Customs, Excise and Gold Tribunal - Calcutta
Exquisite Impex Pvt. Ltd. vs Collector Of Customs on 28 May, 1986
Equivalent citations: 1987(13)ECR479(TRI.-KOLKATA), 1986(31)ELT270(TRI-KOLKATA)
ORDER S.K. Bhatnagar, Member (T)
1. This is a Stay Application filed by the applicant on 5th February, 1985 in the matter of Appeal No. C-26/85-Cal, in which the applicant has prayed that the requirement of pre-deposit of the amount of penalty may be waived. Hearings were held in this connection on 8-8-1985 and 20-9-1985. On 20-9-1985, Shri Bagaria for the applicant submitted that he has filed a supplementary petition showing the financial condition of the applicant.
He further submitted that :-
(a) the applicant had closed down the business on and from 1-7-1983;
(b) this apart, the Customs had seized leather and leather goods worth, according to their own seizure report, Rs. 1,40,000/-, approximately, in June, 1983 and till now the attachment order had not been vacated nor was there any notice to show cause or adjudication proceedings commenced in respect of the aforesaid goods;
(c) the financial situation of the applicant as per figures made upto July 31st, 1985 is none too good. They have got to pay the banks about Rs. 12,24,1207- as well as tax authority in a sum of Rs. 52.320/-;
(d) in the condition in which the applicant is situated, a deposit of Rs. 1,00,000/- required to be made towards penalty in terms of the order-in-appeal would cause undue hardship if insisted upon;
He, therefore, prayed that the requirement of deposit in terms of Section 129E of the Customs Act, 1962, may be dispensed with subject to his. furnishing bank guarantee, if so required, in a sum not exceeding Rs. 10,000/-.
2. Shri Chatterjee, the learned JDR submitted that he has got to verify some of the factual averments made in the supplementary petition in particular, the allegation in relation to the attachment of leather goods in a value of Rs. 1,40,000/- and the subsistence of the said attachment order till now and he prayed for 10 days' time to make such verification and file an affidavit, if necessary, in regard thereto.
3. Shri Bagaria, the learned counsel had no objection to the grant of time.
4. On 3-10-1985, Shri Chatterjee, the learned JDR, submitted inter alia, that in respect of the goods valued at Rs. 1,40,000/- under seizure by Customs, a show cause memo has already been issued and, therefore, it was his submission that these goods are subject matter of a separate proceeding and should not be taken into account during these proceedings. While he has not filed any affidavit in this regard he has made the submissions after due enquiry from the Department.
5. Shri Bagaria, the learned Counsel submitted that in view of the difficult financial position of the applicant their prayer for dispensing with the deposit of the penalty may be considered favourably. They have already filed an affidavit in this regard and it would be seen from the submissions made by them in their Stay Petition that they have suffered huge losses in business and due to several problems including labour trouble etc. their financial condition is not good and the applicant has practically no asset "and their liabilities are much more than their total assets and the applicant has no liquid resource in his hand", since the closure of his factory as aforesaid, the applicant has no business. In the circumstances in which he is placed it is almost impossible for him to pay the disputed amount.
In the circumstances, the request should be granted.
6. Shri Chatterjee, the learned 3DR submitted that this is a case of misdeclaration in respect of goods which were sought to be exported under claim for drawback. Instead of leather vallets, rubbish was found at the time of examination of the goods for export. In view of these facts and circumstances the credibility of the applicant is in question and the submissions made by him in respect "of his financial position or otherwise cannot be relied upon or given any credence.
7. At this juncture, one of us asked whether the alleged fact that rubbish was found in place of declared goods has been admitted or disputed by the appellant, Shri Bagaria, the learned Counsel, submitted that the fact that part of the consignment did not tally with the declarations made in the shipping bill and other documents, is an admitted fact. However, there was no intention of mis-declaration on their part and if he is allowed to go further into the facts and circumstances of the case he is prepared for the same. The Court observed that it would be premature to do so. We cannot go into the merits of the case at length at this stage. However, the facts and circumstances could be broadly referred to so that the matter could be considered with reference to context.
8. Shri Bagaria, the learned Counsel, submitted that in his opinion, a number of factors including prima facie case, balance of convenience and other relevant aspects could be taken into account while considering a request for the stay of an order. However, there are a number of cases which they have pleaded before the Tribunal (including three-member benches) in Which the Tribunal has not agreed to their request in this respect and has insisted upon hardship being adjudged only on the basis of financial position of the applicant. In this case also, therefore, the Tribunal should consider their prayer keeping in mind the difficult financial position shown by them.
9. Shri Chatterjee, the learned JDR, opposed the grant of stay or waiver of the pre-deposit reiterating his submission that in view of the facts and circumstances of the case the credibility of the applicant is in jeopardy and profit and loss account or balance sheet may not disclose the correct financial position.
10. It was asked by one of us whether the Department is disputing the fact that the factory was closed or was filing a counter controverting the applicant's submissions regarding his present financial position. Shri Chatterjee, the learned 3DR submitted that the Department has not made any enquiry into the financial condition of the applicant (it is hardly practicable to do so in all cases) and he is not filing any counter as such but is making his submissions on the Bar. and requests that his pleadings may be taken into account as such.
One of us enquired from Shri Bagaria, the learned Advocate, that (in view of their declared financial position) how much (maximum) amount they can deposit. Shri Bagaria replied that he has instructions to say that they are not in a position to deposit more than Rs. 10,000/- already mentioned during the last hearing.
11. (i) I observe that in this case the Applicant has not been able to show that he has got a prima facie case in his favour. He has also not been able to show that the balance of convenience was in his favour. He has also not shown that the interests of revenue would not be jeopardized if the prayer was granted. In fact, he was solely relied upon the stated financial condition to show that undue hardship would be caused if the prayer was not granted. However, in my opinion stay of an order cannot be granted merely on the basis of one factor alone and all the relevant factors including facts and circumstances of the case as a whole are broadly required to be looked into before a request for the Stay of an Order could be acceded to.
