Madras High Court
M/S.Visaka Industries Limited vs Customs on 14 February, 2012
Author: M.Jaichandren
Bench: M.Jaichandren
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 14.2.2012
CORAM
THE HON'BLE MR.JUSTICE M.JAICHANDREN
Writ Petition No.2094 of 2012
M/s.Visaka Industries Limited
rep. by its Company Secretary
Mr.K.V.Soorianarayanan
Manickanatham Village
Paramathy P.O.,
Namakkal District 637 207 ... petitioner
Vs.
1. Customs, Excise and Service Tax
Appellate Tribunal (South Zonal Bench)
No.26, Haddows Road
Chennai 600 006
2. The Commissioner of Customs & Central Excise
No.1, Foulk's Compound, Annai Medu
Salem 636 001 .... Respondents
This writ petition is filed under Article 226 of the Constitution of India praying for the issuance of a Writ of Certiorarified Mandamus to call for the records comprised in stay order No.813/2011 dated 8.12.2011 on the file of the first respondent, quash the same and consequently direct the first respondent to hear the appeal without insisting the pre-deposit and pass order in accordance with law.
For petitioner : Mr.N.Venkatraman
senior counsel for
Mr.Mohammed Shaffiq
For respondents : Mr.V.Sundareswaran
CGSC for R2
O R D E R
This writ petition has been filed praying that this Court may be pleased to issue a writ of Certiorarified Mandamus to call for the records relating to the stay order No.813/2011, dated 8.12.2011, on the file of the Customs, Excise and Service Tax Appellate Tribunal, (South Zonal Bench), Chennai, the first respondent herein, and quash the same and consequently, direct the first respondent to hear the appeal filed by the petitioner, in Appeal No.E/423&422/09, without insisting on the petitioner making the pre-deposit and to pass appropriate orders, on merits and in accordance with law.
2. It has been stated that the petitioner is a holder of Central Excise Registration No.AAACV7263KXM003. The petitioner is a manufacturer of Asbestos Cement Sheets, classifiable under the sub-heading 6811 of the Central Excise Tariff Act, 1985, using raw materials, like, cement, fly ash, cotton, wood pulp, etc.
3. It has been further stated that the petitioner was issued with a show cause notice, dated 7.4.2008, proposing to demand an amount of Rs.15,37,57,177/-, towards the Central Excise Duty on the Asbestos Cement Sheets cleared by the petitioner, during the years 2003-04 and 2004-05, on the ground that they have wrongly availed exemption Notification No.6/2002, dated 1.3.2002, during the above periods, by accounting bogus/excess fly ash receipts.
4. It has been further stated that, based on the investigation conducted, in view of the statements obtained from M/s.Natesan Engineers and Contractors and M/s.Natesan construction products and on the basis of the information provided by the Superintending Engineer, M/s.Mettur Thermal Power Station, and as per the procedures laid down by the Government, for the purpose of availing the exemption notification, the second respondent had come to the conclusion that the petitioner had not used the required percentage of fly ash i.e., 25% or more in manufacturing the Asbestos Cement Sheets. Therefore, a show cause notice had been issued proposing recovery of duty amount, along with interest and also proposing imposition of penalty, under Section 11AC of the Central Excise Act, 1944. The petitioners had stated, in its reply, inter alia, that the allegations made in the show cause notice were based on presumptions and assumptions. The ratio of the raw materials used in the manufacture of Asbestos Cement Sheets is as per the rules and regulations, applicable to the petitioner. The fly ash used in the manufacture of Asbestos Cement Sheets had been purchased from the various Thermal Power Stations in the States of Tamil Nadu and Andhra Pradesh, either by allotment orders made in favour of their company, or from other allottees of fly ashe, through regular transporters.
5. It had also been stated by the petitioner that it had been filing periodical returns to the second respondent Department. The officers attached to the various wings of the department had visited the petitioner company's units, on a regular basis. Therefore, nothing had been suppressed from the department, at any point of time, as all the relevant records had been scrutinised by the departmental officers.
