TaxTMI 
TaxTMI 
2008 (12) TMI 319
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....vity. 'CESTAT'), Bangalore, under Section 129A of the Act of 1962. The petitioner also filed a petition for stay and dispensation of the deposit of the duty, interest and penalty payable, under the provisions of Section 129E of the Act of 1962 and the said stay application is stated to be pending consideration on the file of the CESTAT till date. 3. While so, the Assistant Commissioner of Customs, Kakinada, respondent 2 herein, addressed letter dated 20-10-2008 to the Shinhan Bank Limited, Mumbai, respondent 4 herein, seeking to invoke the petitioner's Bank Guarantee bearing No. 5020868001, dated 27-3-2002 for a sum of Rs. 7.15 crores in connection with the amounts payable under the order-in-original dated 5-5-2008. 4. Even prior to the issuance of the above communication dated 20-10-2008. the petitioner under its letters dated 22-9-2008 and 26-9-2008 informed the Commissioner of Central Excise and Customs, Visakhapatnam, of the filing of its statutory appeal and stay application against the order-in-original dated 5-5-2008. Upon coming to know of the proposed invocation of its Bank Guarantee under the letter dated 20-10-2008, the petitioner addressed letter dated 31-10....
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.... challenge to the maintainability of the writ petition and cited a plethora of decisions in that regard. He also contended that the circulars relied upon by the petitioner had no application to the present case as invocation of a Bank Guarantee would not amount to 'coercive action' against the petitioner. He placed before us various Judgments in support of the proposition that the Courts would not normally injunct the invocation of Bank Guarantees. 11. The issue squarely turns upon the circulars of the Central Board of Excise and Customs, New Delhi, which lay down the norms to be followed during the pendency of stay petitions in statutory appeals. 12. Under Circular No. 396/29/98-CX., dated 2-6-1998, the Central Board directed that no coercive action should be taken to realize the dues under a particular decision till the disposal of the stay application by the Commissioner (Appeals) in an appeal filed against such decision. Thereafter, the Central Board under its Circular No. 788/21/2004-CX., dated 25-5-2004, acting upon references received with regard to the course of action to be taken when such stay applications against orders-in-original passed by the Commissioner were p....
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....]; all proceeded on the view that encashment of a Bank Guarantee amounted to a 'coercive measure'. Similar was the view taken by the Delhi High Court in Delhi Acrylic Mfg. Co. Pvt. Ltd. v. Commissioner of Cus. (Appeals), New Delhi [2002 (144) E.L.T. 24 (Del.)] and by the Rajasthan High Court in Shree Cement Ltd. v. Union of India [2001 (133) E.L.T. 301 (Raj.)]. There can be no dispute with the fact that the invocation of its Bank Guarantee would have an adverse effect upon the petitioner. Shinhan Bank Limited, Mumbai, would have furnished a Bank Guarantee to the Customs authorities on behalf of the petitioner only after taking sufficient security and upon invocation of the guarantee, it would liquidate such security. Inevitably, the invocation of the Bank Guarantee would cause loss and adversity to the petitioner. Though the learned Assistant Solicitor General for India disputes that such invocation would amount to a coercive step, he is not in a position to either substantiate such contention or support it with authority. In the cases aforestated the Bombay, the Delhi and the Rajasthan High Courts took the view that the invocation of a Bank Guarantee during the period of limitatio....
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....be agitated under Article 226 of the Constitution of India. He placed reliance upon the Judgment of the Supreme Court in National Highways Authority of India v. Ganga Enterprises And Another [(2003) 7 SCC 410] to support this contention. However, we find that the issue before the Supreme Court in that ease was as to the maintainability of a claim arising out of a breach of contract, in a writ petition filed under Article 226 of the Constitution of India. In the present case, we are not concerned with any breach of contract or claim arising therefrom. The issue here is with regard to the propriety and correctness of the Customs authorities in acting in violation of the binding circulars of the Central Board of Excise and Customs, New Delhi. The Judgment relied upon by the learned Assistant Solicitor General for India therefore has no application to this case. 16. The next contention of the learned Assistant Solicitor General for India is that this Court ought not to grant an injunction restraining the enforcement of a Bank Guarantee, unless fraud or irreparable injury was established. He placed before us an abundance of case law on this aspect. The Judgments of the Supreme Court ....
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....e, as stated supra, turns upon the violation of the binding norms of conduct prescribed under the circulars of the Central Board, by the Customs authorities which resulted in the infringement of the legal right of the petitioner to be treated in accordance with such circulars. The Judgment relied upon therefore does not lend support to the contention urged. 18. The learned Assistant Solicitor General for India sought to rely upon the Judgment of a Division Bench of this Court in Ashok Sharda v. Small Industries Development Bank of India, Hyderabad and Others [2007 (5) ALD 866 (DB)], wherein the learned Division Bench held that the High Court could not exercise jurisdiction under Article 226 of the Constitution of India for interlocutory inventions when the main matter was pending before a competent adjudicatory forum created under a special statute. Trite to state, the present writ petition does not invite us to exercise any interlocutory invention in the matter. We are called upon to examine the conduct of the Customs authorities, which we find to be in flagrant disregard of the binding instructions issued by the Central Board under its circulars. Such uncaring violation of bin....
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....roceed as per its ordained course, due to the violation of the binding circulars by the Customs authorities. The Judgment of the Supreme Court therefore is of no guidance to us in the present case. 21. The learned Assistant Solicitor General for India also contended that the writ petition was not maintainable in view of the fact that the petitioner had already invoked an alternative remedy by filing a statutory appeal and a stay application before the CESTAT. The petitioner's stay application before the CESTAT, Bangalore is pending disposal on its file. We do not propose to pass any orders upon the stay application. All that is complained of before this Court is the breach of the expected conduct of the Customs authorities pending disposal of such stay application, in the light of the binding circulars of the Central Board. This contention is therefore liable to be rejected. 22. Lastly, the learned Assistant Solicitor General for India drew our attention to the Judgment of the Supreme Court in Ashwani Kumar Singh v. U.P. Public Service Commission and Others [(2003) 11 SCC 584]. The Supreme Court observed therein that reliance on decisions by the Courts should be on the basis ....