TMI Blog2002 (3) TMI 75X X X X Extracts X X X X X X X X Extracts X X X X ..... as (LNG) terminal at Dabhol. In adjudication, the Commissioner of Customs by his order dated 12th November, 2001 confirmed the duty demand to the extent of Rs. 275,34,45,737 (245,58,73,987 + 8,30,94,084 + 21,44,77,666) and issued penalty of Rs. 45 Crores. The order was passed after considering the reply of the respondent and after affording a full hearing and giving reasons running into 128 pages. (b) In the meanwhile the respondent had lodged two bank guarantees worth Rs. 72.50 Crores at the time of provisional clearance of the goods when they were imported. After the duty demand was confirmed in November, 2001 Customs invoked the bank guarantees. But before the guarantor, the State Bank of India, could complete the formalities, the respondent moved a vacation Judge of the Bombay High Court and obtained an ex parte order on 15th November, 2001 restraining Customs from encashing the bank guarantees. (c) Thereafter, when the Customs moved the High Court to get the injunction vacated, the respondent submitted before the High Court that they had challenged the adjudication order before CEGAT. They therefore argued that the outcome of the CEGAT hearing should be awaited. Section 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is first submission viz. that merits of the matter ought to have been seen while passing order under Section 129E of the Act. Shri Sorabji relied upon two Division Bench Judgments of Delhi High Court. In para 2 of its judgment in Uptron Powertronics v. Collector of Central Excise, Meerut reported in 1987 (28) E.L.T. 61 (Delhi), the Division Bench has observed that in every case when the appellant wants any discretionary relief in his favour, he has first to show prima facie substance in his claim. On this being done, he then has to further show undue hardship to him. The reverse was not to be done. The other Division Bench decision of Delhi High Court relied upon by Shri Sorabji was in the case of Sri Krishna v. Union of India - 1998 (104) E.L.T. 325 (Delhi), wherein, in para 8 the Division Bench has observed that that the order of the Tribunal should show if the pleas raised before it have any merit prima facie or not. If the appellant has such a strong prima facie case then he would be entitled to be exonerated from the payment. 8.As far as this aspect is concerned, Shri Shreedharan, learned Counsel for the Respondent relied upon 4 other judgments. Firstly in the case of Escort ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his case was unconditional one, and without any demur and on demand the amount concerned had to be paid, the moment circumstances for demand were established. He particularly emphasised Clause 6 of the two Guarantees which reads as follows : "The rights of the President to recover the said amount from the surety in the manner aforesaid will not be affected or suspended by reason of the fact that any dispute or disputes has been raised by the importer with regard to the liability or that any proceedings are pending before any officer, Tribunal or Court with regard thereto or in connection therewith." Shri Sorabji submitted that there are a large number of judgments on the approach to be adopted by the Courts when it comes to the encashment of bank guarantees. He particularly made a reference to the judgment of the Apex Court in the case of Dwarikesh Sugar Industries Ltd. v. Prem Heavy Engineering Works (P) Ltd. - (1997) 6 SCC 450. In para 21 of the said judgment reference is made to earlier decisions of the Apex Court and a paragraph is quoted with approval from earlier decision in the case of U.P. State Sugar Corporation (1997) 1 SCC 568, to the effect that in the course of com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Oil and Natural Gas Corporation Ltd. v. State Bank of India - AIR 2000 SC 2548 wherein in para 7 it is observed by the Apex Court as under : "No distinction can also be made between the bank guarantee for due performance of a work contract and a guarantee given towards security (emphasis supplied)deposit for a contract or any other kind of guarantee." Shri Sorabji relied upon the ratios of the Apex Court in catena of judgments viz. in the case of Svenska Handelsbanken v. Charge Chrome, Larsen Toubro Ltd. Maharashtra SEB, Hindustan Steel Workers Construction Ltd. v. G.S. Atwal Co. (Engineers) (P) Ltd. and U.P. State Sugar Corporation v. Sumao International Ltd. referred to in para 21 of the judgment in Dwarikesh Sugar Industries Ltd. (supra) and submitted that the bank guarantees be allowed to be encashed subject to the undertaking given on behalf of the petitioner that in the event, decision goes in favour of the respondent, the amount will be returned back to the respondent with interest at the appropriate rate to be decided by the Court. Shri Sorabji relied upon judgment of the Apex Court in Assistant Collector v. Dunlap India reported in 1985 (19) E.L.T. 22 (S.C.) = ..... X X X X Extracts X X X X X X X X Extracts X X X X
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