6. It had been further stated that the averments made in paragraph 2.07 of the SCN, alleging non-payment for the quantum of fly ash to be received from M/s.Natesan Engineers and Contractors had no significance. The documents relied on by the department cannot be taken as dependable evidence, as they are third party documents and therefore, they cannot be the basis for demanding the duty. The entire quantity of fly ash purchased by the petitioner had been recorded in the books of accounts and paid for by the company. Further, in the SCN there is no proposal to deny the exemption contained in the notification No.6/2002-CE, dated 1.3.2002, by the proper officer of the department. Without denying the exemption contained in the said notification, the demand made in SCN is premature and liable to be withdrawn.
7. It has been further stated that on submission of the reply to the show cause notice issued to the petitioner, the second respondent had adjudicated the matter, after giving an opportunity of personal hearing to the petitioner, on the basis of the findings given in paragraphs 22 to 29 of the Order-in-Original No.4/2009, dated 6.5.2009. The demand order confirmed an amount of Rs.13,23,85,374/- towards the Central Excise duty for the periods in question, along with the interest and penalty of an equal amount, under section 11 AC of the Central Excise Act and Rule 25 of the Central Excise Rules.
8. It has been further stated that, aggrieved by the order passed by the second respondent, the petitioner had filed an appeal before the first respondent, along with a stay application. While deciding the stay application, differing views had been expressed by the Judicial Member and the Technical Member. Therefore, the matter had been placed before the President, Customs Excise and Service Tax Appellate Tribunal (South Zonal Bench), Chennai, for the nomination of a third member. Since, the third member nominated by the President had concurred with the opinion of the Technical Member, the petitioner had been directed, by the impugned order, dated 8.12.2011, to pre-deposit an amount of Rs.4,50,00,000/-, towards duty, within six weeks from the date of the order and to report compliance of the order, to the Deputy Registrar, on 31.1.2012. Aggrieved by the said order, the petitioner had preferred the present writ petition before this Court, under article 226 of the Constitution of India.
9. Various grounds had been raised by the petitioner, in the affidavit filed in support of the writ petition, in challenging the impugned order, dated 8.12.2011, on the file of the first respondent. It has been stated, inter alia, that the second respondent had erred in directing the petitioner to make a pre-deposit for granting an order of stay, against the order demanding the payment of the Central Excise duty, by the petitioner, for the periods in question, along with the interest and the penalty. The conclusion of the second member that even if a prima facie case appears to exist, no blanket stay order can be granted, without pleading and demonstrating the existence of 'financial hardship', is erroneous, as it is a well settled position in law that the existence of a strong prima facie case is a good ground for waiver of pre-deposit.
10. It had also been stated that the said member had also erred in holding that no supporting documents had been furnished to substantiate its existence of 'financial hardship'. He had erred in holding that the burden of proof is on the assessee to prove that it had satisfied the necessary conditions to avail the benefit of exemption, when there is no violation of the conditions specified in the notification, when direct procurement of fly ash are made. Further, there is no condition in the notification stating that the manufacturer should ensure that its suppliers should maintain proper accounts. Notification No.6/2002-CE, dated 1.3.2002, in Sl.No.158, exempts goods falling under chapter No.68, in which not less than 25%, by weight of fly ash or phosphor-gypsum or both, have been used. Further, there is no prohibition for re-sale of fly ash, as there is no such condition prescribed in the notification. As such, it is clear that the second member had traversed beyond the conditions stipulated in the notification in directing the petitioner to make the pre-deposit. Similarly, the findings of the third member are also contrary to the well established position of law.
