JUDGMENT
Tirath Singh Thakur, J.
1. These writ appeals arise out of an order passed by a learned single Judge of this court dated 14-7-1994 dismissing writ petitions Nos. 7469 to 7471/1994. A few facts relevant for the disposal of these appeals may be stated first.
2. The appellant company is engaged in the manufacture of mini and micro computer systems for which purpose it has been importing diskettes and manuals from outside the country. During the relevant period the appellant made 3 importations at Bangalore Madras and Bombay in respect of which duty has been demanded and penalty imposed to the extent set out below :
————————————————————————
Order No. Duty Penalty on Penalty on President
& date demanded company Sri Ashok Soota
------------------------------------------------------------------------
OR No. 13/92, 6,30,929 4,00,000 30,000
dt. 10-5-1993
OR No. 14/91, 58,58,790 5,00,000 50,000
dt. 10-5-1993
OR No. 15/92 Duty not 5,00,000 50,000
assessed
finally
------------------------------------------------------------------------
Total 64,89,719 14,00,000 1,30,000
3. Aggrieved by the demand raised against the appellant, 3 appeals were filed by it before the Customs, Excise and Gold (Control) Appellate Tribunal, South Regional Bench at Madras in which appeals the appellant made applications under Section 35F of the Central Excises and Salt Act, 1944 seeking waiver of pre-deposit of the duty demanded from it. These applications were considered by the Tribunal and by a common order dated 3-1-1994 it directed the appellant-company to make pre-deposit of duty and penalty by 31-3-1994 in each case to the extent given below :
————————————————————————
Order No. Duty to be pre-deposited Penalty to be
& Date pre-deposited
------------------------------------------------------------------------
OR No.13/92, Rs. 3,16,000/- (Rs. Three Rs. 2,00,000/-
dt. 10-5-1993 lakhs sixteen thousand) (Rs. Two lakhs)
OR No. 14/91 Rs. 30,00,000 Rs. 2,50,000/-
dt. 10-5-1993 (Rs. Thirty lakhs) (Rs. Two lakhs
fifty thousand)
OR No. 15/92 --------- Rs. 2,50,000/-
dt. 10-5-1993 (Rs. Two lakhs
fifty thousand)
4. Recovery of the balance amount from the company and the entire amount from its President was stayed by the Tribunal subject to the appellant complying with the direction regarding pre-deposit to the above extent. It is therefore apparent that as against a total amount of Rs. 80,19,719/- found payable by the appellant, it was required to deposit only an amount of Rs. 40,16,000/- which is roughly one half of the total demand raised against it.
5. Aggrieved by the aforesaid order of the Tribunal, the appellant filed W. Ps. No. 7469 to 71-1994, which were heard and dismissed by a learned single Judge of this court as already indicated earlier.
6. We have heard the learned counsel for the appellant at length.
7. The common issue which arises in the three appeals preferred by the appellant before the Tribunal is whether the cost of the manuals imported alongwith the software diskettes should be taken to be included in the cost of the diskettes or the value of the manuals should be taken separately and the two items i.e., manuals and the diskettes assessed as two items. The appellant appears to have got the value of the two items split, in order to benefit from the lower rate of duty which is attracted to the manuals as printed material in comparison to the diskettes which attract a higher duty. The Collector of Customs has however clubbed the value of the manuals and diskettes and levied a uniform higher rate of duty resulting in an additional demand on account of duty besides penalty under the Act.
8. A reading of the order passed by the Appellate Tribunal shows that the Tribunal has carefully considered the matter before it and came to the prima facie conclusion that the instruction manuals imported by the appellant along with diskettes are in the nature of a compulsory supply and are essential for marketing of the diskettes used by the buyers. The Tribunal further found that the appellant had deliberately got the value of the diskettes split under two heads i.e., for diskettes and manuals separately and entered into a financial arrangement with the suppliers for the said purpose. The Tribunal found that if the supply of diskettes and manuals separately was the normal practice in the trade, then there was no need for the appellant to have resorted to this exercise of getting the value of the diskettes and manuals split up by the supplier in the ration of 70 : 30. The Tribunal recorded a specific finding that there was a prima facie mis-statement and suppression of facts on the part of the appellant and therefore concluded that the orders impugned in the appeals before it correctly took the value of the manuals as included in the value of diskettes as per the practice prevalent in trade.
