ORDER
1. This is a Miscellaneous application praying, inter alia that our Order No. 691/A dated 25.9.1985 be modified so as to reduce the amount required to be deposited in cash in terms of the said order substantially, subject to the execution of a Bond guarantee in lieu of the amount by which it is reduced and extending time for compliance in regard to the cash deposit by at least eight weeks or, in the alternative, directing the applicant to furnish an undertaking not to dispose of their assets, plant and machinery pending final disposal of the appeal.
2. The material facts requisite for appreciation of the raison d’etre for the application are-
(a) the applicant filed an appeal against an order of adjudication by the Additional Collector of Customs dated 19.6.1985 by which he directed-
(i) confiscation of the goods in question under S. Ill (d), subject to redemption on payment of a fine of Rs. 20,000/- to be realised from a bond furnished by the applicant to secure and dispense with payment in cash as a condition precedent for the redemption, release and clearance of the goods ;
(ii) enhancement of the value of the goods for purposes of assessment from D.M. 225000 to D.M. 285660 ; and
(iii) payment of the resultant increase in the quantum of duty.
(b) the applicant had, along with the appeal, preferred an application not for dispensing with the deposit of the additional duty demanded in terms of S. 129-E of the Customs Act, 1962, but for stay upon-
(i) payment of the redemption fine of Rs. 20,000/- by the enforcement and realisation of the bond executed by the applicant; and
(ii) payment of the additional duty in a sum of Rs. 1,57,076/-pending the hearing of the appeal;
(c) the applicant had filed and relied upon the balance sheets for the years 1981-82, 1982-83, and 1983-84, together with certificates from the banks. The certificates were-
(i) from the Bank of India dated 9.9.1985 showing that the balance in current account of the applicant maintained by that bank on 31.8.85 was Rs. 17,880.17;
(ii) from the United Bank of India dated 3.9.1985 showing that the balance to the debit of the applicant in Account No. 896 was in a sum of Rs. 14,45,076.04 on 31.8.1985 ;
(iii) from the Bank of Maharashtra dated 2.9.1985 showing a credit in the applicant’s account No. 14606 in a sum of Rs. 2,836.40 on 31.8.1985.
In terms of the affidavit dated 9.9.85 (with which the documents were filed) profit in sums of Rs. 39,815/-, Rs. 67.831/- and Rs. 23 038/- were earned for the years 1981-82, 1982-83, and 1983-84 respectively The accounts for the year 1984-85 were said to be yet under audit and were not filed;
(d) after-an elaborate hearing of the said application the Tribunal directed by its Order No. 691/85-A dated 25.9.1985 ; erected (i) deposit of Rs. 78.S38/-(representing 50% of the total demand to-wards duty) (ii) a bank guarantee to be furnished for the balance within eight weeks from that day The bond securing the redemption fine was also directed to be kept alive ; (e) the applicant by the instant application prays for the modification of that order as set forth in para (1) supra. 3. It is alleged, inter alia, in the instant application dated 19-11-1985 that- (a) the goods were released on the execution of- (i) a bond with a bank surety for a sum of Rs. 78,538/- (ii) personal surety for the balance from the Director of the applicant, (iii) another bond for the payment of the redemption fine ; (b) the order of the Tribunal however, directed a cash deposit of Rs 78 538/-notwithstanding that the bonds as aforesaid are directed to be continued and kept alive;
(c) the applicant does not have sufficient funds in the banks as evidenced by heir certificates, which had been overdrawn by an amount of Rs l 62 lakhs and the position deteriorated further on account of payment of wages, salary, bonus etc. to workers during Diwali.
4. Together with the application was enclosed four certificates. They are –
(a) a certificate dated 19-11-1985 from the Bank of India certifying the balance in the applicant’s Current Account No. 1513 to be a sum of Rs. 14,424.66;
(b) a certificate of the same day (i.e. in 19-11-1985) from the United Bank of India, certifying the debit of the O.D. account of the applicant (A/c No. 896) was in a sum of Rs. 20,37,084.16 on 15-11-1985;
(c) a certificate dated 19-11-85 from the American Express International Banking Corporation certifying the balance in the account of the applicant (A/c No. 1095) on 15-11-1985 to be a sum of Rs. 3,544.46 only ; and
(d) a certificate dated 19-11-1985 from the Bank of Maharashtra certifying the balance of the credit in the account of the applicant (A/c No. 14606) to be Rs. 82.70 on 15-11-1985.
