ORDER
D.V. Shylendra Kumar, J.
1. The Customs, Excise and Service Tax Appellate Tribunal (for short, Tribunal), is a statutory tribunal which normally functions as a second appellate authority under the provisions of Section 129 of the Customs Act, 1962, under Section 35B of the Central Excise Act, 1944 as also under the provisions of the Finance Act, 1994. The number of appeals that come up before such a Tribunal are quite numerous arising under the said three enactments and the statutory requirement to maintain an appeal before the tribunal can be found in terms of Section 129E of the Customs Act, 1962 and the corresponding provisions under the other two enactments.
2. This is a provision where under the legislature has made it a norm that the amount disputed in the appeal should be deposited pending disposal of the appeal and the first proviso to this section reduces the rigor of such insistence by allowing the discretion in favour of the Tribunal to dispense with the deposit to any extent if the tribunal is of the opinion that the requirement of deposit of the amount would cause undue hardship to such a person and the discretion is made subject to the tribunal ensuring to safeguard the interest of the revenue by imposing commensurate conditions on the appellant depending upon the facts and circumstances of the case.
3. Section 129E of the Customs Act, 1962 reads as under:
129E. Deposit pending appeal of (duty and interest) demanded or penalty levied:
Where in any appeal under this Chapter, the decision or order appealed against relates to any (duty and interest) demanded in respect of goods which are not under the control of the customs authorities or any penalty levied under this Act, the person desirous of appealing against such decision or order shall, pending the appeal deposit with the proper officer the (duty and interest) demanded or the penalty levied.
PROVIDED that where in any particular case, the Commissioner (Appeals) or the Appellate Tribunal is of opinion that the deposit of (duty and interest) demanded or penally levied would cause undue hardship to such person, the Commissioner (Appeals) or, as the case may be, the Appellate Tribunal may dispense with such deposit subject to such conditions as he or it may deem fit to impose so as to safeguard the interests of revenue.
PROVIDED FURTHER that where an application is filed before the Commissioner (Appeals) for dispensing with the deposit of duty and interest demanded or penalty levied under the first proviso, the Commissioner (Appeals) shall, where it is possible to do so, decide such application within thirty days from the date of its filing.
4. This provision has been a source of prolific litigation between the assessee and the revenue particularly as in matters arising under the Customs Act and Central Excise Act, the liabilities being quite huge, requirement of pre-deposit being a financial botheration to the appellant and at any rate any such deposit could definitely cause financial inconvenience to any assessee.
5. It is the manner in which the discretion under the proviso to Section 129E of the Customs Act, 1962, as also the corresponding provisions in other enactments is exercised and the order passed under this proviso that has been the subject matter of innumerable decisions of both the High Courts as well as the Supreme Court, alas, the decisions/judgments have multiplied, but the statutory tribunal persists in pursuing its own ways and its own understanding of the provisions even at the cost of being oblivious to the very statutory provisions. The present writ petition illustrates one more situation of this nature.
6. The Revenue has brought this writ petition feeling aggrieved by one such order passed by the Tribunal in an appeal filed by the respondent M/s. United Telecom Ltd., disputing the duty liability of a sum of Rs. 2,52,17,948/-The Tribunal while entertaining the application filed by the appellant before it under the proviso to Section 129E of the Act, a copy of which is produced at Annexure-G to the writ petition, where under the Tribunal, being of the view that the appellant has a strong prima facie case, and has waived the requirement of pre-deposit of the amount, in toto, has granted stay in respect of recovery of any part of this amount and as the amount involved is quite huge, the appeal to come up for hearing out of turn on 31-8-2005, as indicated in this order.
7. It is, inter alia, urged in support of the petition that the very view of the Tribunal that the appellant-assessee had a strong prima facie case is erroneous, contrary to the records; that the observation itself is not tenable; that the Tribunal has not properly appreciated the law laid down in this aspect of the matter in the cases decided by the Supreme Court in Priya Blue Industries Ltd. v. Commissioner of Customs , as also Assistant Collector of Central Excise v. National Tobacco Co. of India Ltd. , that the Tribunal has not shown its awareness and has not applied its mind to the requirement of the second part of the proviso viz., the duty cast on the Tribunal while ordering pre-deposit to ensure the interest of the Revenue is not put to jeopardy by imposing commensurate conditions on the appellant; that granting a total waiver of the liability of Rs. 2,52,17,948/- is a total arbitrary and perverse order and is liable to be set aside; that the view taken is clearly in the teeth of the ratio laid down by the Supreme Court in the case of Vijay Prakash D. Mehta v. Collector of Customs that the Tribunal has also not followed the dictum of the Supreme Court in the matter of granting interim orders as laid down in the case of Assistant Collector of Central Excise, West Bengal v. Dunlap India Ltd. , the order is liable to be quashed and the appellant before the Tribunal was not entitled tor waiver of any part of the deposit and therefore the writ petition should be allowed.