11. It has been further stated that once it is found that the end product contains 25% or more of fly ash, it would not be open to the authorities concerned to hold that the petitioner had violated the conditions prescribed in the notification. It is not open to them to investigate and to penalise the petitioner for non-maintenance of the accounts, by the suppliers of fly ash, even though it may be open to them to initiate appropriate action against such suppliers. As long as the conditions stipulated in the notification had been complied with, by the petitioner, it would not be open to the departmental authorities to direct the payment of excise duty, by the petitioner, along with interest and penalty, as found in the Order-in-Original No.4/2009, dated 6.5.2009, which has been confirmed, subsequently.
12. It had also been stated that the petitioner is bound to show only the usage and consumption of fly ash. The notification does not specify the place from where the fly ash should be procured, or the persons from whom it has to be purchased. The petitioner had fully accounted for the procurement and usage of the fly ash. As such, the departmental authorities do not have a prima facie case to direct the payment of excise duty, by the petitioner and to penalise the petitioner by imposing the penalty thereon.
13. The learned counsel for the petitioner had relied on the following decisions in support of his contentions:
13.1. In BONKAIGAON REFINERY & PETROCHEM LTD., Vs. COLLR. OF C.EX.(A), CAL. (1994 (69) E.L.T. 193 (CAL.), the Calcutta High Court had held as follows:
"31. As already seen the phrase "undue hardship" would cover a case where the appellant has a strong prima facie case. The phrase also in my view covers a situation where there is an arguable case in the appeal. In the former case the Appellate Authority should dispense with the pre-deposit altogether on the basis of the authorities referred to earlier. In the latter case the authority would have to safeguard the interest of the revenue. The Collector has not applied his mind to this aspect of the matter at all. He had to consider whether, if the deposit were waived, the interest of the revenue would be jeopardized. There was no suggestion or even allegation that there would be any jeopardy to the revenue if the pre-deposit were waived in the petitioner's case. Keeping in view the mandate that a discretionary power must be exercised in favour of the assessee unless there was good reasons to the contrary, no reason has been disclosed by the Collector for refusing to exercise his discretion in favour of the petitioner particularly when the revenue's interest was not said to be un-safeguarded. It is to be remembered that this Court, while remanding the matter back to the Collector had directed the petitioner to give an undertaking to this Court that it would not deal with or dispose of any of its assets except in the usual course of business or with the leave of the Court. This undertaking is still subsisting. The Collector did not reject this safeguard as inadequate. The demand relates to a period for the clearance had already been made. There is no question of the petitioner recovering the amount from its customers."
13.2. In GREAVES COTTON AND CO. LTD. Vs. SALES TAX OFFICER AND ANR. (1987) 67 STC 364 (ORISSA), the High Court of Orissa had held as follows:
"Keeping in view the stand of the petitioner which has been to a great extent accepted by the Commissioner, this would be a most deserving and appropriate case for grant of full stay, and in view of the difference of opinion between the two learned Judges, in my opinion, the view which is beneficial to the assessee should be accepted. I would, therefore, agree with the conclusion of Honourable Justice R. C. Patnaik and hold that the order of the Commissioner be modified and the entire amount under demand be stayed till the final disposal of the appeal by the Assistant Commissioner. The Assistant Commissioner is directed to dispose of the pending appeal before him within two months from today."
13.3. In WARDHA COAL TRANSPORT PVT LTD., Vs. UNION OF INDIA 2009 (13) S.T.R. 490 (BOM.), the High Court of Bombay had held as follows:
"8. It is not possible for us to agree with Mr. Desai. It is pertinent to note that in similar fact situation in SSV Coat Carriers Pvt. Ltd., the Tribunal has granted the prayer for waiver of predeposit. Similarly, in Kartikay Bulk Movers Pvt. Ltd. V/s. Commissioner of Central Excise, Nagpur delivered on 7-10-2008, where also the facts were somewhat similar, waiver of predeposit has been granted. Moreover, the tribunal in Sainik Mining & Allied Services Ltd.'s case (supra) has come to the conclusion that service tax liability does not arise in such cases. Learned counsel for the petitioners is right in contending that the petitioners have a prima facie case. We may usefully refer to the observation of the Supreme Court in Indu Nissan Oxo Chemicals Industries Ltd.'s case (supra), wherein the Supreme Court has observed that:-
"It is true that on merely establishing a prima facie case, interim order of protection should not be passed. But if on a cursory glance it appears that the demand raised has no leg to stand, it would be undesirable to require the assessee to pay full or substantive part of the demand......"
