1992 (4) TMI 42 - HC - Central Excise

Court quashes order, directs payment to petitioners, stresses bank guarantee, and expedites stay application process.

MAHINDRA & MAHINDRA LTD. Versus UNION OF INDIA

The High Court found the Tribunal's order directing the Department to hold money in deposit as unsustainable. The premature encashment of bank guarantees ... Stay/Dispensation of prior deposit Issues involved: Impugned order of Tribunal directing Department to hold money in deposit; Encashment of bank guarantee before expiry of statutory period; Stay application by petitioners; Direction to pay recovered amount to petitioners; Execution of new bank guarantee; Disposal of stay application by Tribunal.Impugned Order of Tribunal: The High Court found the order directing the Department to hold the money realized in deposit till the appeal's disposal as unsustainable. The petitioners had filed an appeal challenging the Collector's order, and despite informing the Collector about the pending stay application, the bank guarantees were encashed prematurely by Respondents Nos. 2 and 3.Encashment of Bank Guarantee: The Court deemed it highly improper for the Collector and Assistant Collector to encash the bank guarantees before the statutory three-month period, especially when the petitioners had informed about the scheduled hearing of the stay application. Respondents Nos. 2 and 3 were directed to pay the entire amount recovered to the petitioners within 10 days, with the petitioners required to execute a new bank guarantee in favor of the Collector of Central Excise within two weeks thereafter.Stay Application by Petitioners: The Court made it clear that until the disposal of the stay application, the bank guarantee would remain in force. If the Tribunal rejects the stay application, the order shall not be executed for two weeks from the date of service on the petitioners. The Tribunal was directed to hear and dispose of the stay application expeditiously and preferably before a specified date.Direction to Pay Recovered Amount: Respondents Nos. 2 and 3 were directed to pay the entire amount recovered by encashing the bank guarantees to the petitioners within a specified timeframe. The petitioners were then required to execute a new bank guarantee in favor of the Collector of Central Excise within two weeks of receiving the recovered amount.Disposal of Stay Application by Tribunal: The Tribunal was directed to hear and dispose of the stay application of the petitioners as expeditiously as possible and preferably before a specified date. The impugned order was quashed and set aside, with the stay application made by the petitioners to the CEGAT, West Regional Bench, Bombay, to be disposed of accordingly. The petition succeeded, and the rule was made absolute with no order as to costs. A certified copy of the order was to be furnished out of turn within one week upon application.