8. Petition was admitted on 2-12-2005. Respondent had entered caveat, through counsel. After hearing learned Counsel for parties, the order of the Tribunal was stayed reserving liberty for seeking modification. Respondent has filed statement of objections, inter alia, urging that the writ petition is not maintainable; that no interference is warranted in the exercise of writ jurisdiction by this Court in respect of an interim order passed by the Tribunal in a pending appeal; that the respondent in fact has submitted its case before the Tribunal on the merits of the case; that the Tribunal has granted full waiver of the pre-deposit requirement at the request of respondent and on the application made by it; that the Tribunal was fully justified in passing the impugned order; that the impugned order is a well reasoned order passed on relevant considerations and calls for no interference in exercise of writ jurisdiction and therefore urges for dismissal of the writ petition.
9. It is also pleaded by the respondent that it is the conduct on the part of the officials of the petitioner-department that has stalled the hearing of the appeal before the Tribunal; that the matter was sought to be adjourned on the premise that the department has preferred reference application before this Court etc.
10. It is urged that reliance placed on the decision of the Supreme Court in the case of Priya Blue Industries Ltd. (supra) is proper and the Tribunal has rightly followed this position while passing the impugned order.
11. I have heard Sri N. Devhadass, learned Senior Counsel appearing for the petitioner as also Sri Shivadass, learned Counsel appearing tor the respondent. The matter is heard for disposal with consent and taken up for disposal, though had been listed tor orders on the application of the respondent for issue of direction etc.
12. Submission of Sri N. Devhadass, learned Senior Counsel appearing for the petitioner is that the Tribunal has passed the order in clear contravention of the statutory requirement of proviso to Section 129E of the Act; that the Tribunal has not found on fact that the requirement of pre-deposit as mandated by the statute would cause undue hardship if it has to be enforced; that the Tribunal has merely proceeded on the premise and that too on an erroneous assumption that the appellant before it has a strong prima facie case and that in itself justifies the dispensing with the pre-deposit in its entirety. Learned Counsel submits that the Tribunal has totally given a go-by to the aspect of safeguarding the interest of the revenue; that it has not even shown its awareness to this aspect and that the discretion under the proviso is exercised as though it was the bounden duty of the Tribunal to pass orders for total waiver of the pre-deposit amount; that notwithstanding the law laid down by the Supreme Court in the cases referred to supra as also in terms of the decision of this Court in the case of Commissioner of Central Excise, Bangalore-III v. McDowell and Co. Ltd. , the Tribunal has not shown its awareness to the requirement of proviso to Section 129E of the Act that the impugned order is a totally whimsical and arbitrary order and that the statutory requirement has not been followed.
13. In support of the submission, learned Counsel for the petitioner has placed reliance on the decision of the Supreme Court in the Vijay Prakash D. Mehta (supra) as also the decision in the case of Dunlop India Ltd. (supra) and the decision, of this Court in the case of McDowell & Company Ltd. (supra).
14. Placing reliance on these decisions, the submission of the learned Senior Counsel appearing for the petitioner is that the Supreme Court has observed that an interim stay in tax matters should not be granted as a matter of routine and the mere fact that the assessee had made out a prima facie case and moreover when the very statutory provisions mandates the Tribunal to form an informed opinion that the statutory requirement would cause undue hardship to the assessee before exercising the discretion for waiving the pre-deposit amount and the Tribunal having not shown such awareness in the context of the facts of the particular case and moreover the Tribunal having given a go-by to the interest of the Revenue and in the absence of any express/specific plea of hardship pointed out by the appellant before the Tribunal except for saying that the appellant has a strong prima facie case, the assessee had not made out any case for exercise of the discretion under the proviso by the Tribunal for grant of dispensation of the pre-deposit amount and therefore it is necessary not only to quash the order but also to reject the application and issue directions to the respondent assessee to deposit the full amount before the Tribunal for pursuing its appeal.
