Customs cannot invoke bank guarantee during appeal unless fraud/irreparable harm. Amount held in Fixed Deposit until Tribunal order.

The Court held that invoking the bank guarantee by customs authorities during the appeal period was impermissible unless in cases of fraud or irreparable harm. Relying on precedents, the Court found such actions coercive and directed the authorities to hold the invoked amount in a Fixed Deposit until further orders from the Tribunal. The Tribunal was tasked with promptly deciding on the stay application, emphasizing that the Court's order did not prejudge the appeal. The writ petition was disposed of, granting parties an urgent certified copy of the order.

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Issues:
1. Invocation of bank guarantee by customs authorities before the expiry of the statutory period for appeal.

Analysis:
The petitioner in this case raised a concern regarding the customs authorities invoking the bank guarantee before the statutory period for appeal had expired. The petitioner had initially furnished a bank guarantee and PD Bond along with paying the assessed duty and interest. Subsequently, the customs authorities imposed a redemption fine and penalty, which could be challenged before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT). The petitioner requested the authorities to refrain from invoking the bank guarantee while an appeal was pending, but the authorities did so within the appeal period.

The main contention revolved around whether invoking the bank guarantee during the appeal period was permissible. The petitioner argued that such action was coercive and not justiciable, citing judgments from the Andhra Pradesh High Court and the Bombay High Court. The petitioner also referred to a circular from January 1, 2013, stating that recovery proceedings should wait until the appeal period expires. On the other hand, the respondent contended that invoking the bank guarantee was not coercive as it was meant to satisfy any future claims by the authorities.

The Court, after considering the cited judgments, acknowledged that an interim order against bank guarantee invocation should only be granted in cases of fraud or irreparable harm. The Court noted the Andhra Pradesh High Court's stance on not resorting to coercive measures during the appeal period. Similarly, the Bombay High Court emphasized that any recovery actions during the appeal period were unjustified and amounted to coercive collection of customs duty, a view supported by the present Court.

Ultimately, the Court directed the customs authorities to keep the invoked amount in a Fixed Deposit with a nationalized bank until the CESTAT issued further orders. The Tribunal was instructed to hear and decide on the stay application within three weeks. The Court clarified that its order did not prejudge the appeal or stay application and that the Tribunal should independently decide on the matter. The Tribunal was also empowered to make any necessary directions regarding the amount realized from the bank guarantee invocation.

In conclusion, the writ petition was disposed of, and the parties were granted an urgent certified copy of the order, subject to procedural requirements.

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