5. On 11-12-1985, the counsel of the applicant filed a copy of the “latest provisional Balance Sheet” for the year ending with 30-6-1985 signed by a Director of the applicant.
6. In the hearing before us on 26-12-1985, it was urged, relying on the rulings of the Allahabad High Court in 1985(20) ELT 243 (June) (if. P. Lamination v. Union of India) and 1985 (22) ELT 301 (October) (Hari Fertilizers v. Union of India) that the earlier order may be modified in the light of the present financial situation of the applicant, as evidenced by the aforesaid Bank certificates. It was further submitted that the bond for payment of Rs. 78.53S/- cannot be directed to be kept alive notwithstanding that a cash deposit of the said amount is additionally directed to be made. The bond and the cash deposit cannot co-exist.
7. It would appear to us on the perusal of the papers and the submissions made that-
(a) the applicant had failed to produce a certificate from the American Express International Banking Corporation showing the amount |lying to the credit of the applicant in that bank when the application for stay was originally heard on 18-9-1985. It is only now for the first time that it is disclosed that the applicant has, apart from the accounts maintained with the Bank of India, the United Bank and the Bank of Maharashtra, disclosed earlier, an account with American Express International Banking Corporation as well. Had the applicant revealed the exact amount lying to his credit in the American Express International Banking Corpn. at the time the matter was heard originally, perhaps, the result would have been different. In any view of the matter the applicant had not dealt fairly with the Tribunal, even if one may not go to the extent of characterising the applicant’s conduct as suppressio veri and suggestio falsi;
(b) a comparison of the amounts lying to the credit of the applicant in the three banks on 31-8-1985 with those certified for 19-11-1985 would reveal that the applicant had utilised his overdraft facility with the United Bank of India to the extent of nearly Rs. 5,92,008.12 during the period between 1-9-1985 and 15-11-1985. This was apart from utilization of funds lying to the applicant’s credit in the other banks between 1-9-1985 and 15-11-1985. It is sought to be made out that this was all due to recurring expenditure like payment of “wages, salary and bonus” during Diwali. It is not as if such recurring expenditure could not have been anticipated and appropriate submissions made to focus on the availability of sufficient funds after meeting such anticipated expenditure even when the original application was heard on 18-9-1985. It does not, however, appear that any such submissions were made then. It is only now we are told that the overdraft facility is now overdrawn for payment of “wages, salary and bonus”. Even now, no affidavit of an appropriate officer of the applicant is filed in support of that allegation ;
(c) our earlier order was made on 18-9-1985 and could have been very well complied with soon thereafter. It is almost as if compliance with our order was the last priority and once the overdraft facility is utilised to the full, ostensibly, for other purposes, the applicant could come up with an application for modification of our earlier order. Coupled with the failure to disclose the amount with the American Express International Banking Corporation and the expenditure said to be recurring and, hence, could have been anticipated, earlier, such a conclusion is not unjustified ;
(d) S. 129E of the Act, prescribes a deposit of the amount of duty or penalty, as the case may be, as a condition precedent for the hearing of the appeal. The requirement of a deposit is relatable to the maintainability of the appeal itself. An appeal can even be rejected for failure to make the deposit unless it is dispensed with [AIR 1971 S.C. 2280-Navin Chandra v. The Central Board of Excise and Customs]. It may be dispensed with by the Collector (Appeals) or the Tribunal, as the case may be, if, in their opinion, each in an appeal before them, it would cause undue hardship to the Appellant-subject to such conditions as to security that may safeguard the interests of the Revenue [1984 (16) ELT 445 – Collector of Central Excise v. Crescent Dyes & Chemicals; 1985(21) E.L.T. 558-Modigas & Chemicals v. Collector of Central Excise ;1985(20) E.L.T. 384-Brima Sugar Ltd. v. Collector of Central Excise ; 1985 (21) E.L.T. 704-Parasmal Solanki v. Collector of Customs, Bombay}. If the conditions are not fulfilled, the appeal is liable to be rejected ;
(e) the being so, the Tribunal has, necessarily, to arrive at a decision on its own in regard to dispensing with the deposit for undue hardship untrammelled by the decision of any other quasi-judicial authority, although any such decision earlier in the same case by the first appellate forum may be duly taken note of ;
(f) in the nature of things, there could be neither a deposit nor any occasion to dispense with it in so far as the adjudication itself is concerned. The determination of the duty or penalty payable is in terms of the adjudication order and there could be no occasion for a deposit of the duty or penalty so determined or dispensing with such a deposit until after the adjudication and at the stage of the first appeal. Such accommodation as may have been granted by the adjudicating officer in the payment of differential duty or the redemption fine, in the premises, cannot, in any event, be a quasi-judicial determination to the effect that payment of the duty or penalty or redemption fine would, necessarily, cause undue hardship in terms of S. 129E of the Act, and accordingly it has been dispensed with. It can neither absolve the assessee from a deposit in terms of the said provision when he comes up in appeal against the order of adjudication nor can it predispose the appellate forum in favour of dispensing with a deposit for undue hardship. Equally, the decision of the appellate forum is not liable to criticism if less favourable terms and conditions, more in accord with the liquidity of the applicant, are thought fit to be imposed in dispensing with the mandatory requirement of the deposit of the entire amount of duty demanded or penalty levied ;
