High Court orders return of bank guarantees in customs dispute, stresses prompt compliance

The High Court of Bombay directed Respondent No.4 to return the bank guarantees and bonds to the petitioners within three months, unless a stay order was obtained from the Supreme Court. The court emphasized that in the absence of a stay order, the return should proceed promptly. This decision came after the petitioners sought the return of the guarantees following a customs dispute resolution that favored them. The court considered the delay caused by the pandemic and the ongoing civil appeal but ruled in favor of the petitioners, ordering the return of the guarantees.

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Issues:
1. Return of bank guarantee after customs dispute resolution.

Analysis:
The judgment by the High Court of Bombay concerned two writ petitions seeking the return of bank guarantees following a customs dispute resolution. The petitioners had imported goods and faced a demand cum show cause notice due to alleged undervaluation. The Additional Commissioner of Customs ordered confiscation of the goods, imposing fines and penalties. The petitioners appealed, and the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) allowed the appeal, classifying the goods under a different category. Subsequently, the petitioners sought the return of the bank guarantees and bonds. Respondent No.4 sanctioned a partial refund but did not address the return of the bank guarantee and bond, citing a pending civil appeal before the Supreme Court. The respondents argued that they had a strong case on merit for the appeal. The petitioners contended that the mere filing of a civil appeal should not hinder the return of the bank guarantee and bond.

The High Court reviewed the details of the bank guarantees and the history of the case, noting the delay in proceedings due to the Covid-19 pandemic. It was revealed that the department had filed a civil appeal against the CESTAT order. However, the High Court directed the respondents to return the bonds and bank guarantees to the petitioners within three months, unless a stay order was obtained from the Supreme Court. The judgment emphasized that if no stay order was obtained, the return of the bonds and bank guarantees should proceed within the specified timeframe. Consequently, both writ petitions were disposed of by the High Court of Bombay.

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