(ii) In Section 129E of CA'62 (and corresponding Section 95F of the Central Excise Act, 1944) the crucial words are undue hardship an undue means not due owing: unjustifiable: inappropriate: excessive - Chambers Twentieth Century Dictionary, 1982 Edition. Therefore, it is necessary to see whether in view of the facts and circumstances as a whole the impugned order was unjustified or inappropriate on the face of it; whether an error apparent had crept in & order was palpably wrong and whether it has apparently led to balatant mis-carriage of justice and irreparable injury was likely to be caused. It is important to note in this connection that Section 129E of Customs Act, 62 does not speak of financial hardship or even undue financial hardship but merely that of undue hardship and according to Maxwell on the 'interpretation of Statutes' (12th Edition) the primary rule is that of literal construction. To quote Maxwell -
(iii) "The first and most elementary rule of construction is that it is to be assumed that the words and phrases of technical legislation are used in their technical meaning if they have acquired one, and otherwise in their ordinary meaning and the second is that the phrases and sentences are to be construed according to the rules of grammar." 'The length and detail of modern legislation", wrote Lord Evershed M.R., "has undoubtedly reinforced the claim of literal construction as the only safe rule." If there is nothing to modify, alter or qualify the language which the statute contains, it must be construed in the ordinary and natural meaning of the words and sentences. "The safer and more correct course of dealing with a question of construction is to take the words themselves and arrive if possible at their meaning without, in the first instance, reference to case?."
The rule of construction is "to intend the Legislature to have meant what they have actually expressed.',' The object of all interpretation is to discover the intention of Parliament, "but the intention of Parliament must be deduced from the language used," for "it is well accepted that the beliefs and assumptions of these who frame acts of Parliament cannot make the law."
(iv) Maxwell goes on to say that : Omissions not to be inferred:
"It is a corollary to the general rule of literal construction that nothing is to be added to or taken from a statute unless there are adequate grounds to justify the inference that the legislature intended something which it omitted to express. Lord Mersay said: "It is a strong thing to read into an Act of Parliament words which are not there, and in the absence of clear necessity it is a wrong to do." "We are not entitled," said Lord Lareburn L.C., "to read words into an Act of Parliament unless clear reason for it is to be found within the four corners of the Act itself."
(v) From this, it is apparent that the Tribunal is not competent to add or interpolate the word - "financial" in Section 129E of C.A.'62 (or Section 35F of Central Excise Act, 1944 and the word - undue hardship should be given its normal and ordinary or natural meaning in which it is, generally, understood. Therefore, it would be incorrect to grant Stay merely because the Applicant has been able to show that financially his position was not sound at a given moment of time. In fact, undue hardship can only be judged with reference to the context provided by the facts and circumstances of the case as a whole and the relevant provisions of Jaw. The financial position is and can only be one of the considerations and not the only consideration in deciding whether the prayer of the Applicant was justified or unjustified. In fact, according to the Hon'ble Supreme Court's judgment in the case of Assistant Collector of Central Excise, West Bengal v. Dunlop India Ltd. and Ors. - 1985-19-ELT-22SC, page-23) "the balance of convenience must be clearly in favour of the making of an interim order and there should not be slightest indication of a likelihood of prejudice to the public interest. The Hon'ble Court that also observed, inter alia, 'There are several other vital considerations apart from the existence of a prima facie case. There is the question of balance of convenience. There is the question of irreparable injury. There is the question of the public interest. There are many such factors worthy of consideration.'
(vi) Clearly, the lesson to be drawn from Supreme Court's judgment is that an interim order should not be based merely on consideration of one factor only and where a host of considerations are involved all the relevant factors should be borne in mind.
(vii) In. revenue matters the Supreme Court has in fact all along held that a strong prima facie is required to be shown before a prayer for Stay could be considered favourably, as evident from the judgment of the Hon'ble Supreme Court of India in the case of Income Tax Officer, Cannanore v. M.K. Mohammed Kunhi (ITR, Volume-71, Page-822) in which the Hon'ble Supreme Court has observed inter alia -
(viii) "It is needless to point out that the power of stay by the Tribunal is not likely to be exercised in a routine way or as a matter of course in view of Die special nature of taxation and revenue laws. It will only be when a strong prima facie case is made out that the Tribunal will consider whether to stay the recovery proceedings and on what conditions and the stay will be granted in most deserving and appropriate cases where the Tribunal is satisfied that the entire purpose of the appeal will be frustrated" or rendered nugatory by allowing the recovery proceedings to continue during the pendency of the appeal."
(ix) It is this very principle which has been continued, elaborated and discussed threadbare in the case of Assistant Collector, Central Excise v. Dunlop India Ltd. and to repeat the Hon'ble Supreme Court's most important observation in the making of an interim order there should not be slightest indication of a likelihood of prejudice to the public interest and "since the law presumes that public authorities function properly and bonafide with due regard to the public interest, a Court must be circumspect in granting interim orders of far-reaching dimensions or orders causing administrative, burdensome inconvenience or orders preventing collection of public revenue for no better reason than that the Parties have come to the Court, alleging prejudice, inconvenience or harm and that a prima facie case has been shown. There can be and there are no hard and fast rules but) prudence, discretion and circumspection, are called for."
(x) Coming specifically to the question of waiver of duties and penalties under Section 129E of Customs Act, 1962 and Section 35F of Central Excise Act, it is observed that the Tribunal, itself, has come round to the view that it is proper and fair to keep the position disclosed by a prima facie case in mind while passing the appropriate order in matters in which waiver of pre-deposit has been prayed for, as evident from the Stay No. ELXSB)/105Q/84-B in Appeal No. 284/84-B in the case of Bata India Ltd., 24-Paraganas v. Collector of Central Excise, Calcutta (Stay Order No. 161-85-B). A reading of this Order shows that it is not the financial position of the Company but the admitted facts of the case which obviously led the Tribunal to grant a conditional stay. That apart, the High Court of Calcutta has in its order passed on April 4, 1985 in the case of American Refrigerator Co. Ltd., set aside an Order of the Tribunal on the ground that CEGAT had erred in as much as it had refused to go into the merits of the case and had not taken all the relevant facts and circumstances into account. To quote to Hon'ble High Court "it appears that there 'are errors of law apparent on the face of the order of the Tribunal inasmuch" as the Tribunal rejected the application without taking into consideration the relevant facts and circumstances of the case...." Hon'ble High Court went on to observe that "the Tribunal in granting exemption is bound to take into consideration the prima facie case made out by the Petitioner as also the interests of the Revenue which is substantially secured by the offer made by the petitioner."