9. Viewed in the light of above observations, we are of the opinion that the impugned order deserves to be set aside and is set aside accordingly. Once the tribunal has granted full waiver atleast in two similarly situated cases, it would not be proper to take a different view and deny full waiver of pre-deposit. Accordingly, we direct waiver of pre-deposit of the amounts in question and stay recovery thereof pending appeal."
13.4. In RAVI GUPTA Vs. COMMISSIONER OF SALES TAX, DELHI 2009 (237) E.L.T. 3 (S.C.), the Supreme Court had held as follows:
"10. It is true that on merely establishing a prima facie case, interim order of protection should not be passed. But if on a cursory glance it appears that the demand raised has no leg to stand, it would be undesirable to require the assessee to pay full or substantive part of the demand. Petitions for stay should not be disposed of in a routine matter unmindful of the consequences flowing from the order requiring the assessee to deposit full or part of the demand. There can be no rule of universal application in such matters and the order has to be passed keeping in view the factual scenario involved. Merely because this Court has indicated the principles that does not give a license to the forum/authority to pass an order which cannot be sustained on the touchstone of fairness, legality and public interest. Where denial of interim relief may lead to public mischief, grave irreparable private injury or shake a citizens' faith in the impartiality of public administration, interim relief can be given."
14. In the counter affidavit filed on behalf of the second respondent, it has been stated that the writ petition is not maintainable, in view of the fact that the impugned order is a discretionary order passed by the first respondent, under section 35F of the Central Excise and Salt Act, 1944. The said order had been passed, by the first respondent, taking into consideration the relevant records, including the written submissions filed on behalf of the petitioner, and in view of the facts and circumstances of the case, and keeping in view the various decisions of the courts of law.
15. It had been stated that the Government of India had granted exemption from the payment of excise duty, in case of goods falling under entry 68, provided the goods in question contains not less than 25% of fly ash or phosphor -gypsum or both, by weight, vide Notification No.6/2002-CE, dated 1.3.2002, subject to the following conditions to be fulfilled by the manufacturers:
"(i) The manufacturer maintains proper account in such form and in such manner as the Commissioner of Central Excise having jurisdiction may specify in this behalf, for receipt and use of the fly ash or phosphor-gypsum.
(ii) Files monthly returns in form as may be specified by the Commissioner of Central Excise having jurisdiction."
16. It had been further stated that the petitioner had availed the exemption on the manufacture of the goods, in its factory, under the Notification No.6/2002-CE, dated 1.3.2002, under the guise of using fly ash purchased, from the Mettur Thermal Power Station, for the periods relating to the years 2003-04 and 2004-05. On 27.8.2005, the officers attached to the Head Quarters Preventive Units, Salem Commissionerate, had visited the factory of the petitioner. On verification of the documents, which are maintained by the petitioner for claiming exemption, it was found that the purchase of fly ash from the Mettur Thermal Power Station, and the relative production of the goods from the factories did not coincide, to prove the 25% of usage of fly ash in the manufacture of the goods in question, whereas the forms filed before the officer had claimed that the petitioner had used 27.91% and 26.65% of fly ash for the manufacture of the goods.
17. It had been further stated that the records relating to the purchase of fly ash had been called for. On verification of the records of the Mettur Power Thermal Power Station, it was found that the petitioner had made bogus purchase of fly ash in the name of the Mettur Power Thermal Power Station, amounting to Rs.7957.690 metric tones, relating to the year 2004-05 and 2251.311 metric tones relating to the year 2003-04. On verification from the Mettur Thermal Power Station, it was clarified, by the Superintending Engineer, vide letter, dated 10.3.2008, that, as per clause 4.0 of the terms and conditions in the issue order given to all fly ash removers, the sub-letting of the clearance of fly ash was not allowed.
