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2009 (8) TMI 622

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..... ase to infer whether ‘undue hardship’ shall be caused to the petitioner or not if the petitioner is directed to deposit the amount, in the present facts and circumstances and considering the prima facie case in favor of petitioner, it still cause irreparable loss to him. Therefore it has to be inferred that the impugned order directing petitioner to deposit rupees 25 lakhs as a condition for hearing his appeal is vitiated and is liable to be set aside. Accordingly, having regard to the facts and circumstances of the case the order dated 31st January, 2008 passed by the Appellate Tribunal for Foreign Exchange in directing the appellant to deposit 20% of the penalty amount within 30 days from the date of receipt of the said order is set aside and the writ petition is allowed. - 1793 of 2008 - Dated:- 19-8-2009 - Anil Kumar, J. Ms. Sangita Bhayana, Advocate, for the Petitioner. Ms. Rajdipa Behura, Advocate, for the Respondent. [Order].- The petitioner seeks setting aside of order dated 31st January, 2008 passed by the Appellate Tribunal for Foreign Exchange in appeal No. 132/2007 directing the appellant to deposit 20% of the penalty amount within 30 days from the date of receipt of th .....

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..... which was to be dispatched by the respondents. 8. The petitioner thereafter filed the appeal under Section 52 of Foreign Exchange Regulation Act, 1973 read with Section 19 of Foreign Exchange Management Act, 1999 against the order No. T-4/55-B/94 dated 26th March, 1997 bearing the file No. 41-43/B/SDE/PXA/97 passed by the Special Director of Enforcement, Mumbai along with an application under Section 52(2) Second Proviso read with Section 19(1) Second Proviso for exemption from depositing the penalty amount. Along with the appeal the petitioner also filed the copies of the medical certificate of his wife and copies of the income tax return for the year 2005 2006; 2006-2007 and for the year 2007-2008. 9. The application for dispensation from depositing the penalty amount was disposed of by order dated 31st January, 2008 directing the petitioner to deposit 20% of the penalty amount holding that the plea of the counsel for the petitioner that the adjudication order is solely based on retraction confessional statement of the petitioner without any independent corroboration, will be considered when the matter will be heard at length at the time of final disposal. It was held that the ad .....

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..... prima facie case against the petitioner or not. Relying on the copy of the appeal filed before the Appellate Tribunal it is contended that the plea has been recorded by the Appellate Tribunal is contrary to the grounds raised by the petitioner in the grounds of appeal. 12. The petitioner has also challenged the order on the ground that though the documents were filed to show the undue hardship, however, except discussing as to what is the undue hardship, the facts of the case of the petitioner has not been applied by the Appellate Tribunal. Even according to the order passed undue hardship had to be established by the petitioner and undue means something more than just hardship. The petitioner has contended that his monthly income is Rs. 10,000/ per month which is based on the Income Tax returns filed by the petitioner and the petitioner has also filed the documents pertaining to medical status of his wife. In the circumstances, it is contended that if he is earning only Rs.10,000/ per month, he cannot, deposit Rs.25 lakhs especially considering that the money is required by him on account of the medical condition of his wife and in the circumstances petitioner has discharged his b .....

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..... his appeal before the Appellate Tribunal that show cause-notice was not served on him nothing has been produced by the respondent, to show that the show cause notice was duly served on the petitioner. 17. From the grounds of appeal raised before the Appellate Tribunal, it is also apparent that the ground taken by the petitioner is that he could not be implicated and penalized on the basis of the statement of a co-accused which was also retracted when there is nothing to corroborate his statement even if it is held that retraction is of no consequence. However, what are those documents is not clear either from the order of the adjudicating authority nor the respondents have referred to the documents in their counter affidavit nor the respondents have produced the documents to show prima facie the implication of the petitioner and justification for penalizing the petitioner with a penalty of Rs.1,25,00,000/-. 18. The order of the Tribunal also proceeds on the assumption that the petitioner had made a confessional statement which was retracted which could be considered at the time of final adjudication of the appeal. The order has been passed mechanically by the Appellate Tribunal wi .....

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..... are to be considered. The said discretion is to be exercised in accordance with well settled principles for exercise of judicial discretion. 21. Some judicial decisions where provisions namely Section 129E of the Customs Act, 1962, Section 35F of Central Excise Act, 1944 have been considered by the Courts lays down. (i) In VIP Sea Foods v. Collector of Customs reported at 1989 (44) E.L.T. 606 (Kerala), it was held that Tribunal has not correctly appreciated the various relevant factors, which ought to be considered in exercising the discretion under Provision to Section 129-E. It was held that the petitioner had a prima facie case for consideration on merits. It was held that petitioner s financial circumstances undoubtedly constitute a relevant factor. (ii) Reference can next be made to a decision of the Division Bench in Keramos v. CEGAT, New Delhi reported at 2003 (153) E.L.T. 301 (Delhi). The Court while dealing with similar provision in Section 35F of Central Excise Act, 1944 noted as under : The provisions are mandatory in nature and failure to deposit the amount in question renders the appeal incompetent. The factors to be kept in view while considering an application of wai .....

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..... tained as to how many employees are working for the petitioner and how big his restaurant is or some other facts to rebut the allegation of the petitioner, which has not been done. In the circumstances, on mere denial by the respondent, the income tax returns filed by the petitioner cannot, be ignored. The petitioner has also produced medical record of his wife to show that he requires considerable amount of money for her treatment. In the circumstances if the petitioner is directed to deposit 25 lakhs of rupees, by any yardstick will cause undue hardship to the petitioner. The Tribunal has elaborated what is undue hardship but failed to apply the facts of the present case to infer whether undue hardship shall be caused to the petitioner or not if the petitioner is directed to deposit the amount, in the present facts and circumstances and considering the prima facie case in favor of petitioner, it still cause irreparable loss to him. Therefore it has to be inferred that the impugned order directing petitioner to deposit rupees 25 lakhs as a condition for hearing his appeal is vitiated and is liable to be set aside. 24. Having come to the conclusion that the impugned order is vitiat .....

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