2016 (1) TMI 428 - HC - Customs

Waiver of pre-deposit - undue hardship - validity of order of tribunal granting partial stay - Held that - It is true that the Proviso to Section 129E of the Customs Act, 1962 empowers the Appellate Commissioner and the Tribunal to dispense with the whole or any part of the pre-deposit amount, if the Appellate Authority is of the opinion that the deposit of duty and interest demanded or penalty levied would cause undue hardship to such persons. But at the same time, while ordering a waiver of pre-deposit, the Appellate Authority is entitled to impose such conditions as it may deem fit to impose, so as to safeguard the interests of the Revenue. It is seen from the applications for waiver filed by the appellants that they are all stereotyped. The applications of all the seven appellants contain the very same submissions. There is no specific pleading to the effect that the compliance of the pre-deposit condition would cause undue hardship to the appellants. We agree that it is not necessary for the appellants before the Tribunal to repeat the very same language used in the Proviso to Section 129E parrotlike, for securing an order for waiver. But at the same time, undue hardship, being a question of fact and being a factor that would vary from case to case and from person to person, an obligation is primarily cast upon any person seeking waiver to specifically plead the circumstances, in which, he is placed. But unfortunately, none of the appellants fulfilled this most fundamental requirement, in their application for waiver. The appellants cannot even contend that they have a prima facie case. A careful look at the table extracted would show that the Tribunal decided the cases into two categories namely (i) those, in which, a duty was levied together with penalty and (ii) those where only a penalty was imposed. It is in cases where what was imposed was only penalty that the Tribunal has given some waiver. In cases where a duty is levied together with penalty, the Tribunal has rounded off the duty amount to the next higher or lower figure and directed the said amount to be deposited. Therefore, we see no reason to interfere with the order of the Tribunal - Accordingly, all the civil miscellaneous appeals are dismissed - Decided against the appellants.

Summary

Issues Involved:
1. Legality of the pre-deposit condition imposed by the Tribunal.
2. Consideration of undue hardship in waiver applications.
3. Evaluation of prima facie case by the Tribunal.
4. Alleged arbitrary exercise of power by the Tribunal.

Issue-Wise Detailed Analysis:

1. Legality of the Pre-Deposit Condition Imposed by the Tribunal:
The appellants challenged the Tribunal's order directing them to make a pre-deposit almost equivalent to or more than the duty demanded. The Tribunal had held that the appellants had no prima facie case, thus requiring them to make the pre-deposit. The High Court noted that the Tribunal's power to dispense with the pre-deposit condition is controlled by two guiding factors: undue hardship to the appellants and safeguarding the interests of the Revenue. The court emphasized that while the Tribunal can impose conditions to safeguard the Revenue, it must also consider undue hardship to the appellants.

2. Consideration of Undue Hardship in Waiver Applications:
The appellants argued that the Tribunal failed to consider undue hardship, focusing solely on the prima facie case. The High Court acknowledged that the Proviso to Section 129E of the Customs Act allows for the waiver of pre-deposit if undue hardship is demonstrated. However, the court found that the appellants' waiver applications lacked specific pleadings regarding undue hardship. The applications were stereotyped and did not provide detailed circumstances of financial hardship. Consequently, the Tribunal could not have dealt with the issue of undue hardship due to the absence of specific pleadings.

3. Evaluation of Prima Facie Case by the Tribunal:
The Tribunal's decision was based on a detailed examination of the facts, revealing that the appellants were involved in a scheme to defraud customs by diverting duty-free imported goods. The Tribunal found that advance authorizations were obtained fraudulently and that the appellants were involved in a premeditated design to evade customs duty. The High Court upheld the Tribunal's findings, noting that the appellants did not have a prima facie case. The court referred to previous Supreme Court rulings indicating that while prima facie case can be considered, it should not solely determine the waiver of pre-deposit.

4. Alleged Arbitrary Exercise of Power by the Tribunal:
The appellants contended that the Tribunal acted arbitrarily by granting different levels of waiver to different appellants without providing reasons. The High Court examined the table of pre-deposit amounts and found that the Tribunal categorized the cases based on whether duty and penalty were both levied or only a penalty was imposed. In cases with both duty and penalty, the Tribunal directed the deposit of the duty amount, waiving the penalty. The court found no arbitrary exercise of power, especially given the clear facts of the case indicating customs duty evasion.

Conclusion:
The High Court dismissed the civil miscellaneous appeals, upholding the Tribunal's order requiring the appellants to make pre-deposits. The court emphasized the need for specific pleadings of undue hardship in waiver applications and found that the Tribunal had appropriately considered the prima facie case and the interests of the Revenue. The court also found no arbitrary exercise of power by the Tribunal in differentiating between cases with duty and penalty and those with only penalty. Consequently, all connected pending MPs were also dismissed.