(xi) In view of the above position it is clear that one cannot pass a Stay Order merely on the basis of a Balance Sheet (or stated financial position). In fact, if we do so, we will be reducing ourselves to the level of Accountants and will be determining the question arithmatically rather than judicially. The Calcutta High Court has deprecated the practice of proceeding in Stay matters mechanically and on technical grounds. Therefore, whichever way we look at it, from the point of view of construction of Section 129E of Customs Act, 1962 (Section 35F of Central Excise Act) or from the point of view of the criteria required to be exercised while granting Stay in exercise of inherent powers the totality of facts and circumstances is required to be taken into account to arrive at a just and fair order. Applying this principle and keeping the aforesaid observations of the Hon'ble Supreme Court and the Hon'ble Calcutta High Court in mind I find that in the instant case the Applicant has nothing to show beyond its claim of financial difficulty. On the contrary, the Respondent has questioned the very credibility of the Applicant and specifically Urged that the facts and circumstances of the case may be borne in mind. The admitted fact in the instant case is that rubbish was sought to be exported in the garb of goods declared in the. Shipping Bills. The fact of misdeclaration having been admitted by the Applicant is, in fact, not in dispute (and intention is a different matter). The prima facie case is, therefore, evidently against the Applicant and not in favour of him and in view of his own declared precarious financial condition, the balance of convenience is also not in his favour but that of the Revenue. Indeed, it is obvious that if the financial condition of the Applicant is as load as made out the Customs will find it very difficult to- realise the penalty even if they succeed. It is also nobody's case that the same error apparent had crept in or that the order was patently bad in law and/or that a blatant mis-carriage of justice was involved. Therefore, looking to the facts and circumstances of the case as a whole I consider that the grant of Applicant's requests would be against public interest.
12. I, therefore, reject the Applicant's prayer.
13. The Petition for waiver of pre-deposit and grant of Stay Order, is accordingly dismissed.
Sd/-
S.K. BHATNAGAR/17-10-1985 MEMBER (TECHNICAL) M. Gouri Shankar Murthy, Member (J)
14. Much as I would not like to, I have no option, regrettably, except to dissent from the Order my learned Brother is proposing in this application to dispense with the deposit of penalty only in a sum of Rs. 1,00,000/- (Rupees one lakh only), in terms of Section 129E of the Customs Act, 1962,(hereinafter the Act).
15. Indisputably, the applicant had averred in a supplementary petition duly supported by an affidavit that
(a) the applicant had to close down its factory permanently on and from 1-7-1983 owing to losses suffered in business;
(b) owing to seizure of its accounts and books for the years - 1981-82 to 1983-84 - by the Income-Tax authorities, the annual balance sheets of the applicant company could not be prepared right from 1981-82;
(c) the cash in hand is no more than Rs. 6,499.92 only, while, amongst other liabilities, the dues to the Banks, by themselves, amount to Rs. 14,24,120/-;
(d) on or about 13-6-1983 (Annexure 'B1 to the Supplementary petition), the finished stock of the applicant valued by the preventive officer at Rs. 1,40,000/- (but valued by the applicant at Rs. 2,87,875.00) had been seized and attached in terms of Section 110(1) of the Act, and in these circumstances, requiring the applicant to deposit an amount of Rs. 1,00,000/- towards penalty as a condition precedent to the hearing of his appeal would cause the applicant undue hardship and, accordingly, prayed such pre-deposit be dispensed with subject to furnishing a bank guarantee in a sum of Rs. 10,000/-in terms of the proviso to Section 128E of the Act. If the deposit is not dispensed with, the applicant would be denied its right to file an appeal and have it heard.
16. On 20-9-1985, it was additionally submitted for the applicant, as per our Order of that date dictated in open Court, that the attached goods were neither released nor a notice to show cause issued till that date, Shri Chatterjee, J.D.R., for the Respondent, submitted that he has got to verify some of the factual averments made in the supplementary petition - in particular; the allegation in relation to the attachment of leather goods and the subsistence of the said attachment order. He, accordingly, prayed for ten days' time to make such verification and file an affidavit, if necessary. Accordingly, the application was directed to be listed for hearing on 3-10-1985.
17. On 3-10-1985, Shri Chatterjee had not filed any affidavit controverting any of the allegations in the supplementary petition. He merely submitted that a notice to show cause was issued in regard to the attached goods and hence the attachment was the subject matter of a separate proceeding. He did not disclose the date when the notice was issued. Nor did he file a copy of the notice to support his submission that the attachment was the subject matter of separate proceedings or any affidavit whatsoever, controverting any of the averments in the supplementary petition. His sole submission in regard to the financial condition of the applicant was that the averments made by the applicant in that regard are unworthy of any credence because this is a case of misdeclaration in regard to goods sought to be exported under a claim for drawback and, instead of leather wallets (the declared goods), rubbish was found at the time the goods were examined. On a query, the counsel for the applicant submitted that while it is true that a part of the consignment did not answer the description in the declaration, there was never any intent to misdeclare and he is prepared to argue. We were, however, not prepared to hear his submissions in this regard.
18. In the premises, one can hardly come to the conclusion that the averments made by the applicant in regard to "undue hardship" on the basis of the closure of the applicant's factory or the attachment of his goods on 13-6-1983 are not made out. One cannot be heard to say that the allegations made in an affidavit solemnly sworn are unworthy of credence notwithstanding that they are not denied or controverted by a counter affidavit or established to be untrue in cross-examination of the deponent, just because the deponent was alleged to have been guilty of a misdeclaration, which is the subject matter of the appeal yet to be heard.
19. Nor does my learned Brother assume to be so. He does not, any-where in the course of the Order he proposes, find that the applicant's ; financial condition is such that it will not cause him undue hardship if he were required to deposit the amount demanded. Quite to the contrary, he concedes that the applicant is not financially sound ("in the instant I case, the applicant has nothing to show beyond its claim of financial difficulty" - p.6 ante). He, however, proceeds to decide the issue on the grounds that -
(a) "undue hardship" occurring in the proviso to Section 128-E of the Act is not merely the financial capacity or liquidity or the inability of the applicant to deposit the amount of duty or penalty required to be deposited but includes a host of other considerations like for e.g. the existence of a prima facie case, the balance of convenience, and the prejudice that will be caused to the Revenue in case the deposit is dispensed with; and
(b) on a consideration of these aspects, as distinguished from "financial hardship", the requirement of a deposit of penalty in a sum of Rs. 1,00,000/- does not deserve to be dispensed with.
In sum, he comes to the conclusion that the deposit of the aforesaid amount cannot be dispensed with, regardless of the applicant's financial position.
