Once Court Orders Release Of Bank Guarantee Furnished By Trader, Customs Dept Can't Hold Back Compliance And Direct Adjustment In Demand Order: Delhi HC

The Delhi High Court has made it clear that once a court of law directs the Customs Department to release the bank guarantee furnished by a trader, the Department cannot turn around and say that the amount will be adjusted towards the final demand order.A division bench of Justices Prathiba M. Singh and Dharmesh Sharma were dealing with the writ petition moved by a firm importing gold jewellery. The firm had availed the benefit of an exemption Notification, which it claimed granted the benefit of NIL rate of Basic Customs Duty.However, the authority directed the Petitioner to submit a Bank Guarantee and Bond for an amount equivalent to 100% of the differential BCD.The said order was challenged by the Petitioner and in appeal, the goods were directed to be released, subject to accepting 20% duty.Thereafter, Petitioner sought finalization of the assessment. Since the same was not done, it approached the High Court. A division bench in its December 14, 2023 order directed the Department to release the Bank Guarantee with interest.The Department thereafter passed the final assessment order raising demands and imposing penalties and it directed that the amount be adjusted towards Petitioner's Bank guarantee.The Petitioner sought to challenge the demand and contended that the Customs is guilty of dereliction as the bank guarantee is not released till date.At the outset, the High Court observed, “the Division Bench judgment had to be complied with and the Customs Department could not hold back compliance thereof by directing adjustment in the final order. Such a course of action would not be permissible.”It directed the Bank Guarantee of the Petitioner to be released within eight weeks, along with the interest.In its order, the Court also noted that the counter affidavit filed by the Department's counsel was also silent on compliance of the Division Bench order. Moreover, the reply affidavit filed by the Commissioner of Customs also did not take into consideration the December 2023 judgment.The Court said this is a “serious lapse” on part of the authorities and ordered, “Such lapses ought not to be repeated. If the Bank Guarantee along with interest is not released, the official/officer concerned shall be personally responsible for the same.”In conclusion, the Court ordered release of bank guarantee and permitted the Petitioner to file an appeal challenging the demand after filing requisite pre-deposit.Appearance: Mr. Kishore Kunal, Ms. Runjhun Pare, & Mr. Jayesh Sitlani, Advs. for Petitioner; Mr. Satish Aggarwala, Sr. Standing Counsel for Indirect Taxes, Department of Revenue for R-1.Case title: M/S Om Gems And Jewellery v. Deputy Commissioner Of Customs (Import) Air Cargo Complex Nscbi Airport & Ors.Citation: 2025 LiveLaw (Del) 85Case no.: W.P.(C) 6218/2024Click here to read order

Once Court Orders Release Of Bank Guarantee Furnished By Trader, Customs Dept Can't Hold Back Compliance And Direct Adjustment In Demand Order: Delhi HC

Kapil Dhyani

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