia relied upon a Judgment of a learned Judge of this Court in Canara Bank, Secunderabad v. Power Grid Corporation of India Ltd., New Delhi And Others [2007 (1) ALD 496], wherein the learned Judge held that the claim of the Bank therein for recovery of the amount covered by a Bank Guarantee was nothing but a money claim for which Article 226 of the Constitution of India could not be invoked. It is however relevant to note that the learned Judge also observed that no case had been made out therein to show failure in the performance of a statutory obligation or that the inaction complained about resulted in infringement of a legal right. The present case, as stated supra, turns upon the violation of the binding norms of conduct prescribed under the circulars of the Central Board, by the Customs authorities which resulted in the infringement of the legal right of the petitioner to be treated in accordance with such circulars. The Judgment relied upon therefore does not lend support to the contention urged. 18. The learned Assistant Solicitor General for India sought to rely upon the Judgment of a Division Bench of this Court in Ashok Sharda v. Small Industries Development Bank of I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... must clearly be in favour of the making of 'an interim order'. It is relevant to note that the above Judgment pertained to the passing of interim orders by the High Court. By this order we propose to dispose of the main writ petition itself and the principles applicable to the passing of interim orders as laid down by the Supreme Court in the aforesaid Judgment have no application, further, it is relevant to note that the present writ petition was not filed with the intention of circumventing any statutory proceedings. On the contrary the complaint of the petitioner before this Court appears to be that the statutory proceeding was not permitted to proceed as per its ordained course, due to the violation of the binding circulars by the Customs authorities. The Judgment of the Supreme Court therefore is of no guidance to us in the present case. 21. The learned Assistant Solicitor General for India also contended that the writ petition was not maintainable in view of the fact that the petitioner had already invoked an alternative remedy by filing a statutory appeal and a stay application before the CESTAT. The petitioner's stay application before the CESTAT, Bangalore is pending dis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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