20. In the Tribunal, we had occasion to construe S. 35F of the Central Excises and Salt Act, 1944 or S. 82A of the Gold (Control)'Act, 1968 (in pari materia with Section L28E of the Act) in, (to cite only a few of such cases}
(a) order in an application for dispensing with the deposit in Appeal No. 133/83-NRB (Tribhuvandas Bhimji Zaveri v. Collector of Customs and C.E. - N.R. Bench of Two Members - unreported);
(b) order No. 368/1984-A dt. 29-5-1984 in Application No. ECKSB) 332/84-A in Appeal No. ED(SB)693/84-A Spencer & Co. Ltd., Madras v. Collector of C.E., Madras - by a Bench of three Members - unreported;
(c) Brima Sugar Ltd. v. Collector of Central Excise dated 27-2-1985 by a Bench of three Members - reported in 1985 (20) ELT 384;
(d) Modi Gas & Chemicals v. Collector of C.E., Meerut - dt.17-5-1985. Bench of three Members - reported in 1985 (21) ELT 558;
(e) Parasmal Solanki v. Collector of Customs dt. 30-4-1985. Bench of three Members - reported in 1985 (21) ELT-704.
All the aforesaid decisions are binding on us and one cannot depart from the ratio thereof on one's own, whatever reasons one may have to disagree with them.
21.(a)In the case of Spencer & Co. - adverted to at item (b) in the para supra - the existence of a good case prima facie for the applicant as well as prejudice in case the deposit was not dispensed with were pleaded in the application as well as in the submissions made before us. We refrained from going into the existence of either of these aspects and dismissed the application solely on the ground that the applicant is affluent enough to deposit the amount demanded (Rs. 8.83 lakhs) and consequently the deposit thereof would not cause undue hardship to the applicant. An application for special leave under Article 136 of the Constitution of India against our order was dismissed by the Hon'ble Supreme Court with the observations -
(V.D. Tulzapurkar and D.P. Madan, 33) "We are in agreement with the contention of the Counsel for the Petitioner that the expression 'undue hardship' occurring in the proviso to S.35F of the Central Excises and Salt Act, 1944, would include consideration, inter alia, of the aspect of liquidity possessed by the assessee. We are not inclined to take the view that the impugned order gives any indication that aspect has been completely ignored as was contended by the Counsel. With these observations, the Special Leave Petition is dismissed."
(b) In another decision of the Hon'ble Supreme Court in a writ appeal reported in 1985 (19) ELT 22 (Asstt. Collector of Central Excise v. Dunlop India Limited) it was observed, inter alia, that where matters of public revenue are concerned, it is of the utmost importance to realise that interim orders ought not to be granted merely because a prima facie case has been shown. The Hon'ble Court had further observed, in continuation, "More is required. The balance of convenience must be clearly in favour of the passing of an interim order and there should not be the slightest application of prejudice to public interest".
(c) It will be observed, straightaway, that our refusal to consider the existence of a prima facie case in the Spencer case or the prejudice that may be caused to the Applicant therein, if a deposit were not dispensed with or our insistence upon a scrutiny of the financial ability of the applicant in a consideration of "undue hardship" did not result in the grant of special leave to appeal, if our construction of the aforesaid expression was wrong. Quite to the contrary. It was the liquidity that was categorically laid down as the acid test of "undue hardship".
(d) What then is liquidity? In Black's Law Dictionary (5th Edition) "liquidity" was defined to mean "the Status or condition of the person or a business in terms of his or its ability to convert assets into cash" and "liquid" was itself said to mean substantial working capital. However, construing the expression "financial non-viability" occurring in Section 72-A of the Income Tax Act, 1961" the Hon'ble Supreme Court in (1983) 4 SCC 392 (C.I.T. v. Mahindra & Mahindra - per Tulzapurkar 3) cited with approval the incidents of "financial viability" furnished by NCAER (National Council of Applied Economic Research) in a study of industrial sickness in 1979, thus - "Financial viability consists of three inter-dependent elements of equal emphasis and weight, viz., profitability, liquidity and solvency, which are represented by cash profit or loss, net working capital, and net worth respectively". "Liquidity" is therefore to mean and imply "net working capital".
(e) Again, it cannot be, forgotten that the observations in the Dunlop case were made in the context of interim orders of stay upon recovery of revenue in Writ petitions, where the Court is unfettered by any statutory provision mandatorily requiring a deposit of the amount of duty or penalty to be made on paid of rejection of an appeal itself (AIR-1971 SC-2280-Navin Chandra v. C.B.E.C.) and specifying the criterion that circumscribes an exercise of discretion in dispensing with it.
(f) The distinction between the grant of stay of recovery of an amount in dispute in a writ petition or other Civil proceeding and dispensing with a statutory condition requiring a deposit of the disputed amount as a condition precedent for hearing an appeal is obvious. In the former, the Writ Petition or other Civil proceeding is maintainable regardless of a stay upon recovery. An order of stay may, however, be made if the circumstances warrant. Ordinarily, a stay is granted if there is a prima facie case for the Petitioner, or the balance of convenience is in favour of the grant of stay and no prejudice to the Respondent is likely to be caused in the matter of recovery, in case the Writ Petition or other Civil proceeding is ultimately dismissed. Even in such a case, the order of stay upon recovery of the disputed amount may be conditional to secure the interests of the Respondents. In' the latter case, however, the maintainability of the appeal itself is conditional upon a deposit of the accounted amount, unless it is dispensed with in an exercise of discretion by the appellate authority. While the right of appeal is not unfettered, the removal of the clog on the right of appeal is equally not left to the unguided or untrammeled discretion of the appellate authority. Unless the deposit is made or dispensed with in accordance with the statutory requirements, the appeal itself is in peril of rejection. The deposit, unless dispensed with, is relatable to the maintainability of the appeal itself - the appeal remains infructuous till it is ultimately rejected - whereas a stay of recovery in any other case, like for e.g. a Writ Petition, is interlocutory in nature in a proceeding otherwise maintainable.
(g) While the Hon'ble Supreme Court in the Dunlop case is concerned with a stay-on recovery of revenue, quasi-judicially determined to be due, merely because of prejudice, inconvenience or the existence of a prima facie case, the provision we are to construe, it is important to remember, provides for a recovery of the duty or penalty, as the case may be, by way of the mandatory deposit thereof as a pre-requisite for an appeal - a deposit that can be dispensed with conditionally, on being satisfied that such deposit would cause undue hardship. Even if such deposit is dispensed with, an order to that effect does not proprio vigore, operate as a stay upon recovery, unless, the Tribunal, in an exercise of ancillary or incidental powers, orders a stay specifically.