18. It had been further stated that, on examination of the transporter of the fly ash, it was found that the differential amount of fly ash had been purchased from other sources. In such circumstances, a notice had been issued to the petitioner to show cause as to why the claim of exemption relating to the bogus purchase of fly ash relating, to the years 2003-04 and 2004-05, should not be disallowed. The proceedings had been initiated, within the time frame prescribed under the proviso to Section 11A of the Act.
19. It had been further stated that, after objections had been filed by the petitioner, and after affording adequate opportunity of hearing to the petitioner, the Order-in-Original, dated 6.5.2009, had been passed, considering all the aspects raised by the petitioner.
20. Aggrieved by the said order, the petitioner had preferred an appeal before the first respondent, in Appeal No.E/423&422/09. Along with the said appeal, the petitioner had also preferred an application to stay the Order-in -Original. The first respondent had passed an order, dated 8.12.2011, in stay order No.813 of 2011, by a majority of two members, asking the petitioner to pre-deposit an amount of Rs.4,50,00,000/-, towards duty, within six weeks from the date of pronouncement of the said order. It had also been stated that, subject to compliance with the said direction, pre-deposit of the balance amount of duty and interest and penalty had been waived during the pendency of the appeal.
21. It had been further stated that the stay order No.813 of 2011, dated 8.12.2011, had been passed, as per the provisions of Section 35 of the Act. The first proviso to the said section reads as follows:
"Provided that where in any particular case, the (Commissioner (Appeals) or the Appellate Tribunal is opinion that the deposit of duty demanded or penalty levied would cause undue hardship to such person, the (Commissioner (Appeals) or, as the case may be, the Appellate Tribunal, may dispense with such deposit subject to such conditions as he or it may deem fit to impose so as to safeguard the interests of revenue"
22. In view of the specific requirements to be considered by the first respondent, before passing an order of stay, the details of the financial position has to be considered. Admittedly, the petitioner had not filed any proof, before the first respondent, to prove the existence of undue hardship, for the full waiver of the pre-deposit. On hearing the petitioner relating to the aspect of pre-deposit, the first respondent had held as follows:
"10. ......... In view of the aforecited decisions, even if a prima facie appears to exist, no blanket stay order can be granted without pleading and demonstrating financial hardship. I find that both the appellants have merely stated in identical terms in the stay petitions that they would be exposed to undue financial and other hardship as their liquidity position is hopelessly bad for the present. But no supporting documents or arguments have been provided on behalf of the appellants in this regard. I also find that the order proposed above does not deal with the aspect of financial hardship.
20. After taking into account the unsubstantiated submission regarding financial hardship and after taking into account that the appellants could have at the most manufactured the impugned goods only to the extent of four times the quantity of fly ash, legally obtained by them against quota/allotment made in their name satisfying the condition on 25% fly ash content, and taking into account other attendant facts and circumstances of the case and the law laid down in the aforecited decisions of the Hon'ble Supreme Court and the Hon'ble Bombay High Court (vide citations in para 9), I direct the first appellant M/s.Visaka Industries Ltd., to pre-deposit an amount of Rs.4,50,00,000/- (Rupees Four crores and fifty lakhs only) towards duty and the second appellant M/s.Natesan Engineers & Contractors to pre-deposit an amount of Rs.4,00,000/- (Rupees Four lakhs only) towards penalty within six weeks from the date of pronouncement of the stay order. Subject to compliance with the above direction, pre-deposit of the balance amount of duty, interest and penalty shall remain waived during the pendency of the appeals."
