ORDER
Harish Chander, President
1. By the present application, the appellant has made a prayer for modification of the earlier Stay Order No. 35/94-WRB, dated 11-1-1994. Shri Anil Balani, learned Advocate has appeared on behalf of the appellant. He pleaded that in covering letter to the miscellaneous application dated 6-5-1994, the appellant had made a mention that the jurisdiction pertains to the Regional Bench. He argued that he does not press for the action on the letter dated 6th May, 1994.
2. Shri B.K. Singh, learned SDR who is present on behalf of the respondent stated that it is not a Regional Bench matter.
3. Both the sides agreed that it is not a Regional Bench matter. Accordingly, we proceeded to hear the miscellaneous application.
4. Shri Anil Balani, learned Advocate pleaded that the appellant is suffering a huge financial hardship as various Banks have filed suits against the appellant and the appellant has not been able to get the bank guarantee from the banks in spite of best efforts by the appellant. He pleaded that the appellant is not in a position to deposit the amount and as such the stay order passed by the West Regional Bench, Bombay dated 11-1-1994 may be modified and the pre-deposit of the same may be dispensed with, and the appeal may be heard on merits at an early date.
5. Shri B.K. Singh, learned Senior Departmental Representative pleaded that while disposing of the stay application, the Bench had looked into the prima facie merits including financial hardship, and had passed the order accordingly, and as such the application for modification of the stay order should be rejected. In fairness, he argued that he does not object to the grant of extension of time for compliance of the terms of the Stay Order No. 35/94-NRB, dated 11-1-1994 out of which the present miscellaneous application emerges. In reply, learned Advocate Shri Anil Balani again requests for the modification of the stay order of the West Regional Bench.
6. We have heard both the sides and have gone through the facts and circumstances of the case. During the course of arguments we had enquired from the learned Advocate as to what are the changed circumstances from the last date of hearing till date and whether the sale proceeds of the goods have been credited in account of the appellant. To the Bench query, he fairly stated that there are no changed circumstances except the financial position of the appellant which he has mentioned in the miscellaneous application. Shri Anil Balani learned Advocate pleaded that he is not aware whether the sale proceeds have been credited in the account books of the appellant or not. The Tribunal had occasion to deal with the conduct of the appellant in economic offences in the case of Macneill and Magor Ltd. v. Collector of Customs, Calcutta reported in 1987 (27) E.L.T. 129 and 1987 (28) E.L.T. 318. There is no evidence on record whether the sale proceeds have been credited in the account books of the appellant and the raw materials which were imported, and were used in the actual manufacture of the resultant goods manufactured by the appellant. This Tribunal in the case of Surekha Coated Tubes & Sheets Limited v. Collector of Customs, Bombay vide Order No. C/139/93-B2, dated 22-1-1993 had held as under:
“21 In view of the above discussion, it follows that the imported goods can be deemed as covered by the advance licence held by the appellants only if they are capable of being utilised in accordance with the provisions of Notification No. 116/88, dated 30-3-1988. The appellants have claimed that disputed goods have been imported for “replenishment” of materials used in the manufacture of resultant products exported. In our view the question whether the imported materials could be deemed as “replenishment material” used in the manufacture of resultant products exported in advance has to be determined with reference to condition IX of the advance licence read with proviso (d) to Notification No. 116/88-Cus. and in this regard a reference has also to be made to para 244 of the Import and Export Policy April, 1988 – March, 1991, as amended from time to time. We find that para 244 (1) of the Import and Export Policy for April, 88 – March, 91 as amended by Import Trade Control Public Notice No. 91-ITC(PN)/88-91, dated 10th January, 1989 reads as :-
“244.(1) Exempt materials imported against a licence under this scheme shall be utilised for the manufacture of the resultant products specified in the DEEC except where it is by way of replenishment. The replenishment would be on account of exports/supplies already made by utilising materials of the some characteristics and technical specifications in anticipation of import of duty exempt materials specified in the licence issued under this scheme. The exempt materials shall not be loaned, sold, or transferred or disposed of otherwise under any circumstances. In cases where the export obligation has been partially or fully met before making any import against the licence the manufacturer exporter after fulfilment of export obligation imposed against the licence may utilise the replenished materials for further export/domestic production and subject to actual user conditions. Similarly, the licensing authority may consider the request of registered exporters after fulfilment of export obligation for transfer of the replenishment materials to the supporting manufacturers concerned whose names appear in the DECC for further export/domestic production and subject to actual user conditions.