(h) This being so, can the criteria for the grant of stay by an interlocutory order in a proceeding, otherwise maintainable, be applicable and if so, to what extent, in the exercise of discretion, statutorily circumscribed, in dispensing with a mandatory requirement of deposit as a condition precedent for the maintainability of an appeal? To put it differently, if the identical criteria were applicable, where was the need for a statutory provision requiring a deposit to be made as a condition precedent for the hearing of the appeal - a deposit that can be dispensed with only for "undue hardship". And if "undue hardship" means precisely any or all of the criteria for the grant of stay by an interlocutory order in a proceeding otherwise maintainable, where was the need to prescribe that as the only relevant consideration, even more so, when the Tribunal has, indisputably, ancillary or incidental power to grant stay in appropriate cases? (Income Tax Officer, Cannanore v. Mohd. Kunhi - 71 ITR 822) - AIR 1969 SC 430), A legislative provision is not a superrogation. It cannot be reduced to a mere exercise in futility by a construction, to mean exactly what could have been even without that provision.
(i) Again, "in interpreting an act of Parliament, you are entitled and in many cases bound to look to the state of the law at the date of passing the Act; not only the common law but the law as it then stood under previous Statutes, in order properly to interpret the statute in question. (Fletcher Moulton L.J. enunciating the Rule in Heydon's case in Macmillan v. Dent - (1907) 1 Ch. 107, 120-extracted in Crais on Statute Law - Seventh Edition - 1971). Is it too much to presume that the reasons for prescribing deposit statutorily as a condition precedent for the hearing of the Appeal -a deposit that can be dispensed with, if it would cause undue hardship - are, perhaps, identical with those that prompted the Hon'ble Supreme Court in the Dunlop case 1985 (19) ELT 22 S.C. to deprecate the indiscriminate grant of stay in revenue matters in Writ and other Civil proceedings just because of a prima facie case, inconvenience or prejudice? If this were so, are we justified in construing an expression in the statute to mean and imply nothing but a consideration of such aspects that would have been germane, prior to the enactment of Section 128E of the Act, in the grant of stay in a Writ or other Civil proceeding - the existence of a prima facie case - balance of convene et al?
22. It was for the aforesaid reasons, amongst others, that we had held in the cases cited at (c), (d) and (e) supra that such aspects of the case may be relevant for the grant of stay of recovery, by means of an interlocutory order in an appeal or other civil proceeding are not germane for a consideration of the question of fulfilment of condition relatable to the maintainability of the appeal itself. This apart, in our opinion,
(a) if the existence of a prima facie case or inconvenience or prejudice in themselves cannot justify the grant of stay order in a writ petition under Article 226 of the Constitution 1985 (19) ELT 22 - the Dunlop case they lose all relevance in the context of a mandatory requirement of a deposit statutorily prescribed as a condition precedent for maintainability of an appeal;
(b) in the context in which it occurs, "undue hardship" is inextricably linked to the mandatory deposit and cannot be any hardship un-relatable to the deposit or the pecuniary difficulties in making the deposit; and
(c) if, on the contrary, existence of a prima facie case or the balance of convenience are the factors to be taken into consideration for dispensing with the deposit, nothing prevented the legislature from enacting to the effect straightaway rather than resort to an expression of an obscure import to convey its meaning. One cannot, however, read those factors into the expression "undue hardship" in the context in which it occurs, in the absence of a clear legislative intent to Include them within the ambit of the said expression.
23.(a)Citing Maxwell, my learned Brother comes to the conclusion that the Tribunal cannot "add or interpolate the word 'financial' and the word undue hardship should be given its normal and ordinary or natural meaning in which it is generally understood-In fact, undue hardship can only be judged in the context provided by the facts and circumstances of the case as a whole and the relevant provisions of law".
(b)While it is true that one may not ordinarily read into a statute words that are not there (like in a case where the words used are clear and unequivocal and admit of only one meaning), it is equally axiomatic that every word in the statute has to be given a meaning and statutory language is not read in isolation but in its context. The words in any statutory provision are to be understood in the context in which they occur nor in the context of the facts of any particular case). It is only when one has understood the meaning of the words in the particular context in which the legislature had thought fit to use them, that one can apply one's understanding of the statutory language to such of the facts and circumstances of the case as may be strictly relevant in the context of the legislative mandate. The factors that may be generally relevant in the grant of stay in a proceeding otherwise maintainable need not, necessarily, be material in dispensing with a statutorily prescribed mandatory prerequisite of a deposit that is decisive of the maintainability of the proceeding'- itself.
(c) In terms of the provision, what is it to be dispensed with any why? It is the deposit of the duty demanded or penalty levied and not the impugned order. It is the deposit that" is to be dispensed if, in the opinion of the Tribunal, "the deposit of duty demanded or penalty levied would cause undue hardship". It is not the impugned order that causes the undue hardship but the deposit of duty demanded or penalty levied. Undue hardship is the result of a deposit - and has a nexus with it rather than the impugned order. The provision cannot be understood to mean that the operation of the order impugned is to be "dispensed with" or stayed if it appears that it will cause undue hardship for any reason whatsoever. If, on the contrary, one has" to look for "undue hardship" in the order appealed against, should not the provision provide for dispensing with the deposit if in the opinion of the Tribunal the order appears unjustified or inappropriate on the face of it or suffers from an error apparent or has resulted in miscarriage of justice. Is the expression "undue hardship" in the context in which it occurs to mean all these and not hardship in making the deposit? Is it not "often fallacious in considering the meaning of a phrase consisting of two words (like e.g. 'unfair competition') to find a meaning which each has separately and then infer that the two together cover the combination so arrived at? (Maxwell). The two together, as here, have acquired, in the context in which they occur, a special meaning of their own. Ordinarily, dictionaries, even otherwise, are somewhat delusive guides in the construction of statutory terms.
(d) Above all, if in construing the expression "undue hardship" in the context in which it occurs to mean and imply immediate pecuniary hardship in making the deposit, we are interpolating the word 'financial', are we justified in interpolating prima facie case, balance of convenience, etc?
(e) Where is the question of "reducing ourselves to the level of accountants and will be determining the question arithmetically rather than judicially", when "liquidity" has necessarily to be looked into in terms of the decision of the Supreme Court in the Spencer case. If we have to look into balancesheets for ascertaining "liquidity", we have by all means to do it. A judicial determination of issues that arise requires expertise in many a speciality - form, more often than not, accountancy to forensic medicine and the science of handwriting.
