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2014 (8) TMI 697 - AT - CustomsWaiver of pre deposit - Company declared as sick unit by BFIR - Held that - against a total outstanding dues of around ₹ 11.72 Crores confirmed against all the Applications a pre-deposit of ₹ 1.14 Crores would meet the ends of justice. As already mentioned above, the said amount of ₹ 1.14 Crores is around 10% of the total dues which in our opinion, would not result in any undue hardship to the Applicant, in the circumstances, when the total revenue of the Applicant is ₹ 4.06 Crores; total assets of ₹ 16.79 Crores and there is overall profit of ₹ 52.82 Lakhs for the financial year ending 31.03.2013. In the result, we direct the Applicant M/s.RSI Private Ltd. to deposit ₹ 1.14 Crores within 8 weeks - Following decision of Sagarika Acoustronics Pvt.Ltd. vs. UOI 2007 (3) TMI 723 - Supreme Court of India - Partial stay granted.
Issues Involved:
1. Waiver of customs duty and penalties. 2. Consideration of the company's status as a sick industry under BIFR. 3. Applicability of Supreme Court judgments in similar cases. Detailed Analysis: 1. Waiver of Customs Duty and Penalties: The Applicants, M/s. RSI Private Ltd., sought a waiver of customs duty amounting to Rs. 4,56,22,175/- and an equal amount of penalty under Section 112(b)(ii) of the Customs Act, 1962. Additionally, personal penalties of Rs. 50.00 Lakh were imposed on each of the company's directors, and a penalty of Rs. 10,000/- was imposed on the Authorized Representative. The total dues adjudged amounted to Rs. 11,72,44,352/-. The Tribunal initially directed the Applicant company to deposit 25% of the customs duty, i.e., around Rs. 1.14 Crores, allowing waiver of the remaining dues subject to this deposit. 2. Consideration of the Company's Status as a Sick Industry under BIFR: The Applicants approached the High Court, which directed the Tribunal to reconsider the waiver application, noting that the Tribunal did not consider the fact that the petitioner was declared a sick industry by BIFR. The High Court emphasized the need for the Tribunal to record reasons relating to the net worth of the company while disposing of waiver applications, referencing the Supreme Court's decision in Sagarika Acoustronics Pvt. Ltd. vs. UOI, which mandates consideration of a company's net worth if it is under BIFR. 3. Applicability of Supreme Court Judgments in Similar Cases: The Tribunal examined the merit of the case on a prima facie basis and noted that the Applicant company had disposed of duty-free imported materials in the domestic market without fulfilling the export obligation. The Tribunal referenced the Board Circular No.21/95-CUS, which requires a show cause notice for failure to comply with export obligations. The Tribunal also noted that the Supreme Court's decision in Sagarika Acoustronics was specific to its facts and did not establish a binding precedent applicable to all cases. Instead, the Tribunal relied on the Supreme Court's judgment in Metal Box (I) Ltd. vs. CCE, which clarified that Section 22 of the Sick Industrial Companies Act does not apply to deposits under Section 35F of the Central Excise Act, 1944. Consideration of Financial Hardship: The Applicant's Advocate argued that the company's net worth was negative, and hence no pre-deposit should be required. However, the Revenue argued that despite the company being under BIFR, the financial statements indicated sufficient revenue and assets, suggesting that the pre-deposit would not cause undue hardship. The Tribunal noted that the company's total revenue was Rs. 4.06 Crores, with total assets of Rs. 16.79 Crores, and a profit before tax of Rs. 4,62,828/- for the financial year ending 31.03.2013. Therefore, the Tribunal concluded that a pre-deposit of Rs. 1.14 Crores, which is around 10% of the total dues, would not result in undue hardship. Final Decision: The Tribunal directed the Applicant company to deposit Rs. 1.14 Crores within eight weeks and report compliance. Upon deposit, the balance dues would be waived, and recovery stayed during the pendency of the appeal. Failure to deposit would result in the dismissal of the appeals without further notice. (Operative part of the Order pronounced in the court on 08.05.2014.)
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