(g) the distinction between duty and penalty on the one hand and redemption fine on the other is too obvious to require an exposition. While the payment of duty and penalty are obligatory, redemption of goods ordered to be confiscated on payment of a fine is optional to the owner of the goods. There is no question of dispensing with what is, even otherwise, optional. Dispensing with a fine for redemption involves a determination of the legality of the confiscation in the first instance and if and when it i; held to be illegal, such fine that might have been imposed and paid at the option of the assesses can always be refunded. Significantly, therefore, S. 129-E does not speak of dispensing with the redemption fine;
(h) in the circumstances, it is incorrect to say that the goods were released on the execution of the bank guarantee and personal bond of the Director to secure payment of the differential duty. They were released, in fact, merely on a personal bond for the payment of the fine and the applicant had the benefit of such release without having to pay in hard cash any part of the fine. The execution of the bank guarantee and the personal bond of the Director were aliunde and intended to secure the differential duty that may ultimately require to be paid.
(i) while it may be that the adjudicating officer thought fit to accept a personal bond for 50% of the differential duty, the Tribunal’s direction to deposit that amount in cash, to secure the interests of the revenue cannot be assailed as more onerous or oppressive than the accommodation granted by the adjudication officer. The personal bond for securing 50% of the differential amount, if not necessarily and automatically discharged the moment the amount is deposited can always be directed to be discharged. 1 here is no question of the deposit and bond co-existing So also the guarantee for 50% of the duty executed earlier gets discharged when a fresh guarantee in terms of the Tribunal’s order is obtained. The Tribunal was speaking only of the continuance of the personal bond for payment of the redemption fine and not the bond for securing payment of 50% of the differential duty or the guarantee. In the premises, the order does not require any modification on that ground ;
(j) in 1985 (20) B.L.T. 243,-
(i) it was found, for a fact, that the Tribunal had, indeed, considered the undue hardship in making the deposit and dispensed with the deposit of the entire amount demanded provided that 25% of the duty demanded i s deposited and a bank guarantee was furnished for the balance;
(ii) on a writ petition filed, the High Court held that the Tribunal had not considered the refusal of the Bank and directed the Tribunal to reconsider the application for modifying its earlier order keeping in view the fact that the State Bank of India would not furnish a guarantee unless cash is deposited ;
(iii) the Tribunal held that it did not see any reason to modify its earlier order on the ground that although the petitioner had shown losses in the balance-sheet, an amount of Rs. 5,72,000/- shown as sundry debts was not explained and the petitioner had failed to show that if the State Bank of India was insisting upon a cash deposit, the petitioner had approached any other Bank;
(iv) the petitioner once again filed another writ petition which was disposed of by directing him to approach the Tribunal once again and place the relevant material to establish if there were any assets available with him ;
(v) in pursuance of the order of the Hon’ble High Court the petitioner filed another application, disclosing certain facts to prove the petitioner’s inability to comply with the order of the Tribunal requiring a deposit to be made and a guarantee to be furnished ;
(vi) no counter affidavit was filed by the Department; (vii) the Tribunal, however, relying upon the decision in 1985 (19) E.L.T. 22 (S.C.) again held that sufficient sympathy has been shown to the petitioner and it was not possible to grant any more indulgence ;
(viii) the High Court held that the allegations in the affidavit that the petitioner had no assets from which he could deposit 25% or could furnish a guarantee stood un-rebutted and further observed that the Tribunal obviously did not “appreciate the import of the words ‘undue hardship’ to the applicant occurring in the proviso to S. 35 F. Nor was there any finding in the order as to what would happen if the interim order is not granted in favour of the petitioner. It was further observed that in the absence of any finding on undue hardship, the exercise of discretion by the Tribunal is obviously erroneous. On the facts stated, the High Court was of the view that, in case an interim order is not granted, then the entire business which is on a small scale would come to a stand still and consequently the High Court thought it to be a fit case where the power under Article 226 could be exercised on the principles laid down by the Supreme Court in 1985 (19) E.L.T. 22 (S.C.).