(2) In respect of export products appearing in Appendix 13-E to this Policy, where the supporting manufacturers are not from the organised sector, the merchant exporters and Export/Trading Houses may transfer the replenished exempt materials in favour of an actual user. This will, however, be subject to the provision that an intimation about the transfer of the replenished material is sent, to the concerned licensing authority and the Collector of Customs within a period of 15 days from the date of such transfer, giving full particulars of the transferee e.g. name and full address of the unit etc. In respect of other items and in case of genuine difficulties, the concerned regional licensing authorities not below the rank of Joint Chief Controllers (Imports and Exports) in exceptional cases, may consider requests of other licence holders for transfer of the replenished materials to an actual user after indicating the name and price in advance.
(3) Notwithstanding the provisions contained in sub-paras (1) and (2) above, the holder of an Advance Licence in respect of export of engineering and chemical including petro-chemical products, will be eligible to dispose of the replenished exempt materials referred to in sub-para (1) above, to any person. The above facility will, however, be available only on the basis of necessary permission granted by the licensing authority concerned after ascertaining that the relevant export obligation has been fully discharged for the related products.”
On a plain reading of para 244 (1) (as amended) it follows that replenishment can be only by way of import of materials of the same characteristics and technical specifications which are used in export supplies already made. Under these circumstances we are of the view that the imported materials which admittedly are different in terms of technical specifications and other characteristics from the material used by the appellants in the export product have to be held as not covered by Advance Licence held by them.”
This Tribunal in the case of Maharashtra Tubes Ltd. v. Collector of Customs, vide stay Order No. 15-17/94-A, dated 25-1-1994 has held as under :
“8. Now coming to the liquidity position of the appellants, we would like to observe that the sale proceeds of the raw materials imported by the appellant have not been credited in the account books and as such, no reliance can be placed on the account books.”
Hon’ble Supreme Court in the case of Spencer & Co. Ltd., Madras v. Collector of Central Excise which was followed by the Tribunal in the case of Sonodyne Television Company v. Collector of Central Excise, Calcutta reported in -1985 (22) E.L.T. 582 (Tribunal) had observed as under :-
“We are in agreement with the contention of the counsel for the petitioner that the expression ‘undue hardship’ occurring in the proviso to Section 35F of the Central Excises and Salt Act, 1944, would include consideration, inter alia, of the aspect of liquidity possessed by the asses-see. We are not inclined to take the view that the impugned order gives any indication that aspect has been completely ignored as was contended by counsel. With these observations, the special leave petition is dismissed.”
In the present case, the appellants have not filed up to date balance-sheets. In any case, if they had filed the same, the same would not have been of any relevance as the true position cannot be ascertained as the sale proceeds of the imported materials have not been credited in their account books. Accordingly, it cannot be said that the liquidity position of the appellant is bad. Prima facie merits, as we have held, are in favour of the revenue. Hon’ble Supreme Court in the case of Assistant Collector of Central Excise, West Bengal v. Dunlop India Ltd. and Ors. reported in 1985 (19) E.L.T. 22 (SC) had observed that undue hardship means financial as well as prima facie merits. Hon’ble Delhi High Court in the case of Uptron Powertonics v. Collector of Central Excise, Meerut reported in 1987 (28) E.L.T. 61 had held as under :-
“If the appellant wants any discretionary relief in his favour in any case, he has first to show prima facie substance in his claim and on this being done, he has then to further show undue hardship to him. The reverse is not to be done i.e. first to show hardship and if it cannot be shown then a prima fade substance in the claim before the Appellate Authority. Merely because the petitioners are subsidiary of U.P. Electronics Corporation, it does not mean specifically in the impugned order of the Tribunal that it need not go into the question of prima facie nature of the case of the appellant is totally incorrect in law. Therefore, the order of the Appellate Tribunal is quashed and is directed to hear the appeal on merits without insisting on pre-condition of pre-deposit of duty or penalty and decide all questions of facts and law.”
Hon’ble Madhya Pradesh High Court in the case of Kinetic Honda Motor Ltd. v. Union of India reported in 1992 (61) E.L.T. 52 (M.P.) had held as under :-
“Although it was urged by Shri Neema that all the three requirements, balance of convenience and irreparable injury along with prima facie case must exist in order to grant interim injunction in favour of a party, the dominant consideration in such matters is existence of a prima facie case in favour of party claiming injunction. Admittedly there are similar orders staying recovery proceedings during pendency of appeal passed by the same appellate authority and they have been placed on record. The mere fact that the amount involved in the present appeal is rather large would not by itself alter or modify the principle of grant of injunction.”
