1991 (10) TMI 140 - AT - Central Excise

Summary

Issues:
- Waiver of pre-deposit of duty and penalty demanded from M/s. Rotex Textile Mills
- Financial hardship claimed by the applicants
- Prima facie case not being pressed by the applicants
- Consideration of financial position for waiver of pre-deposit
- Relevant legal precedents regarding undue financial hardship

Analysis:

The judgment before the Appellate Tribunal CEGAT, New Delhi involved applications for the waiver of pre-deposit of duty and penalties demanded from M/s. Rotex Textile Mills and related individuals. The applicants sought relief based on claims of undue financial hardship rather than a prima facie case. The Sr. Counsel for the applicants highlighted the financial difficulties faced by the company, referring to their sick unit status since 1987, losses incurred, and liquidity problems. The Sr. Counsel also emphasized the financial situation of an employee, Sh. Nair, as the sole earning member of his family with limited income.

On the other hand, the Ld. S.D.R. contended that the applicants' financial position did not warrant a waiver, pointing to the company's current assets exceeding liabilities and increasing income. He argued that being overdrawn with their bankers was a common aspect of commercial enterprises. The Ld. S.D.R. cited legal precedents, including a Delhi High Court decision, to support his stance on the requirement to establish a prima facie case before claiming undue financial hardship.

The Tribunal considered the submissions and legal arguments presented by both parties. It noted that the applicants did not base their waiver request on a prima facie case but on their financial situation. The Tribunal referred to previous decisions, including one involving the balance of convenience and undue hardship under Section 35F of the Central Excises & Salt Act, 1944. The Tribunal emphasized that undue hardship extended beyond financial difficulties to include a prima facie case and balance of convenience.

After evaluating the evidence and financial status of M/s. Rotex Textile Mills, the Tribunal found that the company had shown improvement and had the capacity to reduce losses. Consequently, the Tribunal ordered a partial pre-deposit of the duty demanded, requiring M/s. Rotex Textile Mills to deposit a specific sum by a set date. Additionally, the Tribunal dispensed with the pre-deposit of the penalties imposed on the individual applicants, considering them as personal penalties. The judgment concluded by setting a compliance date and disposing of the stay applications accordingly.