Bank guarantee security for vessel release discharged after appeal and pre-deposit, with fresh undertaking protecting customs interests.

Bank guarantee security required to permit a vessel to move outside customs jurisdiction was held no longer necessary once the vessel was brought back, the earlier seizure was quashed, and the assessee had filed an appeal after making the required pre-deposit. The Court reasoned that continued insistence on the guarantee and the director's undertaking was unjustified during pendency of the appeal, especially where coercive recovery was restrained. The Customs interest was protected by requiring a fresh undertaking that the vessel would not leave customs jurisdiction without leave of the appellate tribunal. The request to extend the bank guarantee was rejected and discharge of the guarantee, with relief from the prior undertaking, was granted.

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Issues: Whether the bank guarantee furnished by the assessee was liable to be discharged and the director's undertaking relieved, while the Customs sought its further extension pending the appeal before the appellate tribunal.

Analysis: The bank guarantee had been insisted upon only to secure the assessee's request to take the vessel outside the customs jurisdiction and was intended to operate until the vessel was returned within jurisdiction. The vessel had been brought back, the earlier seizure had been quashed, and the assessee had since preferred an appeal against the confirmed demand after making the requisite pre-deposit. In such circumstances, and in view of the restraint against coercive recovery during pendency of the appeal, continued insistence on the bank guarantee and the corresponding undertaking was not justified. The Court accepted that the Customs' interest could be protected by an undertaking that the vessel would not leave jurisdiction without leave of the appellate tribunal.

Conclusion: The request for extension of the bank guarantee was rejected and the assessee's request for discharge of the bank guarantee and relief from the undertaking was granted, subject to a fresh undertaking that the vessel would not leave the customs jurisdiction without permission of the appellate tribunal.

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