23. As there was a difference of opinion between the members of the first respondent Tribunal, the matter had been referred to the third member, who had concluded as follows:
"28.3. It is also not disputed that the assessee was allotted a quantity of 2000 metric tones per month by the Mettur Thermal Power Station. The assessee had procured only a quantity of 7285.060 during 2003-04 even though they have paid advance for lifting 9000 metric tones. Consequently, they have claimed refund of excess amount relating to 2251 metric tones. That being the case, the reason for accounting the said quantity as having been received from Mettur Thermal Power Station is not prima facie convincing. In other words, they have received from the Mettur Thermal Power Station lesser quantity than what was accounted as received from the Mettur Thermal Power Station. The explanation offered was that the said quantity of 2251.121 metric tones of fly ash was procured from open market by Shri Santhosh Kumar. Similar claims has been made in respect of 7957.690 metric tones of fly ash accounted for the year 2004-05 in excess of what has been received from the Mettur Thermal Power Station. Though, Shri Santhosh Kumar assured to reveal the names and addresses of persons from whom fly ash was procured from "open market", he failed to do so. In the absence of evidence from procurement of fly ash by the firms of Shri Santhosh Kumar, prima facie, their claim that they supplied such quantity to the assessee cannot be accepted. The assessee and the firms or Shri Santhosh Kumar have special relationship and their failure to produce the evidence regarding their procurement puts the question mark on the receipt of quantities in excess of what was actually received by assessee on the basis of allotment by the Mettur Thermal Power Station.
29. In view of the above, I hold that the assessee (the first applicant) has not, prima facie, established the use of minimum percentage of fly ash prescribed under notification No.6/2002 and thus has not made out a prima facie case for waiver. Further, prima facie, the second applicant, without any evidence for procurement from third parties has prepared documents showing additional supply of fly ash and therefore abetted 1st applicant in wrongly availing the exemption.
30. In view of the above, I prefer to concur with the opinion of the learned Technical Member."
24. It had been further stated that the first respondent had, after taking into consideration the fact that there was no prima facie case made out by the petitioner, for granting an absolute waiver of pre-deposit, directed the petitioner to remit a sum of Rs.4,50,00,000/-, as duty. Challenging the said order, the petitioner had preferred the present writ petition before this court.
25. Per contra, the learned Central Government Standing Counsel appearing on behalf of the second respondent had submitted that the writ petition filed by the petitioner challenging the order of the first respondent directing the petitioner to make the pre-deposit of Rs.4,50,00,000/- as a condition, for the grant of the stay order is not maintainable.
26. On considering the various decisions of the courts of law, it is clear that the petitioner has to claim and show the existence of 'undue financial hardship for the grant of waiver of pre-deposit. Since, in the present case, the petitioner had not filed any document claiming undue financial hardship, the waiver of pre-deposit cannot be granted. further, in view of the fact that the petitioner had not made out a strong prima facie case in the appeal filed before the first respondent, the contentions raised by the petitioner, in the present writ petition, cannot be countenanced. As such, the writ petition is devoid of merits and therefore, it is liable to be dismissed.
27. The learned Central Government Standing Counsel appearing on behalf of the second respondent had relied on the following decisions in support of contentions:
27.1. In BENARA VALVES LTD. AND OTHERS Vs. COMMISSIONER OF CENTRAL EXCISE AND ANOTHER (2009) 20 VST 297 (SC), the Supreme Court had held as follows:
"8. It is true that on merely establishing a prima facie case, an interim order of protection should not be passed. But if on a cursory glance it appears that the demand raised has no leg to stand on, it would be undesirable to require the assessee to pay the full or a substantive part of the demand. Petitions for stay should not be disposed of in a routine matter unmindful of the consequences flowing from the order requiring the assessee to deposit full or part of the demand. There can be no rule of universal application in such matters and the order has to be passed keeping in view the factual scenario involved. Merely because this Court has indicated the principles that does not give a license to the forum/authority to pass an order which cannot be sustained on the touchstone of fairness, legality and public interest. Where denial of interim relief may lead to public mischief, grave irreparable private injury or shake a citizens' faith in the impartiality of public administration, interim relief can be given.