24. (a) Amongst the cases decided by the Tribunal and adverted to in Para (7) supra, those specified at (a) and (b) were prior to the decision in the Order No. 161/85-B dated 22-2-1985 in Stay No. ED(SB) 1050/84-B in Appeal No. 281/84-B (Bata" India Ltd. V. Collector of Central Excise). The rest were subsequent. It is not correct, therefore, to say that the Tribunal "has come round to the view" that the prima facie case assumes primacy and "it is not the financial position of the company but the admitted facts of the case which obviously led the Tribunal to grant conditional stay". On a perusal of the decision, it would appear that the attention of the' Bench was not invited to the earlier decisions of the Tribunal as well as the order dated 30-10-1984 of the Hon'ble Supreme Court in the Spencer case aforesaid. It would also appear that it was conceded for the respondent that the existence of a prima facie case was a relevant consideration in dispensing with a deposit, on the ground that "when the Department (Revenue) applies for stay it was itself requesting that it had a prima facie case. Therefore, he submitted that it would not be proper for the Department to urge that at the stage of stay application prima facie case should not be looked into at all". The submission, in my view, ignores the distinction between a stay that is ordinarily granted in a writ or other civil proceeding and dispensing with a statutory requirement of a mandatory deposit for "undue hardship". When the Revenue, as an appellant, apply for stay of operation of an order under appeal, it is not a prayer for dispensing with a mandatory deposit. The Revenue, as an appellant, are not required to make any deposit and there is no question of dispensing with any such deposit for "undue hardship" for the Revenue. Nor is there any condition of securing the interests of the respondent while dispensing with a mandatory deposit. While, therefore, the existence of a prima facie case is relevant for the grant of stay of operation of the order under appeal, it is not so for the purposes of S.35F of the Central Excises and Salt Act, 1944 (= Section 128E of the Act). The decisions cited for the applicant before the Bench (37 ITR 267, 86 ITR 699 etc.) are one and all, decisions in cases where the question was the grant of stay upon recovery, rather than those where a mandatory deposit, statutorily prescribed, has to be dispensed with.
(b) A Careful perusal of the order of the Calcutta High Court in reference American Refrigerator Co's case reveals -
(i) the Petitioner's case was that there was an accumulated loss of Rs. 65.64 lakhs as on 30-4-1984 and as a result thereof there was great hardship for which the petitioner should be granted exemption from the deposit of about Rs. 10 lakhs;
(ii) a sum of Rs. 8 lakhs was due to be refunded to the petitioner and the petitioner was prepared to undertake not to withdraw that amount pending the hearing of the appeal;
(iii) it was the aforesaid considerations that weighed with the Hon'ble High Court, and not, if one may say so the existence of a prima facie case. For a fact, the Hon'ble High Court did not go into that issue at all in directing that the deposit may -be dispensed with and recovery stayed;
(iv) besides, the attention of the Hon'ble High Court was not invited, as would appear from a perusal of the order, to the decisions of the Supreme Court in the Spencer case and the Dunlop case cited above;
(v) nor can the entire order be construed to mean and imply that the deposit cannot be dispensed with even when there is, in evidence, substantial loss and the deposit, if insisted' upon, cannot be possibly made, just because the applicant has no case, prima facie. As already observed, the Hon'ble High Court decided the issue only on the pecuniary aspect and did not go into the existence of prima facie case. The decision of the Calcutta High Court is one in favour of dispensing with the deposit in case the deposit would result in immediate pecuniary hardship. The decision cannot be read as if despite immediate pecuniary hardship in the making of the deposit the existence of a prima facie case is decisive in dispensing with it.
25. (a) Nor does the decision of the Allahabad High Court in 1955 (20) ELT 243 support any such view. All that the Hon'ble High Court observed (in repelling the contention of the respondent that the Hon'ble High Court had ceased to have any jurisdiction to grant interim orders in view of the Supreme Court's decision in the Dunlop case) was that in the exercise of its extraordinary jurisdiction under Article 226 the Courts have not ceased to have jurisdiction to grant interim orders in view of the ratio of the Dunlop case. As observed by the Hon'ble Court, "the only declaration of law which can be said to be binding in respect of interim orders is that it is not only the prima facie case on which an interim order should be granted in taxation matters but the Court must further consider if there was balance of convenience in favour of the petitioner" in Civil proceedings.
(b) Insofar as Section 35F of the Central Excises and Salt Act (S. 128E of the Act) was concerned -
(i) it was found, for a fact, that the Tribunal had indeed considered the undue hardship in making the deposit and dispensed with the deposit of the entire amount demanded provided that 25% of the duty demanded is deposited and a bank guarantee was furnished for the balance;
(ii) on a writ petition filed, the High Court held that the Tribunal had not considered the refusal of the Bank and directed the Tribunal to reconsider the application for modifying its earlier order keeping in view the fact that the State Bank of India would not furnish a guarantee unless cash is deposited;
(iii) the Tribunal held that it did not see any reason to modify its earlier order on the ground that although the petitioner had shown losses in the balance sheet, an amount of Rs. 5,72,000/- shown as sundry debts was not explained and the petitioner had failed to show that if the State Bank of India was insisting upon a cash deposit, the petitioner had approached any other Bank;
(iv) the petitioner once again filed another writ petition which was disposed of by directing him to approach the Tribunal once again and place the relevant material to establish if there were any assets available with him;
(v) in pursuance of the order of the Hon'ble High Court the petitioner filed another application, disclosing certain facts to prove the petitioner's inability to comply with the order of the Tribunal requiring a deposit to be made and a guarantee to be furnished;
(vi) no counter affidavit was filed by the Department;
(vii) the Tribunal, however, relying upon the aforesaid Dunlop case again held that sufficient sympathy has been shown to the petitioner and it was not possible to grant any more indulgence;
(viii) the High Court held that the allegations in the affidavit that the petitioner had no assets from which he could deposit 25%. or could furnish a guarantee stood unrebutted and further observed that the Tribunal obviously did not "appreciate the import of the words 'undue hardship' to the applicant occurring in the proviso to Section 35F. Nor was there any finding in the order as to what would happen if the interim order is not granted in favour of the petitioner. It was further observed that in the absence of any finding on undue hardship, the exercise of discretion by the Tribunal is obviously erroneous. On the facts stated, the High Court was of the view that in case an interim order is not granted then the entire business which is on a small scale would come to a standstill and consequently the High Court thought it to be a fit case where the power under Article 226 could be exercised on the principles laid down by the Supreme Court in the Dunlop case.
(c) It would be observed that the Hon'ble High Court has nowhere found fault with the Tribunal for not having considered the existence of a prima facie case. On the contrary, the entire purport of the order was that the Tribunal had failed to consider the immediate pecuniary difficulties faced by the petitioner in compliance with the Tribunal's order after consideration of the undue hardship that would be caused to him in the light of his financial position.