9. While arriving at the said conclusions the Tribunal drew sustenance from the statements of Sri S.S. Ramakrishnan, Manager (Procurement) and N. Mohan, General Manager (Materials) of the appellant company, recorded on 1-3-1991 in which they have stated that whenever a software package is purchased the items given are software programme in media, instruction manual/operating manual in book form, Sl. Nos., identification card, cuter hard board package, etc. They had further stated that all these items are given to anybody who purchases a software in one complete set. It was further stated that the practice of giving operating instructions manual was similar to the operating or instruction manual received along with items such as VCR, T.V., Refrigerator etc.
10. Having thus examined the issue prima facie, the Tribunal proceeded to consider the financial capacity of the appellant, and found that the appellant was a profit making concern who had set up only cash flow problem as a ground for not making a pre-deposit of duty and penalty. The Tribunal had accordingly while directing pre-deposit of duty and penalty given substantial relief to the appellant both in regard to the deposit of duty and penalty. As against a total amount of Rs. 80,19,719/- found due from the appellant on account of duty and penalty, the Tribunal directed the appellant to deposit only a sum of Rs. 40,16,000/- and stayed the penalty imposed upon the President of the company subject to the company depositing the aforesaid amount.
11. In the writ petitions filed against the aforesaid order, the appellant had questioned the order passed by Tribunal primarily on the ground that while directing pre-deposit of the aforesaid amount, the Tribunal had failed to notice the plea of limitation raised by the appellant. The learned single Judge however did not find favour with this submission and held that the question of limitation was intricately connected with the facts alleged by the parties concerned both in relation to levy of duty as also penalty and therefore at the stage of directing pre-deposit the Tribunal was not required to return a separate finding as to whether the entire action taken by the department was barred by limitation.
12. In appeal before us Mr. Chander Kumar, learned senior counsel has once again reiterated the said submission and strenuously urged that the Tribunal ought to have atleast prima facie looked into the question of limitation before making an order regarding pre-deposit. We do not find any substance in the said submission. We feel that the Tribunal while deciding whether a pre-deposit should be ordered was required to take only a prima facie view of the matter and was not expected to examine each and every ground of challenge that may be urged before it against the orders impugned. In the instant case, we find that the Tribunal has given a fairly detailed consideration to the question whether the pre-deposit should or should not be made and even when it has prima facie come to the conclusion that splitting up of value of diskettes and manuals in the ratio of 70 : 30 was a device which the Tribunal found to be reprehensible and unethical, it has granted substantial relief to the appellant in reducing the total pre-deposit demand from Rs. 80,19,719/- to Rs. 40,16,000/- as pointed out earlier. In our opinion therefore, the omission on the part of the Tribunal to consider the question relating to limitation as urged before us by the learned counsel does not invalidate the order of the Tribunal nor was it necessary in our opinion for the Tribunal to have dealt with the said issue at the interim stage of granting or refusing the relief regarding pre-deposit.
13. Mr. Kumar then argued that the deposit of duty and penalty would cause extreme hardship to the appellant-company, which the Tribunal, according to him, has failed to take into consideration. It is no doubt true that the Tribunal is required to keep the question of hardship in view while deciding whether or not pre-deposit should be ordered, yet it is difficult for us to accept the submission of the learned counsel that a pre-deposit even to the extent of 50% of the total amount of duty and penalty should be treated to be causing any hardship to the appellant. This is particularly so when the Tribunal has prima facie come to the conclusion that the value of diskettes and manuals is liable to be clubbed together as the manuals were an essential part of software which could have been used only with the manuals.
