1985 (3) TMI 236 - HC - Central Excise

Summary

Issues:
Interim order in revenue matters, Prima facie case and balance of convenience, Jurisdiction of High Court to grant interim orders, Challenge to Tribunal's order under Central Excises and Salt Act, Discretion of Tribunal in deposit of duty demanded or penalty levied, Undue hardship and safeguarding revenue interests, Tribunal's refusal to modify order, Petitioner's assets and inability to furnish bank guarantee, Exercise of discretion by Tribunal, Balance of convenience in granting interim relief.

Analysis:
The High Court considered the issue of granting an interim order in revenue matters, emphasizing the requirement of an application supported by an affidavit demonstrating a prima facie case and balance of convenience in favor of the applicant. The petitioner, a small entrepreneur, challenged a notice from the Collector, Central Excise, regarding duty payment and penalty imposition. The petitioner argued that certain goods exempted from duty should not be included in the turnover calculation, bringing it below the exemption limit. The Court found a prima facie case in favor of the petitioner based on this argument.

The Court addressed the jurisdiction of the High Court to grant interim orders in revenue matters, refuting the argument that a Supreme Court decision restricted such jurisdiction. It clarified that the High Court retains the power to grant interim relief, especially in cases of gross violation of law or injustice. The Court highlighted the importance of discretion in granting interim relief and the necessity to consider the balance of convenience in taxation matters.

Regarding the challenge to the Tribunal's order under the Central Excises and Salt Act, the Court analyzed the discretion conferred on the Tribunal to dispense with the deposit of duty or penalty if it causes undue hardship, while safeguarding revenue interests. The Tribunal's refusal to modify its order despite the petitioner's inability to furnish a bank guarantee was scrutinized. The Court found the Tribunal's exercise of discretion erroneous as it failed to consider the undue hardship faced by the petitioner, especially in the absence of any finding on the consequences of not granting interim relief.

The Court examined the petitioner's assets and the inability to provide a bank guarantee, emphasizing the difference between a small industrial entrepreneur and a large corporation. It concluded that the petitioner's business would suffer grave private injury without interim relief. Therefore, the Court stayed the operation of the Tribunal's order, allowing the appeal to proceed without hindrance while granting interim relief to the petitioner to prevent significant harm to the business.