(k) while it may be that an interlocutory order may be modified to suit the requirements of any unforeseen or unanticipated change in the facts and circumstances of the case from those that prevailed at the time when it was originally made, the question in the instant case is as to whether there has been any such change that would warrant or necessitate a modification of the earlier order;
(1) as we had already seen, ‘such change in the ways and means position of the applicant was not something that could not have been anticipated or foreseen so that the exact hardship could be assessed at the time the Tribunal made its order originally and relief granted, accordingly, even then. On the contrary, it is almost as if a situation had been contrived so as to present the Tribunal with a fait accompli so as to enable the applicant to seek a modification of this earlier order ;
(m) this apart, a cursory look at the unaudited balance sheet filed for the year ending 30-6-1985 in juxtaposition with the earlier balance sheets would reveal that-
(i) the applicant still has, on 30-6-1985, investments aggregating to Rs. 12,25,594.00 in shares (quoted and unquoted) along with National Savings Certificates ; (details in Schedule ‘B’ to the Balance Sheet for the year 1983-84) ;
(ii) the applicant had advanced to M/s. Wavell Investments, a company in which one of the Directors is interested, sums of Rs. 3,00,000 [1981-82], Rs. 1,40,000/- [1982-83], Rs. 65.000/- [1983-84]. Loans and advances for the year 1984-85-unsecured considered goods amounted to Rs. 2,80,241.62. It is not known how much of this amount was an advance to M/s. Wavell Investments, If “liquidity” is required to be considered in any application under S. 35F of the Central Excises and Salt Act [=-S. 129E of the Act] as held by the Hon’ble Supreme Court in S.L.P. No. 7762 of 1984-[M/s. Spencer & Co. Ltd., Madras v. Collector of Central Excise, Madras]-and “liquidity” is “net working capital” [(1983) 4 S.C.C. 392-C.I.T. v. Mahindra and Mahindra] or the applicants’ ability to convert assets into cash [Black’s Law Dictionary-5th Edition], how could it be ever said that the terms laid down by the Tribunal for dispensing with the mandatory requirements of deposit calls for any modification ;
(n) in the aforesaid Spencer case, when the application under S. 35F was decided by the Tribunal, we refused to consider the existence of a prima facie case, though invited to do so [Order No. 363/1984-A dated 29-5-84]. The S.L.P. was the sequel. Our refusal to consider the existence of a prima facie case or the prejudice that may be caused to the applicant, did not result in the grant of a special leave as it should have been if our construction of the said provision was erroneous. Quite to the contrary, it does not appear that the attention of the Hon’ble High Court [in 1985 (22) E.L.T. 301] was drawn to the decision of the Supreme Court in the Spencer case;
(o) even assuming that the Tribunal was in error in failing to consider the existence of a prima facie case for the applicant earlier, the fact still remains that the mandatory deposit was dispensed with on the ground of “undue hardship”. Consideration of the existence of a prima facie case is, even in terms of the decision in 1985 (22) E.L.T. 301, relevant to a conclusion on undue hardship. Prima facie case has no relevance to such terms as may be imposed once undue hardship has been found in favour of the applicant. Our failure to consider the existence of a prima facie case can hardly be made, in the premises of a grievance of.
8. In the premises, we see no reason to modify our earlier order in any respect. The applicant should comply with it within three weeks from the communication of this order till which time, we extend the time for compliance in the peculiar facts and circumstances of the case.
9. The application was totally misconceived and is, hereby, dismissed.