14. That apart, it is now well-settled by a catena of judgments of the Appex Court that merely because an appeal or a writ petition relating to public revenue raises an arguable question or makes out a prima facie case in favour of the assessee, is no reason for the court to grant an interim stay against the payment of the amount of duty or tax found to be payable by the assessee. In order to run the Governments hard cash and not guarantees, securities or undertakings are required. In each case therefore, the authority concerned has to draw balance between the interest of the exchequer and what is just and fair keeping in view the nature of the controversy, the amount of tax demanded, the nature of the defence set up etc. In our opinion, while directing a pre-deposit of only 50% of the amount demanded from the appellant, the Tribunal cannot be said to have acted arbitrarily or unfairly let alone in defiance of reason and logic so as to warrant our interference in the exercise of our writ jurisdiction.
15. The question as to whether an interim order should be made in a given case is primarily a matter in the discretion of the authority concerned. Discretion so vested no doubt has to be exercised judicially but so long as the exercise thereof is not palpably erroneous and unjust, no interference with the same is warranted in the exercise of the extraordinary writ jurisdiction of this court. In the instant case, we find neither an error of law nor any perversity in exercise of judicial discretion vested in the Tribunal so as to warrant our intervention in the matter.
16. We may now refer to a few judgments that were cited before us by the learned Counsel for the Appellant in support of his submission that the Tribunal had failed to keep in view the relevant factors while declining to waive the pre-deposit in toto.
17. In Rajendrakumar R. Shah v. Collector of Customs a single Judge of this Court, was dealing with a case where the Tribunal had not applied the test of ‘Prima facie case’ and had declined to waive the pre-deposit only on the basis of the conduct of the party. This Court held that once the petitioner had asserted that he was not possessed of sufficient means, it was for the Respondent to prove that the said assertion was incorrect and that the Respondent had means to pay the amount demanded. The order passed by the Tribunal declining to waive the pre-deposit, was in the light of these facts set aside by this Court. In the instant case, however, there is no such assertion made by the learned Counsel for the Appellant. All that has been contended is that the appellant has certain cash flow problems which averment does not suggest that the appellant is financially incapable of making the deposit in question. Problems of ‘cash-flow’ is a vague assertion and does not necessarily mean incapacity on the part of the Appellant to make the deposit in question.
18. In U.P. Lamination v. Union of India & Others [1985 (20) E.L.T. 243] a Division Bench of the Allahabad High Court was dealing with a case where the Court found on a question of fact that if an interim order was not granted in favour of the petitioner the entire business which was being run on a small scale, would come to a standstill. Further, the Court held that if the averments made in the application seeking waiver of pre-deposit, were not controverted by an affidavit filed by the Department, the allegation of the appellant regarding his financial position and undue hardship should be deemed to be unrebutted, entitling the petitioner to the grant of interim relief. The Court repelled the argument that subsequent to the judgment of the Apex Court in Assistant Collector of Central Excise v. Dunlop India Ltd. and Others , the power of the High Court under Article 226 of the Constitution to grant interim relief had been taken away. The judgment is clearly distinguishable as the Court had in that case, on a question of fact found that the petitioner will be left in the helplessness position and the small scale Unit being run by it will have to be closed causing undue hardship in case the interim order of waiver of pre-deposit was not made in its favour. This indeed, is not the position in the case before us. There is nothing on record before us to suggest that the appellant’s financial position is such, as may not permit the making of a pre-deposit even to the extent of 50% of the total demanded amount. The Allahabad case therefore lends no assistance to the Appellant.
