TMI Blog1989 (2) TMI 125X X X X Extracts X X X X X X X X Extracts X X X X ..... the Superintendent of Central Excise on 13/14-2-1984, which resulted in seizure of incriminating documents and the recording of a statement from Balan, the foreman of the factory. The documents seized and the statement recorded from Balan disclosed that the production in the factory far exceeded the limit of exemption under the notifications of the Central Government during the three years, 1981-82, 1982-83 and 1983-84. On the basis of these disclosures, the Superintendent of Central Excise, Angamaly Range directed the petitioner on 16-2-1984 to take out licence under Rule 173 of the Central Excise Rules (the Rules). This was followed by the seizure on 17-2-1984 of 694.500 kilograms of tread rubber "illegally" produced by the petitioner. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the list furnished by them and to pass fresh order in accordance with law. 4. After further enquiry the first respondent passed a fresh order of adjudication Ext. P5 on 26-2-1988 finding the petitioner guilty of suppression of manufacture and of clandestine removal of goods without payment of duty. Accordingly demand was made for an amount of Rs. 18,31,378.01 as excise duty, besides penalty of Rs. 2,00,000/- Penalty of Rs. 25.000/- each was imposed on the three partners and of Rs. 5000/- on an employee Mathachen. The plant, machinery, land and buildings were confiscated but option was given to redeem them on payment of Rs. 25,000/-. The tread rubber under seizure was also allowed to be redeemed on payment of Rs. 4000/-. 5. The petitione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal is seen reported at page 353 of 1988 (38) E.L.T. (Tribunal)]. The petitioner assails the order Ext. P8 as one not passed in proper exercise of the discretion vested in the Tribunal under the proviso to Section 35E of the Act. 6. Section 35F stipulates that where the decision appealed against relates to any duty demanded or penalty levied under the Act, the person appealing against the decision shall deposit with the adjudicating authority the duty demanded or the penalty levied. But the appellate authority is vested with a discretion to dispense with the deposit subject to such conditions as it may impose so as to safeguard the interests of the revenue, if it is of opinion that the deposit of the duty or the penalty would cau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te authority is not dealing with an application for stay. The deposit is required because it is a condition precedent for the entertainability of the appeal. Therefore, on such an application, the question whether there is any duty admittedly due is irrelevant. The factor made relevant is undue hardship to the appellant. Even if there is any amount admittedly due, the. appellate authority can dispense with the deposit of the duty and penalty as a pre-condition for entertaining the appeal, if insistence on such deposit will cause undue hardship to the appellant. The line of enquiry is whether only undue hardship will ensue to the appellant by insistence on deposit of the duty and penalty and not whether any portion of the amount is admitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncial position and that deposit of the duty and penalty levied will place further stress and strain on their resources. In the light of the finding entered by the Tribunal about the financial position of the petitioner, it has to be held that the direction to pay rupees three lakhs as pre-deposit was not made in sound exercise of the judicial discretion vested in the Tribunal. The primary reason which weighed with the Tribunal in making this direction was the fact that this amount was more or less admitted to be due. In placing reliance on this factor as a relevant circumstance, the Tribunal has mis-directed itself in law. This factor is extraneous in the consideration of an application under the proviso to Sec. 35F, though very much releva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... table, any direction to the appellant to make payment of such a substantial amount as rupees three lakhs will necessarily cause undue hardship to them having regard to their available resources. The Tribunal has committed an error of law in treating the question of admitted liability as a relevant factor in this matter. 12. The discretion vested in the 2nd respondent has not been exercised in accordance with law. Ext. P8 has, therefore, to be quashed. On the facts and the circumstances of the case, the condition of non-deposit has to be dispensed with and the appeals have to be heard on merits. 13. The order Ext. P8 has also clubbed together an order on the prayer for stay with a direction that if the pre-deposit is made recovery of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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