SWAN MILLS LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) APPEAL No. 227 of 1989.- Appeal admitted. Mr. Dhanuka waives service on behalf of the respondents. Appeal No. 285 of 1989.- Appeal admitted Mr. Andhyarujina waives service on behalf of the respondents. Appeals called our for hearing forthwith.

(2.) THESE two Appeals arise cut of the interlocutory order passed by the learned Single Judge on february 14, 1989 in Writ Petition No. 202 of 1989. The petitions is filed by the Swan Mills limited who are the Appellants in Appeal No. 227 of 1989 against the Union of India and who are the Appellants in Appeal No. 285 of 1989. Both the Swan Mills as well as the Union of India are aggrieved by the impugned order. Hence their respective appeals.

(3.) TOP appreciate the contentions, be may briefly narrate the facts leading to the appeals. It appears that Messrs Swan Mills, the petitioners in the original petition and the Appellants in appeal No. 227 of 1989 had filed a petition in this Court in the year 1979 challenging the levy of excise duty on the cotton fabrics manufactured and processed by them. In that petition, an interlocutory order came to be passed whereunder pending the hearing and final disposal of the petition, among other things, the Superintendent, Central Excise, was permitted to assess the differential excise duty and additional duty in respect of the cotton fabrics manufactured by the petitioners and processed by them and to issue demand notice in respect of such differential duty on the processed fabric and the fabric in grey stage but to keep the recovery of the amount in abeyance till the final disposal of the petition, provided the petitioners furnished a Bank guarantee. He has directed by the High Court, after duly following the procedure under Rule 173-I of the Central Excise Rules, 1944, the Superintendent, Central Excise, determined the duty and passed assessment orders and also issued demand notices from time to time, pending the petition. These orders were never challenged and became final. The petitioners furnished bank guarantees. The petitioners thereafter failed and the amount due under the demand notices became due for realization. The Union of India therefore became entitled to encash bank guarantees.