11. Two significant expressions used in the provisions are "undue hardship to such person" and "safeguard the interests of revenue". Therefore, while dealing with the application twin requirements of considerations i.e., consideration of undue hardship aspect and imposition of conditions to safeguard the interest of Revenue have to be kept in view.
12. As noted above there are two important expressions in Section 35F. One is undue hardship. This is a matter within the special knowledge of the applicant for waiver and has to be established by him. A mere assertion about undue hardship would not be sufficient. It was noted by this Court in S. Vasudeva v. State of Karnataka AIR 1994 SC 923, that under Indian conditions the expression "Undue hardship" is normally related to economic hardship. "Undue" means something which is not merited by the conduct of the claimant, or is very much disproportionate to it. Undue hardship is caused when the hardship is not warranted by the circumstances.
13. For a hardship to be 'undue' it must be shown that the particular burden to have to observe or perform the requirement is out of proportion to the nature of the requirement itself, and the benefit which the applicant would derive from compliance with it.
14. The word "undue" adds something more than just hardship. It means an excessive hardship or a hardship greater than the circumstances warrant."
27.2. In UNION OF INDIA AND ANOTHER Vs. ADANI EXPORTS LTD. AND ANOTHER (2007) 13 SCC 207, the Supreme Court had held as follows:
"8. It is not in dispute that the respondents have filed appeals before the Tribunal. As noted by the High Court, primary challenge in the writ petitions was to the order relating to pre-deposit. While dealing with that the High Court was not justified in going into the merits and expressing its views and thereafter remitting the matter to the Tribunal (sic adjudicating authority). Such a course was not available to be adopted."
28. In view of the submissions made by the learned counsels appearing for the petitioner as well as the second respondent, and on a perusal of the records available, and on considering the decisions cited supra, this Court is of the considered view that the first respondent Tribunal ought to have granted the relief of interim stay of the impugned order, without imposing the condition of pre-deposit, as prayed for by the petitioner, in the present writ petition.
29. Even though the first respondent Tribunal had exercised its discretionary power, Section 35F of the Central Excise and Salt Act, 1944, in granting the order of stay, dated 8.12.2011, in Stay Order No.813 of 2011, it ought to have taken into consideration the fact that the petitioner had made out a strong prima facie case in the Appeal, in Appeal No.E/423&422/09.
30. From the averments made on behalf of the petitioner, it is clear that certain issues in dispute, between the petitioner and the second respondent, have to be analysed in detail, at the time of the hearing of the appeal, based on evidence. However, in view of the materials available before this court, it could be inferred that the petitioner has a strong prima facie case in the said appeal. No doubt, it is for the first respondent Tribunal to decide the issues arising for its consideration, on merits and in accordance with law, at the time of the hearing of the appeal. As such, when a strong prima facie case has been made out by the petitioner, the first respondent Tribunal ought to have granted an order of stay, as prayed for by the petitioner, without the condition of pre-deposit, even if financial hardship had not been shown to exist or proved by acceptable evidence, as held by the supreme court, in RAVI GUPTA Vs. COMMISSIONER OF SALES TAX, DELHI 2009 (237) E.L.T. 3 (S.C.). However, in view of the fact that the interests of the revenue should also be safeguarded, the petitioner is directed to furnish a bank guarantee for a sum of Rs.4,50,00,000/-, to the satisfaction of the second respondent, within a period of fifteen days from today. On the petitioner complying with the above said condition, the first respondent Tribunal shall hear the appeal and dispose of the same, on merits and in accordance with law, as expeditiously as possible, not later than six months from the date of receipt of a copy of this order.
Accordingly, the writ petition is disposed of, with the above directions. No costs. Connected M.P.No.1 of 2012 is closed.
lan To:
1. Customs, Excise and Service Tax Appellate Tribunal (South Zonal Bench) No.26, Haddows Road Chennai 600 006
2. The Commissioner of Customs & Central Excise No.1, Foulk's Compound, Annai Medu Salem 636 001