In view of these observations, the appellant fails on prima facie merits as well as financial hardship.”
There are no changed circumstances from the last date of hearing till date and as such we do not find any justification for the modification of the stay order. Shri Singh during the course of arguments had stated that he has got no objection for the extension of time for the compliance of the terms of the stay order dated 11-1-1994. Shri Anil Balani, learned Advocate prayed for extension of time. In the interest of justice, we grant two months time from today for complying with the terms of the stay order dated 11-1-1994. Learned Advocate during the course of arguments, had made a prayer for grant of out of turn hearing. The out of turn hearing can only be granted after complying with the provisions of Section 129E of Customs Act, 1962. The relevant provision of Section 129E of Customs Act, 1962 is reproduced below :
“S. 129E. Deposit, pending appeal, of duty demanded or penalty levied. –
Where in any appeal under this Chapter, the decision or order appealed against relates to any duty 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 demanded or the penalty levied:
Provided that where in any particular case, the Collector (Appeals) or the Appellate Tribunal is of opinion that the deposit of duty demanded or penalty levied would cause undue hardship to such person, the Collector (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.”
Hon’ble Supreme Court in the case of Navin Chandra Chhotelal v. Central Board of Excise and Customs and Ors. reported in 1981 (8) E.L.T. 679 (SC) had held as under:
“18. No doubt Section 129 does not expressly provide for the rejection of the appeal for non-compliance with the requirement regarding the deposit of penalty or duty; but when Sub-section (1) of Section 129 makes it obligatory on an appellant to deposit the duty or penalty pending the appeal and if a party does not comply either with the main sub-section or with any order that may be passed under the proviso the appellate authority is fully competent to reject the appeal of non-compliance with the provisions of Section 129 (1). That is exactly what the first respondent had done in this case. Accepting the contention of Mr. Trivedi will mean that the appeal will have to be kept on file for ever even when the requirement of Section 129(1) has not been complied with. Retention of such an appeal on file will serve no purpose whatsoever because unless Section 129(1) is complied with, the appellate authority cannot proceed to hear an appeal on merits. Therefore; the logical consequence of failure to comply with Section 129 (1) is the rejection of appeal on that ground.”
The Hon’ble Supreme Court in the case of Vijay Prakash D. Mehta v. Collector of Customs, reported in 1989 (39) E.L.T. 178 (SC) had held as under :
“Section 129E provides a conditional right of appeal in respect of ah appeal against the duty demanded or penalty levied. Although the Section does not expressly provide for rejection of the appeal for non-deposit of duty or penalty, yet it makes it obligatory on the appellant to deposit the duty or penalty, pending the appeal, failing which the Appellate Tribunal is fully competent to reject the appeal. Right to appeal is neither an absolute right nor an ingredient of natural justice the principles of which must be followed in all judicial and quasi-judicial adjudications. The right to appeal is a statutory right and it can be circumscribed by the conditions in the grant. The proviso to Section 129E gives a discretion to the authority to dispense with the obligation to deposit in case of ‘under hardships’. The discretion must be exercised on relevant materials, honestly, bonafide and objectively. In this case it is manifest that the order of the Tribunal was passed honestly, bonafide and having regard to the plea of undue hardship as canvassed by the Appellant. There are no error of jurisdiction or misdirection. In the facts and circumstances of the case and all the relevant factors, namely, the probability’ of the prima facie case of the -appellant, the conduct of the parties, have been taken into consideration by the Tribunal. The purpose of the section is to act in terrorem to make the people comply with the provisions of law”.
In view of the above legal position, the appellant crosses the hurdle of Section 129E of the Customs Act, 1962, the appellant’s request for out of turn hearing cannot be granted. It is open to the appellant to approach the Tribunal for out of turn hearing after complying with the terms of the stay order.
7. Since we have granted two months extension of time for making the payment from today, the appellant shall report compliance of this order to the registry within two and half months from today. The matter is listed for mention on 3rd October, 1994. It is made clear that on the next date of hearing i.e. 3rd October, 1994 if there is no evidence on record as to the compliance of the terms of the stay order, the appeal will be dismissed for non-compliance of provisions of Section 129E of the Customs Act, 1962 read with Section 129B of the Custom Act and this order may be treated as a notice for the same, and no adjournment will be granted in any case.