19. Learned Counsel for the appellant then relied upon a single Bench judgment of the Calcutta High Court, reported in Bongaigaon Refinery & Petrochem Ltd. v. Collector of C. Ex. (A), Calcutta [1994 (69) E.L.T. 193 (Cal.)]. In the said case the learned single Judge has taken the view that the term ‘undue hardship’ occurring in Section 35F of the Central Excises and Salt Act, 1944, should be deemed to be implicit in a case where the appellant has made out a strong prima facie case in his favour. The phrase was held to cover even a situation where there is an arguable case in the appeal. The view taken was that while in the case of a strong prima facie case the pre-deposit should be altogether dispensed with, in a case where the appellant only makes out an arguable case in his favour, the Tribunal would be required to safeguard the interest of the revenue as well. Even though we find it difficult to fully subscribe to the view taken by the learned single Judge, of the Calcutta High Court, that the mere existence of a strong prima facie case is by itself a sufficient ground for waiver of pre-deposit even if the said view were accepted in toto, the findings returned by the Tribunal do not suggest that the appellant has been found to have a strong prima facie case in its favour. On the contrary, the Tribunal has returned a clear finding even though prima facie, that there has been misrepresentation and mis-statement of facts on the part of the appellant in having the manuals accompanying the diskettes assessed at a lower rate of duty. In arriving at the said conclusion the Tribunal has in our view, taken note of the relevant facts and since we do not find any perversity in that finding, we can safely say that the view taken by the Tribunal has not found a strong prima facie case in favour of the appellant. In view of what has been urged before us and what was contended before the Tribunal, all that could be said is that the appellant has made out an arguable case, in which event, in terms of the view taken by the learned single Judge, in the above case, the Tribunal was required to safeguard the interest of the Revenue also. While doing so, if the Tribunal has directed the deposit of 50% of the amount of duty and penalty demanded from the appellant, it has obviously taken care of the interests of the Revenue while simultaneously giving substantial relief to the appellant.
20. In R.K. Organisation v. CEGAT – 1993 (68) E.L.T. 560 (M.P.), a Division Bench of the Madhya Pradesh High Court disposed of a Misc. Writ Petition, even without issuing notice to the opposite party, holding that the Tribunal had not considered the question of limitation while declining to waive the requirement of pre-deposit under Section 35 of the Act. We have carefully gone through the judgment but find ourselves unable to read into the same any legal principle requiring the Tribunal to necessarily go into the question of limitation either independently or conjointly with other points raised in the appeal at the preliminary stage of deciding an application under Section 35F of the Act. That was a case where the Court found that the Tribunal had not addressed itself to the question of limitation even though urged before it and that the ends of justice would require that the Tribunal consider the matter once again in the context of the said point. If the judgment in question means to lay down that in every case where a question of limitation is raised before the Tribunal, it is under an obligation to return a specific finding on the same even at the stage of considering the grant of interim relief, we, with respect find ourselves unable to subscribe to the said view. While, it is open to the Tribunal to consider prima facie the grounds urged for or against the grant of interim relief, in doing so, if any specific ground is not specifically dealt with by the Tribunal, the same may not be a sufficient reason for the High Court in interfere. We say so particularly when the Tribunal has on merits returned a specific finding after consideration of the relevant material, that the appellant has no prima facie in its favour. In any such case, non-consideration of any ground on which the petitioner may be banking in support of its prayer for grant of interim relief will not, in our opinion, vitiate the order.
21. Before parting, we may quote the following instructive passage from the judgment of their Lordships of the Supreme Court in Assistant Collector v. Dunlop India Ltd. .
“But since the law presumes that public authorities function properly and bona fide with due regard to the public interest, a Court must be circumspect in granting interim orders of far-reaching dimensions or orders causing administrative, burdensome inconvenience or orders preventing collection of public revenue for no better reason than that the parties have come to the Court alleging prejudice, inconvenience or harm and that prima facie case has been shown. There can be and there are no hard and fast rules. But prudence, discretion and circumspection are called for. There are several other vital considerations apart from the existence of a prima facie case. There is the question of balance of convenience. There is the question of irreparable injury. There is the question of public interest. There are many such factors worthy of consideration. We often wonder why in the case indirect taxation where the burden has already been passed on to the consumer, any interim relief should at all be given to the manufacturer, dealer and the like”.
22. In the result, we find no merit in these appeals which are hereby dismissed. We, however, direct that the period of 2 months granted by the learned single Judge, for making the deposit, which has already expired, shall stand extended by another period of four weeks from today. No costs.