15. On the other hand, Sri Shivadass, learned Counsel for the respondent, submits that the respondent has a strong prima facie case; that the Tribunal has only followed the decision of the Supreme Court in the case of Priya Blue Industries Ltd. (supra) to come to the conclusion that the assessee had a strong prima facie case, particularly when the order appealed against was one in view of the department having reopened the concluded assessment and having fastened the liability which the assessee had never admitted and the assessee’s chance of success being bright in terms of the ratio laid down by the Supreme Court in the said case, if the Tribunal had granted total waiver of the pre-deposit requirement, no fault can be found with the order of the Tribunal and no interference is called, for and therefore the writ petition deserves to be dismissed.
16. Learned Counsel for the respondent would also submit that the Tribunal has merely followed the ratio of the ruling of the Division Bench of the Allahabad High Court in the case of ITC Ltd. v. Commissioner (Appeals) of Customs and Central Excise ; that the concept of hardship does not necessarily mean only facing financial hardship; that it is wide enough to include other hardships in the sense even when a assessee is financially capable of making the pre-deposit, a waiver can be granted if the assessee has a strong prima facie case and if the Tribunal has only followed such a ruling and ratio which the Allahabad High Court had laid down after examining the case in the light of this aspect. It cannot be said that the Tribunal has committed an error, much less any illegality warranting interference by this Court in exercise of jurisdiction under Articles 226/227 of the Constitution of India.
17. Sri Shivadass, learned Counsel for the respondent by drawing attention to the decision of this Court in the case of McDowell (supra) submits that the matter was only remanded by this Court even after noticing that the order of the Tribunal was not sustainable and therefore submits that assuming for argument’s sake, without conceding that the matter to any extent warrants interference by this Court, it can only be remanded to the Tribunal for passing orders afresh on the application of the appellant before the Tribunal, and not for quashing of the order and to reject the application and for issuance of directions to the respondent to deposit the amount before the Tribunal, as urged by the learned Counsel for the petitioner.
18. Interference with an interlocutory order in pending proceedings before any other forum including the Appellate Tribunal like the one here, is an exception and not as a matter of routine. It should be like that, but in reality perhaps more number of matters crop up before the High Courts and the Supreme Court only on the orders passed by the Tribunal in exercise of its discretionary power under the proviso to Section 129E of the Act and the corresponding provisions under the Central Excise Act and as of now in the Finance Act 1994, in the context of levy of Service tax.
19. This is a phenomena which has a knack of repeating itself only because of the reason that the amount involved in the case is quite huge and the assessee can afford to engage in legal battles with the revenue, if not for any other deserving relief, at least for stalling the proceedings to the benefit of the assessee and to the detriment of the revenue. It is only on rare occasion the revenue seeks interference and invokes jurisdiction of this Court or the Supreme Court, for interfering with the orders passed by the Tribunal. The prolific case law on other subject is a testimony for the penchant for litigation on this aspect by the assessee.
20. A mere look at the decision of the Allahabad High Court in the case of ITC Ltd, (supra), relied upon by the learned Counsel for the respondent-assessee itself is a proof of this fact, as the learned Judges of the Allahabad High Court, before expressing their opinion, had occasion to examine as many as 25 to 26 earlier decided cases either of the High Courts or of the Supreme Court, including the decisions of the Supreme Court in the case of Dunlop India Ltd. (supra) as well as Vijay Prakash Mehta (supra). Unfortunately, even after all these legal deliberations, the picture does not project itself with any clarity or precision. There is scope in every case for the assessee to contend that he is entitled for waiver of entire pre-deposit amount and the revenue to contest this position saying that it is otherwise.
21. One interesting feature that becomes obvious on an examination of the case law is that the dispensation concession under the proviso which can only be an exception to the rule of pre-deposit, on the other hand has become the rule and in every appeal/case pre-deposit waiver requirement is inevitably invoked and also waived to any extent or to a total extent.
22. The understanding of the words ‘undue hardship’ occurring in the proviso, is interpreted so wide that it can virtually give a go-by to the very provision of Section 129E of the Act introduced in the statute by the legislature. The phrase undoubtedly has to be understood as including a strong prima facie case in favour of the assessee. This Court, had occasion to consider this aspect, of the matter in the case of McDowell & Company Ltd. (supra), strongly relied upon by the learned Counsel for the Revenue, and interpreted this concept, holding that mere existence of a prima facie case in itself does not translate into a case of undue hardship to the assessee. The undue hardship is an undue hardship which the assessee should in fact suffer if he is required to comply with the pre-deposit and which should have been demonstrated before the Tribunal or the appellate authority, who in turn should form an informed opinion that such pre-deposit will in fact cause undue hardship to the assessee. In this regard in the present case, the plea/case of the assessee for such waiver before the Tribunal as prayed in its application is as under:
3. The applicants have a strong prima facie case in their favour inasmuch as the impugned order of the Id. Commissioner is liable to be set aside for the various reasons set out in the grounds of appeal in the memorandum of appeal and the applicants crave leave to refer to and rely upon the same for the purpose of this application for stay.
