TMI Blog2006 (1) TMI 138X X X X Extracts X X X X X X X X Extracts X X X X ..... favour of the Tribunal to dispense with the deposit to any extent if the tribunal is of the opinion that the requirement of deposit of the amount would cause undue hardship to such a person and the discretion is made subject to the tribunal ensuring to safeguard the interest of the revenue by imposing commensurate conditions on the appellant depending upon the facts and circumstances of the case. 3.Section 129E of the Customs Act, 1962 reads as under : "129E. Deposit pending appeal of (duty and interest) demanded or penalty levied : Where in any appeal under this Chapter, the decision or order appealed against relates to any (duty and interest) demanded in respect of goods which are not under the control of the customs authorities or any penalty levied under this Act, the person desirous of appealing against such decision or order shall, pending the appeal deposit with the proper officer the (duty and interest) demanded or the penalty levied. PROVIDED that where in any particular case, the Commissioner (Appeals) or the Appellate Tribunal is of opinion that the deposit of (duty and interest) demanded or penalty levied would cause undue hardship to such person, the Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal that the appellant-assessee had a strong prima facie case is erroneous, contrary to the records; that the observation itself is not tenable; that the Tribunal has not properly appreciated the law laid down in this aspect of the matter in the cases decided by the Supreme Court in Priya Blue Industries Ltd. v. Commissioner of Customs, 2004 (172) E.L.T. 145 (S.C.)], as also Assistant Collector of Central Excise v. National Tobacco Company of India Ltd. [1978 (2) E.L.T. (J416) (S.C.), that the Tribunal has not shown its awareness and has not applied its mind to the requirement of the second part of the proviso viz., the duty cast on the Tribunal while ordering pre-deposit to ensure the interest of the Revenue is not put to jeopardy by imposing commensurate conditions on the appellant; that granting a total waiver of the liability of Rs. 2,52,17,948/- is a total arbitrary and perverse order and is liable to be set aside; that the view taken is clearly in the teeth of the ratio laid down by the Supreme Court in the case of Vijay Prakash D. Mehta v. Collector of Customs [1989 (39) E.L.T. 178 (S.C.) = (1988) 4 SCC 402] that the Tribunal has also not followed the dictum of the Sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of proviso to Section 129E of the Act; that the Tribunal has not found on fact that the requirement of pre-deposit as mandated by the statute would cause undue hardship if it has to be enforced; that the Tribunal has merely proceeded on the premise and that too on an erroneous assumption that the appellant before it has a strong prima facie case and that in itself justifies the dispensing with the pre-deposit in its entirety. Learned Counsel submits that the Tribunal has totally given a go-by to the aspect of safeguarding the interest of the revenue; that it has not even shown its awareness to this aspect and that the discretion under the proviso is exercised as though it was the bounden duty of the Tribunal to pass orders for total waiver of the pre-deposit amount; that notwithstanding the law laid down by the Supreme Court in the cases referred to supra as also in terms of the decision of this court in the case of Commissioner of Central Excise, Bangalore-III v. McDowell Company Ltd. [2005 (186) E.L.T. 145 (Kar.)], the Tribunal has not shown its awareness to the requirement of proviso to Section 129E of the Act that the impugned order is a totally whimsical and arbitrary ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal and no interference is called, for and therefore the writ petition deserves to be dismissed. 16.Learned Counsel for the respondent would also submit that the Tribunal has merely followed the ratio of the ruling of the Division Bench of the Allahabad High Court in the case of ITC Ltd. v. Commissioner (Appeals) of Customs Central Excise [2005 (184) E.L.T. 347 (All.)]; that the concept of hardship does not necessarily mean only facing financial hardship; that it is wide enough to include other hardships in the sense even when a assessee is financially capable of making the pre-deposit, a waiver can be granted if the assessee has a strong prima facie case and if the Tribunal has only followed such a ruling and ratio which the Allahabad High Court had laid down after examining the case in the light of this aspect. It cannot be said that the Tribunal has committed an error, much less any illegality warranting interference by this court in exercise of jurisdiction under Articles 226/227 of the Constitution of India. 