26. Even assuming that the existence of a prima facie case is a consideration relevant for dispensing with the deposit under Section 128E of the Act, does it mean that even if the applicant happens to be unable in view of his financial condition to make a deposit of the duty demanded or penalty levied, as the case may be, such deposit cannot be dispensed With? In other words, where the appellant has no prima facie case, should we refuse to dispense with deposit of the duty or penalty, as the-case may be, although it may be that he is. not in a position financially to make the deposit? If we cannot refuse to dispense with the deposit notwithstanding the absence of a prima facie case, in a case of proven financial hardship, does it not mean and imply that undue hardship is only the financial hardship and nothing else? Should the appellant be deprived of his right of appeal in such a case just because he has no prima facie case?
27. In the instant case, it is conceded by my learned Brother that it is financially difficult, if not altogether impossible for the applicant to make the deposit, if insisted upon, of a sum of Rs. one lakh towards penalty. On the existence of a prima facie case we have ourselves not allowed the learned advocate for the applicant to have his say. When he wanted to explain as to how the applicant never had any intention to misdeclare although the goods did not answer the description in the declaration we would not hear him and how could we come to any conclusion on the existence or otherwise of a prima facie case? Prima facie case does hot mean coming to a conclusion on a mere admission without taking into account the explanation that the applicant was prepared to offer for the admission. If we are not to dispense with the deposit, the applicant says, the right of appeal that has accrued to him cannot be exercised and it will be lost. The Allahabad case cited supra is a case in point. Dispensing with the deposit is to enable the applicant who is straightened circumstances to exercise his right of appeal. The proviso cannot be interpreted to mean and imply virtually a deprivation of the right of appeal itself.
28. In the result, I for one would feel that the deposit of the penalty in a sum of Rs. one lakh should be dispensed with in this case on the applicant depositing a sum of Rs. 10,000/- only, since in my opinion the existence or otherwise of a prima facie case for the applicant is hardly of any relevance in construing the expression (undue hardship) in the context in which it occurred in Section 129E of the Customs Act, 1962. My brother is, however, of a different opinion.
29. in view of the difference of opinion between both of us, the papers may be placed before the Hon'ble President for a reference to third member in accordance with Section 1290(5) of the Customs Act, 1962, on the question of the true and correct interpretation of the expression "undue hardship" in the context in which it occurs in Section 129E(ibid) and to determine its scope and effect.
Harish Chander, Member (J)
30. I have perused the order dictated by my learned brothers Shri S.K. Bhatnagar, Member (Technical) and Shri M.G.S. Murthy, Member (Judicial). Both the learned Brothers have expressed their viewpoints at length.
31. Shri S.K. Bagaria, the learned Advocate has appeared on behalf of the applicants. He has referred to the orders passed by the learned Brothers. Shri Bagaria, the learned Advocate has pleaded that the applicants are facing acute financial difficulties. The total paid up capital of the company is Rs. 2,00,000/- and the value of the confiscated goods is worth Rs. 1,96,000/-. He has further argued that In another matter the applicants goods worth. Rs. 2,88,000/- were seized by the revenue authorities and their adjudication order is yet to be passed. Shri Bagaria, the learned Advocate pleads that the business of the company was closed down since 1st July, 1973. There is acute financial hardship and in case the applicants' prayer for dispensing with the predeposit "f the penalty amount of Rs. 1,00,000/- is not accepted, the applicants will loose the right of the hearing of appeal on ; merits. He has pleaded that in case, the applicants' prayer is rejected,; it will mean denial of justice, he has referred to the judgment of the Tribunal in the case of R.K. Containers & Steel Fabricators v. Collector of Central Excise & Customs, reported in 1986 (7) ECR 109. He has pleaded that this is a judgment of the Special Bench and the Tribunal had held that :
"'Undue hardship' is the only relevant consideration for dispensing with the mandatory deposit which is a condition precedent for the maintainability of an appeal; therefore, a prima facie case which is a criterion applicable for grant of a stay in an otherwise maintainable appeal is of no i relevance."' Shri Bagaria, the learned advocate, has referred to another judgment in the case of Modi Gas and Chemical Co. v. Collector of Central Excise, Meerut reported in 1986 (6) ECR 366 (Cegat) where the Tribunal had held that in terms of provisions of Section 35F of the Central Excises & Salt Act, 194j> speaks of a deposit as a condition precedent for the maintainability of an appeal except where the deposit would, if insisted upon, cause "undue -hardship". In construing the expression "undue hardship", one is not to loose sight altogether of the context or the setting in which it occurs. Therefore, "undue hardship" is inextricably linked with the deposit. It was held that undue hardship is nothing but grave financial difficulties, in complying with [the mandatory requirement of a deposit as a condition precedent for hearing the appeal. He has referred also to a judgment of the Tribunal in the case of Parasmai Solanki, Bangalore v. Collector of Customs, Bombay reported in 1985 (21) ELT 704.
32. Shri Bagaria, the learned Advocate, has referred to the observation of learned Brother Shri G.S. Murthy in para No. 8 of his order wherein he had referred to the judgments of the Hon'ble Supreme Court in the case of Spencer & Co; Ltd. Madras v. Union of India, Asstt. Collector of Central Excise v. Dunlop India Ltd. He has also referred to para No. 8 of the judgment of learned Brother Shri S.K. Bhatnagar. He has also observed that "the Tribunal should consider their prayer keeping in mind the difficult financial position shown by them."
33. Shri Bagaria, the learned Advocate, has pleaded that it is a case of undue hardship and the Tribunal should dispense with the pre-deposit of the penalty amount and grant a stay.
34. Shri A.K. Chatterjee, the learned J.D.R. has pleaded that the applicant has no prima facie case. The applicant's financial hardship should not be taken into consideration. He has referred to a judgment of the Tribunal in the case of Bata India Ltd. v. Collector of Central Excise, Calcutta reported in 1986 (23) ELT 234, where the Tribunal had held that "a prima facie case may be looked into on application for dispensing or stay of recovery, thereof".
35. Shri Chatterjee, learned J.D.R., has referred to the Order-in-Original, and has argued that the description of the goods shown on the invoice was leather wallets 10,000 pieces. He has also referred to page 10 of the Order-in-Original and has laid special emphasis on para No. Ml which was the statement of Shri P.N. Tudu, Appraiser and has been reproduced. He has pleaded that the value of the goods confiscated is just Rs. 25.000/- whereas the applicant has inflated the sum of Rs. 1,96,000/-.
36. Shri Chatterjee, the learned Departmental Representative has pleaded that the Bench should appreciate the totality of the circumstances, and the applicant's request for the dispensing with the pre-deposit of the penalty amount, should be declined. He has pleaded for the rejection of the Stay Application.