4. Further, the balance of convenience is also clearly in their favour. Any direction to the applicant to pre-deposit any part of the duty incorrectly imposed on them for hearing this appeal would cause undue hardship and irreparable loss to them.
23. A combined reading of these two paragraphs would only indicate that the determination of the duty liability is not correct and if the liability is enforced on the assessee even during the pendency of the appeal would cause undue hardship and irreparable loss to it. Nothing beyond is pleaded. It is not shown as to what type of hardship it would cause and in fact as to whether the assessee is not in a position to deposit the amount in its entirety or in any part of it. Undue hardship is sought to be inferred as a logical corollary to the appellant having a strong prima facie case and not because in fact the appellant before the Tribunal would suffer undue hardship tor fulfilling the requirement.
24. The order passed by the Tribunal on this aspect of the matter reads as under:
5. On a careful consideration of the submissions made by both the sides we notice that there are lot of merits in the arguments advanced by the learned Counsel. The ratio of the Apex Court Judge rendered in the case of Priya Blue Industries is that when the finalization of assessment has not been appealed by the other side, then the matter cannot be reopened by issue of show cause notice or by filing refund application by the assesses. It is for the revenue to seek appropriate relief before the Apex Court only if they are aggrieved with the ratio of Priya Blue Industries case (supra). As the assessment had been finalized in the present case and parts of the cellular phones have been given the benefit of exemption and, the revenue did not challenged (sic) the order of assessment, hence, it cannot be reopened by raising fresh ground by invoking Rule 2(a) of the Interpretation Rules to hold that the goods imported did not have essential characteristics of the final products. The assessee has carried out several process to bring the product into existence, hence, prima facie the item cannot be considered to be cellular phones. The revenue’s contention that the appellants have not pleaded financial hardship and that they should be directed to pre-deposit the amount is not a ground to direct them to pre-deposit as they have strong prima facie case on merits, hence waiver of pre-deposit has to be granted in the light of the judgment of the High Court of Judicature at Allahabad rendered in the case of ITC Ltd. (supra). The appellants have strong prima facie case in their favour on merits and therefore full waiver of pre-deposit of the disputed amount is granted in the matter. The stay application is allowed. The revenue shall not proceed to recover the disputed amount till the disposal of the appeal, As the amount involved in the matter is huge, the appeal to come up for out of turn hearing on 31-8-2005.
25. The awareness shown by the Tribunal is only to the existence of a strong prima facie case in terms of the decision of the Allahabad High Court in the case of ITC Ltd. [supra], and the decision of the Supreme Court in Priya Blue Industries [supra] and nothing else at all. There is absolutely no discussion or awareness shown by the tribunal with regard to the fact situation of the assessee except for taking the view that the assessee has a good case on merits for allowing the appeal etc. It is for this reason, the Tribunal has allowed the application and restrained the revenue from recovering any part of the disputed amount in the appeal during the pendency of the appeal. No awareness is shown to the aspect of safeguarding the interest of the revenue.
26. It is on this aspect Sri Shivadass, learned Counsel for the respondent-assessee has submitted before this Court that the awareness of the Tribunal for safeguarding the interest of the revenue can be inferred from the last sentence wherein the Tribunal has indicated that the amount involved in the appeal being huge the appeal to come up for early hearing out of turn etc.
27. I am of the clear view that a prima facie case in itself does not translate into a case of undue hardship. A prima facie may be the sine qua non for invoking the jurisdiction of the Tribunal to exercise the power for passing order of waiver of pre-deposit and not the end in itself to automatically grant a total waiver. It is only when the Tribunal is satisfied and forms an opinion that the requirement of pre-deposit will constitute undue hardship then the discretion can be exercised for considering the application for waiver. The extent, of waiver which again depends upon the financial position of the assessee, is again a matter in the discretion of the Tribunal. But the Tribunal should show its awareness to this aspect. Even while the Tribunal should remain focussed on the aspect of safeguarding the interest of the revenue and that awareness is exhibited by imposing commensurate conditions and not by indicating that the hearing in the appeal may be expedited as the amount involved is huge. It is not the lip sympathy of the Tribunal which can fulfil the statutory requirement of ensuring the safeguard of the interest of the revenue, but a concrete order indicating the manner in which the interest of the revenue is in fact safeguarded by imposing com mensurate conditions.
