Waiver of pre-deposit and simultaneous recovery were inconsistent, leading to restoration of funds and a fresh bank guarantee direction.

Waiver of pre-deposit could not coherently coexist with permission to recover the same disputed duty, so the tribunal's directions were treated as mutually inconsistent. On those facts, encashment of the bank guarantee and recovery of the disputed amount were regarded as unjustified. The company's prior declaration as sick before the Board for Industrial and Financial Reconstruction was also considered relevant against execution of recovery in the circumstances. The impugned order was set aside, the recovered amount was directed to be restored to the petitioners' account, and a fresh bank guarantee was to be furnished on the same terms.

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Issues: Whether the order of the appellate tribunal, which waived pre-deposit but declined stay of recovery and resulted in encashment of the bank guarantee and recovery of the disputed duty, could be sustained, especially when the petitioner company had been declared sick before the Board for Industrial and Financial Reconstruction.

Analysis: The directions in the impugned order were mutually inconsistent because the tribunal, while waiving the requirement of pre-deposit, simultaneously permitted recovery of the very amount whose deposit had been waived. In the circumstances, recovery by encashment of the bank guarantee was treated as unjustified. The Court also took into account that the company had been declared sick before the Board for Industrial and Financial Reconstruction, and therefore execution of the recovery against the company was not appropriate on those facts.

Conclusion: The impugned order was set aside and the amount recovered was directed to be restored to the petitioners' account, with a corresponding direction to furnish a fresh bank guarantee on the same terms.

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