LAWS(MPH)-2002-3-100

COSPAR TRADING PVT. LTD. Vs. IDBI BANK LTD.

Decided On March 27, 2002
Cospar Trading Pvt. Ltd. Appellant
V/S
IDBI BANK LTD. Respondents

JUDGEMENT

(1.) THE short point involved in this writ petition arises on following facts. The demand under the Customs Act was raised against the petitioner for a sum of Rs.54,51,771/ - by the authorities. This demand was challenged by the petitioner before the adjudicating authority which resulted into its affirmation by order dated 29.12.1999 (Annexure P -3). Petitioner felt aggrieved and pursued the matter further by filing an appeal before the Commissioner of Appeals under the Customs Act.

(2.) THE Commissioner of Appeals by his order dated 28.4.2000 (Annexure P -6) allowed the appeal and set aside the demand referred supra, in its entirety. It may here be mentioned that to ensure payment of the dues in question in the event of decision going against the petitioner and demand being upheld, the petitioner had furnished a Bank Guarantee in favour of the department for Rs. 54,51,771/ -. This Bank Guarantee was furnished by respondent No. 1 for and on behalf of petitioner. It is dated 13.11.1999 (Annexure P -2). This Bank Guarantee was kept alive so long as the dispute before the First Appellate Authority was pending. Consequent upon the allowing of an appeal by the Commissioner, Customs (Appeals) by its order dated 28.4.2000 a direction was issued by the Appellate Authority itself in its concluding para to return the Bank Guarantee furnished by the appellant. This direction was necessary in view of the fact that the demand in question was set aside and was held to be unsustainable. It is now a matter of record that the department was not satisfied by the orders of Commissioner, Customs (Appeals) and took up the matters with CEGAT in further appeal. The department also prayed for a stay but the same was dismissed by the Tribunal by its order dated 24.1.2000 (Annexure P -8).

(3.) HAVING heard learned counsel of the parties and having perused the record of the case, I am of the opinion that the department does not have any right to withhold the Bank Guarantee furnished by the respondent No. 1 for and on behalf of the petitioner in view of the admitted fact emerging from the record that demand in question for which Bank Guarantee was furnished stands annulled. Once the demand in question is annuled and no longer remains in existence, the need for furnishing Bank Guarantee or its continuance does not arise. It is not necessary for the assessee to then secure the payment which they are not liable to pay. It being an admitted position that the demand in question has since been set aside by Commissioner of Appeals though the order of Commissioner of Appeals is sub judice at the instance of department, the Department was not able to obtain any restrain order from CEGAT against the petitioner from allowing them to release the Bank Guarantee. Mere pendency of appeal before the CEGAT does not entitle the department to restrain the petitioner from seeking release of the Bank Guarantee.