37. Shri Bagaria, the learned Advocate has pleaded that even prima facie, the applicant has got a good case. He has argued that in the present matter both the Members viz. Member (Technical) as well as Member (Judicial) agreed to the conclusion that the applicant is having financial hardship, but the learned Technical Member Shri S.K. Bhatnagar has rejected the request of the applicants for dispensing with the pre-deposit on the ground that prima facie the applicant has got no case.
38. Shri Bagaria, the learned Advocate, has argued that the totality of the circumstances has to be seen and the applicants is having undue hardship on account of his poor financial position, the Tribunal should dispense with the pre-deposit of the penalty and grant the stay.
39. After hearing both the sides and going through the facts and circumstances of the case I would like to observe that the applicant's business stands closed from 1st Duly, 1983, and balance sheet of the company for the years 1981-82 to 1983-84 could not be prepared due to seizure of the account book by the Income-Tax Authority!
40. In para No. 2(c) of the order of Brother Shri M.G.S. Murthy, he has mentioned that the applicant is having cash in hand and is not more than Rs. 6,499.92 only while, amongst other liabilities, the dues to the Banks, by themselves, amount to Rs. 14,24,120/-.
41. The Hon'ble Supreme Court in the case of Spencer & Co. Ltd., Madras v. Union of India had observed as under :
"We are in agreement with the contention of the counsel for the Petitioner that the expression 'undue hardship' occurring in the proviso to Section 35F of the Central Excises and Salt Act, 1944, would include consideration, inter alia, of the aspect of liquidity possessed by the assessee. We are not inclined to take the view that the impugned order gives any indication that aspect has been completely ignored as was contended by the Counsel. With these observations, the Special Leave Petition is Dismissed."
42. The Hon'ble Supreme Court in the case of Asstt. Collector of Central Excise v. Dunlop India Ltd. reported AIR SC 330 Vol. 72, 1985 March 855/1985(19) ELT 22 (SC) had held that -
"13. No counter has, however, been filed. Shri F.S. Nariman, learned Counsel, however appeared for the respondent. We do not have slightest doubt that the orders of the learned single judge as well as Divisional Bench are wholly unsustainable and should never have been made. Even assuming that the company had established a prima facie case, about which we do not express any opinion, we do not think' that it was sufficient justification for granting the interim orders as was done by the High Court. There was no question of any balance of convenience being in favour of the respondent-Company. The balance of convenience was certainly in favour of the Government of India. Governments are not run on mere Bank. Guarantees. We notice that very often some courts act as if furnishing a Bank Guarantee would meet the ends of justice. No governmental business or for that matter no business of any kind can be run on mere Bank Guarantees. Liquid cash is necessary for the running of a Government as indeed any other enterprise. We consider that where matters of public revenue are concerned, it is of utmost importance to realise that interim orders ought -not to be granted merely because a prima facie case has been shown. More is required. The balance of convenience must be clearly in favour of the making of an interim order and there should not be the slightest indication of a likelihood of prejudice to the interest. We are very sorry to remark that these considerations have not been borne in mind by the High Court and interim order of this magnitude had been granted for the mere asking. The appeal is allowed with costs."
43. The Tribunal in the case of R.K. Containers & Steel Fabricators v. Collector of Central Excise & Customs reported in 1986 (24) ELT 400 has held that 'undue hardship' is the only relevant consideration for dispensing with the mandatory deposit which is a condition precedent for the maintainability of an appeal; therefore a prima facie case which is a criterion applicable for grant of a stay in an otherwise maintainable appeal is of no relevance. Para No. (e), (f), (g) are reproduced as under :-
"(e) The distinction between grant of stay of recovery of an amount in dispute in a proceeding, which is otherwise maintainable, and dispensing with a statutory condition requiring a deposit of the disputed amount, as a condition precedent for hearing an appeal, is obvious. In the one case, the proceeding is maintainable, regardless of an interlocutory stay upon recovery, which may be granted allunde in exercise of incidental or ancillary powers. In the other, maintainability of the appeal itself is conditional upon a deposit of the disputed amount, unless it is dispensed with. This being so, the criteria applicable for the grant of a stay by an interlocutory order, in a proceeding otherwise maintainable, cannot be applicable to the exercise of discretion, statutorily circumscribed in terms of Section 35F, for dispensing with the mandatory requirement of deposit as a condition precedent for the maintainability of the appeal itself. Were it not so, Section 35F need not have been enacted, seeing that in every appeal, stay could be granted in exercise of the ancillary or incidental powers of the Tribunal, when there exists a good prima facie case or it is in the interests of balance of convenience, etc. The statutory provision in Section 35F- cannot be interpreted so as to import all such considerations as may be relevant in the grant of stay upon recovery into dispensing with the deposit in terms of Section 35F. If 'undue hardship' means precisely any or all the criteria for the grant of stay by an interlocutory order in a proceeding otherwise maintainable, where was the need to prescribe that as the only relevant consideration-, even more so when the Tribunal has, indisputably, ancillary and incidental powers to grant stay in an appropriate case?
(f) In the context in which it occurs, 'undue hardship' is inextricably linked to the mandatory deposit and, therefore, it cannot be any hardship unrelatable to the deposit or the pecuniary difficulties in making the deposit, since it is the deposit of the duty demanded or penalty levied would cause undue hardship.
(g) In the premises we are not inclined to hold that we have to look into the existence of a prima facie case in a consideration of 'undue hardship' in terms of Section 35F of the Act."
44. In view of the Hon'ble Supreme Court's judgment in the case of Spencer & Co. Ltd., Madras v. Union of India, I am of the view that liquidity of the applicant is very relevant. There may be a situation that the applicant's financial position is not good and prima facie he has got no case. If the Court has to take a view in granting the stay about prima facie case, then the applicants will loose the right of the hearing of appeal on meats, and their appeal will be rejected for non-compliance of the provisions of Section 129E of the Customs Act, 1962.
45. In view of the above discussion, I agree with the conclusion of learned Brother Shri M.G.S. Murthy, Judicial Member. I dispense with the pre-deposit of the penalty amount of Rs. 1 lakh on the condition of applicant, depositing a sum of Rs. 10,000/- (Rupees ten thousand only)
46. The matter will now go to East Regional Bench, Calcutta for passing order in accordance with Section 129C(5) of the Customs Act, 1962.
Sd./-
(Harish Chander) Member (Judicial) FINAL ORDER
47. Following the majority decision, the request for waiver of the pre-deposit of penalty amount is allowed subject to the condition that the applicant deposits a sum of Rs. 10,000/- only within four weeks of the receipt of the order.