The Collector has the discretion to dispense with the requirement of cash security under Rule 206(3) of the Central Excise Rules, 1944, in appropriate cases.

By consent of parties, the writ petition itself is taken up for final disposal.

2.The petitioner claims to be a registered small scale industry manufacturing springs and coils out of raw materials supplied by the 3rd respondent for ultimate use in Government of India projects. It states that as per the terms of the agreement between the petitioner and the 3rd respondent, goods manufactured by the petitioner will have to conform to the prescribed standards and delivery or clearance from the factory would be made only after inspection by the Officers of the 3rd respondent and not before.

3.On 8-9-1989, the Officers of the 1st and 2nd respondents made an inspection of the petitioner's factory premises and they seized goods which were in the factory apparently on the ground that it has not been entered in R.G. 1 register. The petitioner herein filed W.P. 12612 of 1989 in this Court for quashing the proceedings culminating in the preparation of the mahazar dated 8-9-1989 relating to the seizure and in that writ petition, the following order was made:-

"Heard the counsel on both sides for some time. The learned Additional Central Government Standing Counsel on instructions states that if the petitioner approaches the 1st respondent with appropriate application for release of the goods and expressing his willingness to pay appropriate excise duty, the 1st respondent will release the goods in terms of Rule 206 of the Central Excise Rules, 1944. To this course, Mr. Shriram Ponchu, learned counsel appearing for the petitioner has no objection. Accordingly, on application by the petitioner and on payment of appropriate excise duty, the 1st respondent will release the goods in terms of the abovesaid Rule 206, within three days." *

4.On 5-10-1989, the petitioner wrote to the Collector of Central Excise that it is prepared to pay appropriate duty on the seized goods as per the order of the High Court and the duty amount will be paid under protest. By reply dated 6-10-1989, the Deputy Collector (Prevention) informed the petitioner that pending investigation, the petitioner can seek provisional release of the seized goods in terms of Rule 206 of the Central Excise Rules as per the directions of the High Court, Madras. The attention of the petitioner was also drawn to the provisions of Rule 206, under which a person seeking a release is required to execute bond with security as may be intimated. On 19-10-1989, the petitioner wrote back stating that the goods in question may be ordered to be released to it in terms of Rule 206 subject to verification on inspection and it being a small scale industry, a lenient view may be taken and the petitioner may be permitted to obtain release on payment of duty and execution of a bond. It is thereafter the impugned orders dated 24-10-1989 had been issued by the Deputy Collector (Prevention) under which the petitioner was informed as follows:-

"Collector has ordered provisional release of the seized goods subject to execution of prescribed B. 11 Bond for the full value of the goods seized with 25% cash security of the amount of the bond. Further the goods are dutiable and appropriate duty has to be paid at the time of clearance." *

5.Learned counsel for the petitioner submits that when W.P. No. 12612 of 1989 came up for hearing, learned Additional Central Government Standing Counsel on instructions had stated that if the petitioner approaches the 1st respondent with appropriate application for release of the goods and expressing his willingness to pay appropriate excise duty, the 1st respondent will release the goods in terms of Rule 206 of the Central Excise Rules, 1944. After having taken such a stand, it is not open to the respondents to insist upon the execution of a bond or to demand deposit of 25% of cash security of the amount of the bond. Secondly, he would submit that the goods were not fully manufactured and they were only semi-manufactured and therefore, the liability to enter in R.G. 1 r