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of <h1>Tribunal denies stay on bank guarantee encashment for vessel release due to failure to pay redemption fine</h1> <h3>Mohammad Bin Khamis Bin Hilal Majali Versus Commissioner of Customs (Preventive), Mumbai</h3> The Tribunal dismissed the applicant's request for a stay on the encashment of a bank guarantee related to the provisional release of a vessel seized by ... Exercise of Tribunal's power granted under provisions of Rule 4 and 41 of CESTAT (Procedure)Rules - Seeking provisional release of vessel - Extended on execution of bond and bank guarantee - Held that:- applicant has not made out any case for exercising our inherent power, as the option which was extended to him for payment of redemption fine in lieu of confiscation should have exercised by him when the order-in-original was passed. Also the law is very clear that the redemption fine has to be paid by the applicant in lieu of confiscation as the applicant is still using the vessel and in possession of the said vessel. Therefore, this is not a fit case for us to exercise the powers granted to us under the provisions of Rule 4 and 41 ibid. - Decided against the appellant Issues:- Stay of encashment of bank guarantee- Provisional release of vessel- Imposition of penalty and confiscation of vessel- Renewal of bank guarantee- Urgency of the application- Exercise of inherent power by the TribunalStay of Encashment of Bank Guarantee:The applicant sought indulgence from the Tribunal for a stay on the encashment of a bank guarantee related to the provisional release of a vessel seized by the department in 2005. The Commissioner of Customs imposed a penalty and confiscated the vessel, allowing redemption on payment of a fine. The Tribunal had earlier granted conditional stay on deposit of 20% of the penalty. The applicant renewed the bank guarantee, which was valid till a specified date. The urgency arose when the department requested encashment of the bank guarantee, prompting the applicant to seek restraint based on the pending appeal and disputed penalty.Provisional Release of Vessel:The applicant obtained provisional release of the vessel in question by furnishing a bond and a bank guarantee after it was seized by the department in 2005. Subsequently, a show cause notice was issued, leading to an adjudication where a penalty was imposed, and the vessel was confiscated with an option for redemption upon payment of a fine. The Tribunal found that the applicant did not exercise the redemption option when the original order was passed and continued to use the vessel, which was not detained by the authorities during confiscation.Imposition of Penalty and Confiscation of Vessel:The Commissioner of Customs imposed a penalty of Rs. 50 lakhs on the appellant and confiscated the vessel, providing an option for redemption on payment of a fine of Rs. 50 lakhs. The Tribunal did not find merit in the applicant's argument to restrain encashment of the bank guarantee, stating that the redemption fine should have been paid when the original order was issued, and the vessel was still in the applicant's possession.Renewal of Bank Guarantee:The applicant had been renewing the bank guarantee executed by them, which was valid until a specified date. The urgency to seek restraint on encashment arose when the department requested the bank guarantee's encashment, despite the pending appeal and the disputed penalty.Urgency of the Application:The urgency of the application stemmed from the department's request to encash the bank guarantee, even though the appeal was pending, and the penalty imposition was still under dispute. The applicant sought restraint based on the security provided through the bond and bank guarantee.Exercise of Inherent Power by the Tribunal:The Tribunal, after considering the arguments and perusing the records, found that the applicant did not establish grounds for the Tribunal to exercise its inherent power to restrain the encashment of the bank guarantee. The Tribunal emphasized that the redemption fine should have been paid when the vessel was confiscated, and the applicant continued to use the vessel without it being detained by the authorities during confiscation. Consequently, the application was deemed devoid of merit and dismissed.
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