1985 (5) TMI 172 - AT - Central Excise

Issues Involved:
1. Whether the requirement of pre-deposit of the penalty amount should be waived due to the applicant's financial hardship.
2. Interpretation of "undue hardship" under Section 129E of the Customs Act, 1962.

Issue-wise Detailed Analysis:

1. Waiver of Pre-deposit Due to Financial Hardship:
The applicant filed a stay application requesting the waiver of the pre-deposit of a penalty amount of Rs. 1,00,000/- due to severe financial hardship. The applicant argued:
- The business was closed on 1-7-1983.
- Customs had seized goods worth Rs. 1,40,000/- in June 1983, and the attachment remained without any adjudication.
- The applicant had significant liabilities amounting to Rs. 12,24,120/- to banks and Rs. 52,320/- to tax authorities.
- The applicant could not afford the pre-deposit and suggested providing a bank guarantee of Rs. 10,000/- instead.

The respondent (Customs Department) argued that the seized goods were part of a separate proceeding and should not influence the current case. They also questioned the credibility of the applicant due to a misdeclaration incident where rubbish was found instead of declared leather wallets.

The Tribunal noted that the applicant admitted to the misdeclaration but claimed it was unintentional. The Tribunal emphasized that undue hardship under Section 129E should not be based solely on financial hardship but must consider the overall context, including the prima facie case, balance of convenience, and public interest.

2. Interpretation of "Undue Hardship":
The Tribunal discussed the interpretation of "undue hardship" under Section 129E of the Customs Act, 1962. The key points included:
- "Undue hardship" should not be interpreted solely as financial hardship. It encompasses a broader context, including whether the impugned order is unjustifiable or inappropriate.
- The Tribunal referred to the Supreme Court's judgment in the case of Assistant Collector of Central Excise, West Bengal v. Dunlop India Ltd., which emphasized that interim orders should not be granted merely on financial hardship but must consider public interest and balance of convenience.

Separate Judgments:

Judgment by Member (Technical):
The Member (Technical) rejected the applicant's prayer for waiver of the pre-deposit, emphasizing that undue hardship should consider all relevant factors, not just financial hardship. The Member argued that the applicant did not demonstrate a prima facie case or balance of convenience in their favor. The financial position alone was insufficient to grant the stay.

Dissenting Judgment by Member (Judicial):
The Member (Judicial) dissented, arguing that the applicant's financial hardship was severe and undisputed. The Member emphasized that the closure of the business and significant liabilities justified waiving the pre-deposit. The Member argued that "undue hardship" should primarily consider financial difficulties, and denying the waiver would deprive the applicant of the right to appeal.

Opinion by Third Member (Judicial):
The third Member (Judicial) agreed with the dissenting opinion, emphasizing that the applicant's financial hardship warranted waiving the pre-deposit. The Member highlighted that liquidity and financial position were crucial factors in determining undue hardship.

Final Order:
Following the majority decision, the Tribunal allowed the waiver of the pre-deposit of the penalty amount subject to the condition that the applicant deposits a sum of Rs. 10,000/- within four weeks of the receipt of the order.

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