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TMI Blog1992 (6) TMI 193X X X X Extracts X X X X X X X X Extracts X X X X ..... order unless the sum imposed by way of penalty is first deposited or unless the Board dispenses with such deposit under second proviso thereof, which reads as follows: Provided further that where the Appellate Board is of opinion that the deposit to be made will cause undue hardship to the appellant, it may, in its own discretion, dispense with such a deposit either unconditionally or subject to such conditions as it may deem fit. 3. Corresponding provision is also contained in section 35F of the Central Excise and Salt Act, 1944. 4. Rule 6A of the Adjudication Proceedings and Appeal Rules, 1974 enjoins upon the appellant to indicate his financial position including particulars regarding his income, the value of property (movable and immovable) held by him, cash in hand and cash balances in any bank, as also to submit three copies of completed order relating to income-tax and wealth-tax assessments in respect of the three years preceding the date of presentation of the memorandum, and where the assessment orders have not been completed for the said period, the returns in respect of the period for which the income-tax and wealth-tax assessments have not been completed. Sub-rule (2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmovable, including fixed assets, investments made as also the capability to arrange finances through banks) have also to be taken into consideration, as is clear from the position of the unreported judgment of the Supreme Court reproduced in para 33 of the CEGAT order in Jayashree Insulators Ltd. v . CCE 1987 (28) ELT 279 (Delhi - Trib.)(SB). As the income-tax assessment orders/balance sheet disclose, M.J. Exports (P.) Ltd., can be said to be financially sound and as such they would not financially face or suffer undue hardship if the requirement of pre-deposit of the penalty amount is not waived. For that matter, as other appellants are directors of M.J. Exports (P.) Ltd., they would also not suffer any such hardship. Even otherwise, they have also not made out a case that they would face undue hardship on account of their financial position if they are required to make pre-deposit of the penalties. 6. While the counsel appearing for the appellants does not dispute the above position, he maintained that the term 'undue hardship does not mean financial hardship alone. According to him, existence of the prima facie case alone may justify dispensation of pre-deposit of the penal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yashree Insulators Ltd.'s case (supra) has held that the expression 'undue hardship' under section 35F cannot be taken to be 'financial hardship alone'. In para 84 of its order, the CEGAT observed as under: ...Where financial hardship has been established, that should suffice for (whole or partial) wavier of pre-deposit, subject to whatever conditions the appellate authority may deem fit to Impose. Where financial hardship is not established or not pleaded, it would still be open to the applicant to justify waiver on other adequate grounds. These grounds would be the existence of a prima facie case in his favour, plus balance of convenience. This would normally happen where the applicant has shown that even on the face of it he has a case which is not merely a prima facie case as ordinarily understood, but something much stronger. ... (p. 301) 11. After going through the CEGATs order, it appears that the CEGAT arrived at the above conclusion mainly by interpreting the following judgments of the Supreme Court: (i) Dunlop India Ltd.'s case ( supra) (ii) Unreported order of the Supreme Court in the case of Spencer Co. Ltd. [SLP (Civil) No. 7762 of 1984). 12. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entral Excises and Salt Act, 1944 would include consideration, inter alia, of the aspect of liquidity possessed by the assessee. (p. 291) The above observations clearly indicate that apart from the aspect of liquidity possessed by the assessee, the expression 'undue hardship' would also include consideration of other relevant factors. 16. One view that has been expressed is that where financial hardship is not established, it would still be open to the applicant to plead for waiver of pre-deposit of the penalty on other grounds such as the existence of prima facie case plus balance of convenience, etc. It would mean that if the applicant fails to establish financial hardship first, he can thereafter still justify waiver by proving the existence of prima facie case, such a view would seem to run counter to the decision of the Delhi High Court in Uptron Powertronics' case (supra), wherein the Court has clearly held that such reverse consideration of the matter would not be permissible. Further, such a view would amount to tilting the balance always in favour of only one party. This may harm the public interest involved. 17. From the above, it is quite clear that apart fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the said account of Mr. A.T. Muwany belongs to that company itself. The stand of the appellant is not free from doubt and lack substance for the purpose. 19. As already discussed, the appellants in this case could not show that there would be undue hardship from financial point of view on account of depositing the entire amount of the penalty before their appeals are heard on merits. On the other hand, the appellants appear to be financially in a sound position to make pre-deposit of the penalty. Having regard to the appellants' sound financial condition, it cannot be said that balance of convenience lies in their favour. Nor have the appellants shown whether they would suffer irreparable injury if they are required to deposit the entire penalty amount. 20. In the above circumstances, we are of the view that there would not be any undue hardship to the appellants if they are required to pay the entire amount of penalties before their appeals are heard on merits. The appellants' applications for dispensation of pre-deposit of the penalties are rejected and the appellants are directed to deposit the entire penalty imposed on each of them vide Adjudication Order No. ADJ/SOE ..... X X X X Extracts X X X X X X X X Extracts X X X X
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