BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED : 31/10/2008
CORAM
THE HONOURABLE MR.JUSTICE S.NAGAMUTHU
Writ Petition (MD). No.4126 of 2006
and
W.P.M.P.No.4334 of 2006 &
M.P.No.1 of 2008
Sree Nithyakalyani Textiles Limited,
Chinnakara Mangalam,
Tiruvadanai Taluk,
Ramanathapuram District,
Represented by its Managing Director,
N.Nagappan. .. Petitioner
Vs.
1.The Commissioner of Central Excise,
Central Revenue Building
BibiKulam,
Madurai.
2.The Commissioner of Central Excise (Appeals)
Lal Bahadur Shastri Marg, Madurai.
3.The Customs Excise and Service Tax Tribunal,
South Zonal Bench,
Chennai. .. Respondents
Prayer
Writ petition is filed under Article 226 of the Constitution of India
to issue a writ of Certiorarified Mandamus calling for the records comprised in
stay order No.286/06 dated 29.03.2006, on the file of the third respondent and
quash the same and consequently direct the third respondent to dispense with the
pre deposit and hear the appeal before the third respondent.
!For Petitioner ... Mr.Raghavan for
Mr.R.Karthikeyan
^For Respondent ... Mr.C.Arul Vadivelu alias Sekar
:ORDER
By consent of both parties the writ petition itself is disposed of.
2. The adjudicating authority under the Central Excise Act confirmed the
demand of Rs.25,89,250/- and imposed a penalty of Rs.25,00,000/- on the
petitioner by order in Original No.1 of 2004 dated 19.01.2004. Challenging the
same, the petitioner preferred an appeal to the Commissioner of Central Excise
(Appeals) in Appeal No.154 of 2004. The appellate authority confirmed the demand
of Rs.25,89,250/- but reduced the penalty from 25,00,000/- to Rs.10,00,000/- by
order dated 28.07.2004. Challenging the same, the petitioner has preferred an
appeal to the Customs, Excise and Service Tax Appellate Tribunal. Along with the
appeal he filed a petition under Section 35(F) of the Central Excise Act for
stay. However, the petitioner did not deposit the entire amount with the
adjudicating authority as required under Section 35(F) of the Act. He prayed for
dispensing with the said payment. The appellate tribunal by order dated
29.03.2006 in No.E/PD/701/2004 in E/Appeal No.1338/2004 directed the the
petitioner herein to deposit 50% of the duty amount within four weeks from the
date of the order. The tribunal however directed to report compliance on or
before 10.05.2006. Challenging the direction given by the Tribunal to deposit
50% of the duty amount, the petitioner has come forward with this writ petition.
3. The learned counsel for the petitioner would submit that the appellate
tribunal did not take into account the undue hardship and other circumstances
under which the petitioner was forced to pray for dispensation with pre deposit.
He has raised several grounds in the writ petition relating to his contention
that the petitioner is not liable to pay the duty as confirmed by the appellate
authority.
4. Mr. C.Arul Vadivel appearing for the respondents would submit that
the writ petition is liable to be dismissed for two reasons. According to him,
the order which is under challenge is an appellable order and so this writ
petition is not maintainable. He would further submit that in the petition filed
before the appellate tribunal except making a vague assertion that the
petitioner would be put to undue hardship, there is no other materials made
available justifying his request for dispensation with the pre deposit. He
relies on a judgment of the Honourable Supreme Court in BENARA VALVES LTD. vs.
COMMISSIONER OF CENTRAL EXCISE (2006 (204) E.L.T. 513 (S.C.).
5. I have considered the rival submissions. In the petition filed before
the tribunal seeking to dispense with the pre deposit, the petitioner has not
made out any case to establish undue hardship to him.
6. In Benara Valves Limited case cited supra, the Honourable Supreme
Court had an occasion to deal with the similar situation regarding undue
hardship to the assessee. In paragraphs 11 to 15, the Honourable Supreme Court
has held as follows;
“11. Two significant expressions used in the provisions are “undue
hardship to such person” and “safeguard the interests of revenue”. Therefore,
while dealing with the application twin requirements of consideration of undue
hardship aspect and imposition of conditions to safeguard the interest of
Revenue have to be kept in view.
12. As noted above there are two important expressions in Section 35(F).
One is undue hardship. This is a matter within the special knowledge of the
applicant for waiver and has to be established by him. a mere assertion about
undue hardship would not be sufficient. It was noted by this Court in S.VASUDEVA
v. STATE OF KARNATAKA AND ORS (AIR 1994 SC 923) that under Indian conditions
expression “undue hardship” is normally related to economic hardship. “Undue”
which means something which is not merited by the conduct of the claimant, or is
very much disproportionate to it. Undue hardship is caused when the hardship is
not warranted by the circumstances.
13. For a hardship to be ‘undue’ it must be shown that the particular
burden to have to observe or perform the requirement is out of proportion to the
nature of the requirement itself, and the benefit which the applicant would
derive from compliance with it.
14. The word “undue” adds something more than just hardship. It means an
excessive hardship or a hardship greater than the circumstances warrant.
15. The other aspect relates to imposition of condition to safeguard the
interest of revenue. Therefore, the Tribunal while dealing with the application
has to consider materials to be placed by the assessee relating to undue
hardship and also to stipulate condition as required to safeguard the interest
of revenue.”
As per the law laid down by the Honourable Supreme Court it is incumbent on the
part of the petitioner to establish that he would suffer undue hardship if the
amount is recovered from him. Thus the petitioner has not made out any case to
dispense with the pre deposit. However, the tribunal has taken a very lenient
view to dispense with 50% of the amount demanded. Thus I find no reason to
interfere with the order impugned. On this ground alone the writ petition is
liable to be dismissed.
7. Regarding maintainability of the writ petition, as pointed out by the
Assistant Solicitor General, any order made under Section 35(F) is appealable
which includes an order refusing to dispense with pre deposit. But the
petitioner has not chosen to prefer any appeal and on this ground also the writ
petition is liable to be dismissed.
8. In the result, the writ petition fails and the same is accordingly
dismissed. The interim order made in W.P.M.P.No.4334 of 2006 dated 05.05.2006
stands vacated and the petition W.P.M.P.No.4334 of 2006 is dismissed. M.P.No.1
of 2008 is closed. No costs.
jikr
To
1.The Commissioner of Central Excise,
Central Revenue Building
BibiKulam, Madurai.
2.The Commissioner of Central Excise (Appeals)
Lal Bahadur Shastri Marg, Madurai.
3.The Customs Excise and Service Tax Tribunal,
South Zonal Bench,
Chennai.