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Issues Involved
1. Whether the cost of the manuals imported along with the software diskettes should be included in the cost of the diskettes or assessed separately. 2. Whether the Tribunal erred in directing pre-deposit of duty and penalty without considering the plea of limitation. 3. Whether the pre-deposit requirement imposed by the Tribunal causes undue hardship to the appellant. Detailed Analysis 1. Inclusion of Manuals' Cost with Diskettes The primary issue revolves around whether the cost of the manuals imported along with the software diskettes should be included in the cost of the diskettes or assessed separately. The appellant had split the value of the manuals and diskettes to benefit from a lower duty rate applicable to printed materials. However, the Collector of Customs clubbed the value of the manuals and diskettes, levying a higher uniform duty rate. The Tribunal found that the manuals were essential for the marketing of the diskettes and were a compulsory supply, thus justifying the clubbing of their values. The Tribunal noted that the appellant had deliberately split the values and entered into a financial arrangement with the suppliers to benefit from the lower duty rate. This practice was found to be a mis-statement and suppression of facts, leading to the conclusion that the manuals should be included in the value of the diskettes. 2. Plea of Limitation The appellant contended that the Tribunal failed to consider the plea of limitation while directing the pre-deposit. The learned single Judge dismissed this argument, stating that the question of limitation was intricately connected with the facts alleged by the parties and did not require a separate finding at the interim stage. On appeal, this court upheld the Tribunal's decision, noting that the Tribunal was only required to take a prima facie view of the matter and not examine every ground of challenge in detail. The Tribunal had given substantial relief to the appellant by reducing the pre-deposit amount to roughly half of the total demand. The omission to consider the limitation issue did not invalidate the Tribunal's order. 3. Undue Hardship Due to Pre-Deposit Requirement The appellant argued that the pre-deposit of duty and penalty would cause extreme hardship. The Tribunal had considered the financial capacity of the appellant and found it to be a profit-making concern with only cash flow problems. The Tribunal directed the pre-deposit of only 50% of the total demand, which was not deemed to cause undue hardship. This court agreed, stating that the Tribunal had balanced the interests of the exchequer and the appellant. The court emphasized that the Tribunal's discretion in such matters should be exercised judicially but found no error or perversity in the Tribunal's decision. Supporting Judgments The court referred to several judgments to support its findings: - Rajendrakumar R. Shah v. Collector of Customs: This case involved a situation where the Tribunal had not applied the test of 'Prima facie case' and declined to waive the pre-deposit based on the conduct of the party. The court found this distinguishable as the appellant in the current case did not assert financial incapacity but rather cash flow problems. - U.P. Lamination v. Union of India & Others: The Allahabad High Court granted interim relief based on the small scale of the business and lack of rebuttal from the department. This was not applicable as the appellant in the current case did not demonstrate financial incapacity. - Bongaigaon Refinery & Petrochem Ltd. v. Collector of C. Ex. (A), Calcutta: The Calcutta High Court held that a strong prima facie case could imply undue hardship. However, the Tribunal in the current case found no strong prima facie case in favor of the appellant, justifying the pre-deposit requirement. - R.K. Organisation v. CEGAT: The Madhya Pradesh High Court found that the Tribunal should consider the limitation issue. However, this court did not find it necessary for the Tribunal to address every ground at the interim stage. Conclusion The appeals were dismissed, with the court extending the period for making the deposit by another four weeks. The Tribunal's decision to club the value of the manuals and diskettes, its handling of the plea of limitation, and the imposition of a 50% pre-deposit were all upheld as reasonable and legally sound.
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