Calcutta High Court
Hooghly Mills Company Limited vs Union Of India (Uoi) on 22 September, 1998
Equivalent citations: 1999(108)ELT637(CAL)
JUDGMENT Samaresh Banerjee, J.
1. In the instant writ application,, the petitioners have challenged an order dated 22nd April, 1998 passed by the Commissioner of Central Excise (Appeals) disposing of the stay application directing the petitioners to deposit a sum of Rs. 10 lakhs for both the cases within 10 days from the date of receipt of the order as also the order dated 8th May, 1997 rejecting the application of the petitioner to modify the demand order passed by the Superintendent, Central Excise, Range-Ill, Howrah West Division.
2. Admitted the present petitioners have filed two appeals along with two stay applications before the Commissioner of Central Excise (Appeals), Calcutta, against the two orders of adjudication both dated 8th May, 1997, the petitioners prayed for exemption of such pre-deposit, inter alia, on the ground that the company's financial position is not sound and also on the ground that he has a strong prima facie case.
3. By the first impugned order dated 28th November, 1997 the company has been, directed to deposit a sum of Rs. 10 lakhs out of the disputed amount of Rs. l7,43,395/- and by the Second impugned order the petitioners' prayer for modification of the same has been rejected.
4. After considering the respective submissions of the parties and the writ application' and all other materials on records, I am of the view that the impugned orders cannot be sustained.
5. By the original order by which the petitioner has been directed to deposit a sum of Rs. 10 lakhs, it appears that the Commissioner (Appeals) has rejected the prayer for exemption being of the view that it is urged by every appellant that he has a good prima facie case and in reality no appellant would state that he does not have a strong prima facie case. It has been held by the said Commissioner that even if the appellant considers that he has a strong case in his favour, the same is not a ground sufficient enough to grant waiver of pre-deposit unless he is able to establish that pre-deposit would cause undue hardship to him.
6. It, thus, appears that the Commissioner of Appeals completely fell into error in not considering at all that through judicial precedence, it is now well settled that whether the appellant has got a prima facie case is also relevant consideration for determining whether the appellant can be granted exemption of pre-deposit because of undue hardship.
7. It appears that as the Commissioner wrongly held that the same will not be relevant consideration on its own, an application for modification of that order was made wherein the attention of the Commissioner was drawn to judgment of a learned Single Judge of this Hon'ble Court in the case of Bangaigaon Refinery Petrochem Ltd. v. Collector of Central Excise (Appeals), Calcutta, wherein it has been held, inter alia, that the expression 'undue hardship' would cover a case where the appellant has a strong prima facie case.
8. It appears that notwithstanding the attention of the Commissioner was drawn to such a decision, the prayer for modification was rejected on the ground that the appellant had failed to advance any argument in addition to what has already been made by them during the proceeding of the stay application nor any fresh fact has been brought.
9. It thus, appears to this Court that the same Commissioner is not even aware of the interpretation of the expression 'undue hardship' in Section 35F of the Central Excise Act as made by the different courts nor has he, understood the implication of such judicial pronouncement.
10. It is, therefore, necessary for this court once again to reiterate the legal position, in this regard as it appears to this Court that the judicial pronouncements have not percolated down to the said Commissioner.
11. Because of the several judicial pronouncements, it is no more in doubt that the expression 'undue hardship' as used in Section 35F of the Central Excise Act will cover a case where the appellant has a strong prima facie case. If an appellant can establish before the Commissioner of Appeal or before the Tribunal, as the case may be, that he has got a strong prima facie case, in such event the same itself independent of other factors would come within the relevant consideration for determining whether the order of pre-deposit will cause undue hardship or not. This is because of the reason that an assessee will suffer undue hardship if he has to pay an amount which is not legally due. It is not necessary for the appellant to show, in addition to, that the appellant has suffered financial hardship as wrongly interpreted by the Commissioner of Appeals.
12. A Division Bench of this Court in the case of J.N. Chemical (Pvt.) Ltd. v. CEGAT held that a good prima facie case would justify the dispensation of the requirement of pre-deposit of the disputed amount of duty and penalty in question. The relevant observations of Their Lordships were made in paragraph 7 of the said judgment. Their Lordships came to such a finding keeping in mind the decision of the House of Lords in Julius v. Lord Bishop of Oxford reported in (1880) 5 Appeal Cases 214 which was approved by the Supreme Court in the case of L. Hirday Narain v. Income Tax Officer, Bareilly .
13. In the case of Tata Iron & Steel Co. Ltd. v. Commissioner (Appeals), Central Excise, Calcutta Hon'ble Mr. Justice Vinod Kumar Gupta of this High Court has taken the same view. In coming to such a decision His Lordship has followed the decision of a Supreme Court in the case of Vijay Prakash D. Mehta and Jawahar D. Mehta v. Collector of Customs (Preventive) Bombay which judgment was rendered by Their Lordships of the Supreme Court while dealing with Section 129E of the Customs Act, which is pari materia to Section 35F of the Central Excises and Salt Act, 1944.
14. Same view has been expressed by the Hon'ble Justice Ruma Pal in the aforesaid case of Bangaigaon Refinery Petrochem Ltd. (supra) which has already been placed before the Commissioner of Appeals by the appellant, which was not followed by him. Same view has also be taken by our High Court in the case of In Re : American Refrigeration Co. Ltd. -. Kerala High Court in the case of V.I.T. Sea Foods v. Collector of Customs and the Allahabad High Court in the case of Hari Fertiliser v. Union of India has taken the same view.
15. It may also be recorded in this connection that for the purpose of deciding whether an appellant has got a good prima facie case, it is not really necessary for the appellant to satisfy the Court or the Tribunal or the appropriate authority, as the case may be, that his case is a guilt-aged one and is bound to succeed. It has been held time and again by the Courts that a strong prima facie case would mean that the case is an arguable one and fit for trial.
16. It appears to this Court that this aspect of the matter has not been gone into at all by the Commissioner of Appeals being totally unaware of such legal position.
17. In such view of the matter, the impugned order passed by the Commissioner of Appeals cannot be sustained and is liable to be set aside.
18. It, however, appears to this Court that the point which is sought to be urged by the writ petition as the appellant before the Commissioner of Appeals on merits prima facie is supported by judgments of the Supreme Court, namely in the case of Indian Oxygen Ltd. v. Collector of Central Excise . Therefore, it certainly can be said that the petitioner has got a strong prima facie case.
19. In such view of the matter of the writ application succeeds. The impugned orders are hereby set aside. The Commissioner (Appeals) is directed to consider the application of the petitioner for exemption of pre-deposit afresh in accordance with law and in the light of the present judgment and proceeding on the footing that the appellant has got a strong prima facie case.
20. The writ application is, thus, disposed off.
21. There will be no order as to costs.
22. Since no affidavits have been used by the respondents, the allegations made in the writ petition shall be deemed not to have been admitted by the respondents.