28. The phrase ‘undue hardship’ which occurs in the proviso to Section 129E where the rule is pre-deposit of the amount that is disputed in the appeal, has to receive the meaning in the context in which it occurs viz., in the context of the requirement of the pre-deposit. In all tax matters, the lis between the revenue and the assessee is about the tax liability which again is in terms of the amount the assessee has to pay in favour of the revenue. The difficulty arises to an assessee because of this liability and not for other reasons. The concept of undue hardship in the context of taxing statutes and occurring in a provision like the pre-deposit provision under Section 129E can only be linked to the financial hardship that the assessee faces if the assessee has to comply with the pre-deposit requirement and cannot be anything else. Unless an assessee pleads the financial hardship for the compliance of pre-deposit and the assessee in fact is unable to pay the pre-deposit amount in reality also, there is no undue hardship as contemplated in the proviso to Section 129E. In the present case it is not even the case of the appellant before the Tribunal that it faces any financial hardship or has any difficulty in this regard. Even in the absence of any plea from the appellant before the Tribunal to this effect, the tribunal ventures upon to grant total waiver of pre-deposit. It is undoubtedly yet another instance of as observed by this Court in the case of McDowell & Company [supra] the Tribunal being more loyal than the king. It is rather surprising that the Tribunal persists in ignoring the statutory provisions as contained in the proviso to Section 129E in passing such order for the purpose of pre-deposit when the order is passed only under this proviso and not under any other provision. The impugned order is clearly a violation of the statute, fit to be characterized as arbitrary inasmuch as the Tribunal has not shown its awareness to the aspect of undue hardship if in fact existed or will be caused to the assessee if the assessee has to fulfil the statutory requirement of pre-deposit and not because of the Tribunal directs it and therefore calls for interference even in the exercise of jurisdiction under Article 227 of the Constitution of India.
29. I am of the view that such orders are clearly in the teeth of the ratio laid down by the Supreme Court in the case of Dunlop India Ltd. and Vijay Prakash D. Mehta (supra). The Tribunal cannot, go beyond the statutory provisions and cannot take into consideration, such other aspects which are not germane to the provision to Section 129E in passing such orders.
30. In the result, this writ petition is allowed and the impugned order is quashed by issuing a writ of certiorari. Rule made absolute.
31. While Sri Shivadass, learned Counsel for the respondent submits that the matter should be remanded to the Tribunal for consideration of the matter, Sri Devhadass learned Senior Counsel appearing for the petitioner submits that the respondent assessee having not pleaded any hardship the matter does not warrant any remand to the Tribunal as there is nothing to be considered by the Tribunal even in the event of a remand. Learned Senior counsel for the petitioner submits that the Tribunal having failed to show any awareness to the aspect of safeguarding the interest of the revenue and the respondent-assessee not having made out any cause for exercising the discretion under the proviso, the application should have been rejected and nothing else. However, Sri Devhadass fairly submits that, if the respondent, is directed to deposit 75% of the amount in dispute and to furnish bank guarantee for the balance amount to safeguard the interest of the revenue and assuming that the respondent has made out some hardship only on the premise of the prima facie case but not conceding the same, it should safeguard the interest of the revenue also while granting some relief to the assessee and on such compliance the Tribunal may be directed to proceed to consider the appeal of the respondent, on merits.
32. In this view of the matter and with the failure on the part of the respondent to plead in this regard, there was nothing before the Tribunal which was required to be considered by the tribunal for the purpose of consideration of the aspect of any undue hardship, existence of which alone would have authorize the Tribunal to dispense with the pre-deposit requirement. However, in view of the submission and concession made by Sri Devhadass, learned Senior Counsel appearing for the petitioner-revenue, I deem it fit to permit the respondent-assessee to deposit 75% of the disputed amount in the appeal within four weeks from today before the Commissioner of Customs and to furnish bank guarantee for the balance 25% during the pendency of the appeal before the Tribunal and the Tribunal is hereby directed to proceed with the hearing of the appeal on merits on such compliance by the respondent-assessee.
33. On the failure of the respondent-assessee to deposit the amount as directed now, the Tribunal should proceed to pass orders in terms of the law laid down by the Supreme Court in the case of Vijay Prakash Mehta (supra).
34. Writ petition allowed. Costs made easy.