17.Sri Shivadass, learned Counsel for the respondent by drawing attention to the decision of this court in the case of McDowell (supra) submits that the matter was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... project itself with any clarity or precision. There is scope in every case for the assessee to contend that he is entitled for waiver of entire pre-deposit amount and the revenue to contest this position saying that it is otherwise. 21.One interesting feature that becomes obvious on an examination of the case law is that the dispensation concession under the proviso which can only be an exception to the rule of pre-deposit, on the other hand has become the rule and in every appeal/case pre-deposit waiver requirement is inevitably invoked and also waived to any extent or to a total extent. 22.The understanding of the words 'undue hardship' occurring in the proviso, is interpreted so wide that it can virtually give a go-by to the very provision of Section 129E of the Act introduced in the statute by the legislature.The phrase undoubtedly has to be understood as including a strong prima facie case in favour of the assessee. This court, had occasion to consider this aspect, of the matter in the case of McDowell Company Ltd. (supra), strongly relied upon by the learned counsel for the Revenue, and interpreted this concept, holding that mere existence of a prima facie case in it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to seek appropriate relief before the Apex Court only if they are aggrieved with the ratio of Priya Blue Industries case (supra). As the assessment had been finalized in the present case and parts of the cellular phones have been given the benefit of exemption and, the revenue did not challenged (sic) the order of assessment, hence, it cannot be reopened by raising fresh ground by invoking Rule 2(a) of the Interpretation Rules to hold that the goods imported did not have essential characteristics of the final products. The assessee has carried out several process to bring the product into existence, hence, prima facie the item cannot be considered to be cellular phones. The revenue's contention that the appellants have not pleaded financial hardship and that they should be directed to pre-deposit the amount is not a ground to direct them to pre-deposit as they have strong prima facie case on merits, hence waiver of pre-deposit has to be granted in the light of the judgment of the High Court of Judicature at Allahabad rendered in the case of ITC Ltd. (supra). The appellants have strong prima facie case in their favour on merits and therefore full waiver of pre-deposit of the disput ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount involved is huge. It is not the lip sympathy of the Tribunal which can fulfil the statutory requirement of ensuring the safeguard of the interest of the revenue, but a concrete order indicating the manner in which the interest of the revenue is in fact safeguarded by imposing commensurate conditions. 28.The phrase 'undue hardship' which occurs in the proviso to Section 129E where the rule is pre-deposit of the amount that is disputed in the appeal, has to receive the meaning in the context in which it occurs viz., in the context of the requirement of the pre-deposit. In all tax matters, the lis between the revenue and the assessee is about the tax liability which again is in terms of the amount the assessee has to pay in favour of the revenue. The difficulty arises to an assessee because of this liability and not for other reasons. The concept of undue hardship in the context of taxing statutes and occurring in a provision like the pre-deposit provision under Section 129E can only be linked to the financial hardship that the assessee faces if the assessee has to comply with the pre-deposit requirement and cannot be anything else. Unless an assessee pleads the financial hard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng failed to show any awareness to the aspect of safeguarding the interest of the revenue and the respondent-assessee not having made out any cause for exercising the discretion under the proviso, the application should have been rejected and nothing else. However, Sri Devhadass fairly submits that, if the respondent, is directed to deposit 75% of the amount in dispute and to furnish bank guarantee for the balance amount to safeguard the interest of the revenue and assuming that the respondent has made out some hardship only on the premise of the prima facie case but not conceding the same, it should safeguard the interest of the revenue also while granting some relief to the assessee and on such compliance the Tribunal may be directed to proceed to consider the appeal of the respondent, on merits. 32.In this view of the matter and with the failure on the part of the respondent to plead in this regard, there was nothing before the Tribunal which was required to be considered by the tribunal for the purpose of consideration of the aspect of any undue hardship, existence of which alone would have authorize the Tribunal to dispense with the pre-deposit requirement. However, in view ..... X X X X Extracts X X X X X X X X Extracts X X X X
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