Premature bank guarantee encashment deemed unjust; refund granted to appellants.

The Tribunal held that the premature encashment of the bank guarantee by the Revenue, without fulfilling the export obligation, was unjust. The Tribunal emphasized that the bank guarantee was a security measure and not a payment of duty. Refund was granted to the appellants as the encashed amount was not a duty demand but a security measure. Citing Supreme Court precedents and a Rajasthan High Court decision, the Tribunal set aside the Commissioner (Appeals) decision, allowing the appeal and providing relief to the appellants.

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Issues:
1. Encashment of bank guarantee by the Revenue without fulfilling export obligation.
2. Refund claim rejected on grounds of time bar and unjust enrichment.
3. Appeal against the Commissioner (Appeals) decision.

Analysis:
1. The appellants imported raw materials against advance licenses free of duty under Notification No. 128/94-Cus. They executed a bond with a bank guarantee. Despite informing the Revenue about pending extension of the export period, the bank guarantee was encashed prematurely. The DGFT later allowed clubbing of licenses, confirming export obligation fulfillment. The appellants requested a refund, leading to a show cause notice citing time bar and unjust enrichment.

2. The Assistant Commissioner ruled in favor of the appellants, directing the refund. However, the Commissioner (Appeals) overturned this decision, citing time limitation and unjust enrichment. The appellate authority found the Revenue rushed in encashing the bank guarantee, especially when informed by both appellants and DGFT about the pending export certificate. The bank guarantee was a security measure, not a payment of duty. Citing Supreme Court precedents, the Tribunal held that the encashed amount should be refunded to the appellants as it was not a duty demand but a security measure.

3. The Tribunal referred to the Rajasthan High Court's decision in Union of India v. Grasim Industries Ltd., emphasizing that furnishing a bank guarantee does not equate to paying excise duty, hence Section 11B provisions do not apply. Consequently, the Tribunal set aside the Commissioner (Appeals) decision and allowed the appeal, granting relief to the appellants.

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