2011 (7) TMI 385 - HC - Customs

Waiver of pre-deposit - Second respondent had submitted that the petitioner had not raised, specifically, the ground of financial hardship , as mentioned in Section 129E of the Customs Act, 1962 - Further, no materials had been placed before the first respondent to substantiate the contentions raised on behalf of the petitioner - The application filed on behalf of the petitioner, for the waiver of pre-deposit of penalty, is bereft of facts and particulars - Even if it could be accepted that the petitioner had made certain averments regarding its financial difficulties it would not be entitled to the relief of waiver of pre-deposit of penalty, as such averments had not been substantiated with sufficient evidence - The order of the first respondent cannot be held to be erroneous and invalid only on the ground that it does not give sufficient reasons for denying the request of the petitioner, for the waiver of pre-deposit of penalty - Decided against the assessee.

Summary

Issues Involved:
1. Challenge to the impugned order of pre-deposit requirement under Section 129E of the Customs Act, 1962.
2. Allegations against the petitioner regarding duty drawback availed through fraudulent exports.
3. Consideration of financial hardship and prima facie case for waiver of pre-deposit.

Detailed Analysis:

1. Challenge to the Impugned Order of Pre-Deposit Requirement:
The petitioner challenged the impugned order dated 14.02.2011, issued by the first respondent, which directed the petitioner to make a pre-deposit as per Section 129E of the Customs Act, 1962. The petitioner sought a direction for the first respondent to hear the appeal on merits without insisting on the pre-deposit. The petitioner argued that the Tribunal did not consider the grounds raised for waiver of the pre-deposit, including financial hardship and lack of involvement in the alleged fraudulent activities.

2. Allegations Against the Petitioner Regarding Duty Drawback:
The Department alleged that the petitioner, through M/s. Maapillai Vinayagar Exports, had exported goods via 52 shipping bills and availed a duty drawback amounting to Rs. 96,36,837/-. The petitioner denied these allegations, stating that the signatures on the shipping bills were not his and that he was unaware of the export transactions. The petitioner further claimed that K. Gunasekhar was the actual individual behind the exports and the duty drawback claims, and that the petitioner had no knowledge of the irregularities committed.

3. Consideration of Financial Hardship and Prima Facie Case for Waiver of Pre-Deposit:
The petitioner asserted that it had a prima facie case and that it was not involved in the fraudulent activities. The petitioner also claimed financial hardship, as the company was managed by a sole proprietor, whose license had been suspended and later canceled. The petitioner argued that the Tribunal did not record the specific contentions and failed to consider the request for adjournment due to medical grounds.

The petitioner relied on several judicial precedents to support the argument for waiver of pre-deposit, including:
- Amitava Saha vs. CESTAT: Highlighted the need to consider financial hardship and prima facie case for waiver of pre-deposit.
- Adinath Dyeing and Finishing Mills vs. Commr. of C.EX., Ludhiana: Emphasized the Tribunal's duty to consider relevant factors like prima facie case, balance of convenience, and irreparable loss.
- Virender Kumar Yadav vs. Union of India: Stressed the importance of considering prima facie case and balance of convenience in waiver applications.

Respondent's Argument:
The respondent countered that the petitioner did not specifically raise the ground of financial hardship with supporting evidence. The respondent argued that the waiver of pre-deposit is not automatic and must be substantiated with sufficient evidence as per Section 129E of the Customs Act, 1962. The respondent cited the following cases:
- Vijay Prakash D. Mehta vs. Collector of Customs: Affirmed that the right to stay is conditional and must be exercised based on relevant materials.
- Benara Valves Ltd. vs. Commissioner of Central Excise: Discussed the need for judicial discretion in granting waivers and the importance of safeguarding revenue interests.

Court's Conclusion:
The Court concluded that the petitioner failed to show sufficient cause or reason to grant the reliefs sought. The petitioner did not substantiate the claims of financial hardship with sufficient evidence. The order of the first respondent was not deemed erroneous or invalid merely due to the lack of detailed reasons, as the petitioner did not provide specific grounds with supporting evidence to satisfy the conditions of Section 129E of the Customs Act, 1962. Consequently, the writ petition was dismissed as devoid of merits, and the connected miscellaneous petitions were closed.