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Brima Sugar Limited Vs. Collector of Central Excise - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1985)(20)ELT384TriDel
AppellantBrima Sugar Limited
RespondentCollector of Central Excise
Excerpt:
.....in 1985 (19) e.l.t. 148 {military dairy farm, kirkee, pune v. collector of c.e.). on the issue of "undue hardship" occurring in the proviso to s. 35f, he invited our attention to the loss incurred for the year 1983-84 in a sum of rs. 57.67 lacs as mentioned in the balance sheet for the year.he, however, preferred not to produce or rely upon the balance sheet of the brihan maharashtra sugar syndicate, of which the appellant is, admittedly, a wholly-owned subsidiary. when his attention was drawn to the reserves of the applicant (rs. 1,29,98,116) and the difficulty in assessing undue hardship in the absence of evidence of the financial capacity of the owner of the applicant, he submitted that it is not as if there was not sufficient money for the deposit, but during the crushing season,.....
Judgment:
1. This is an application, merely for stay of the execution of the order under Appeal. It is not expressly one for dispensing with the deposit in terms of S. 35F of the Central Excises and Salt Act, 1944 (hereinafter, the Act), notwithstanding that in answer to a query in the Memorandum of Appeal, it was stated that an application for dispensing with the deposit of the duty in issue was made. Presumably, the reference was to this application only, for there is no other application. In the circumstances, we treat this application as one under S. 35F of the Act also, since there can be no question of a stay of execution of the order under Appeal, unless the deposit in terms of S. 35F is dispensed with in the first instance.

2. In the course of his submissions, Shri Rangaswamy for the Applicant, relying upon the ruling of the Supreme Court in 1985 E.L.T. (19) 22Assistant Collector of C.E., West Bengal v. Dunlop India Ltd.], submitted that this was pre-eminently a case where an interim order of stay has to be made, in the interests of justice, the balance of convenience and with a view to prevent gross violation of the law and injustice about to be perpetrated, since the decision under Appeal was clearly contrary to the ratio of the Tribunal's Order in 1985 (19) E.L.T. 148 {Military Dairy Farm, Kirkee, Pune v. Collector of C.E.). On the issue of "undue hardship" occurring in the proviso to S. 35F, he invited our attention to the loss incurred for the year 1983-84 in a sum of Rs. 57.67 lacs as mentioned in the balance sheet for the year.

He, however, preferred not to produce or rely upon the balance sheet of the Brihan Maharashtra Sugar Syndicate, of which the Appellant is, admittedly, a wholly-owned subsidiary. When his attention was drawn to the Reserves of the Applicant (Rs. 1,29,98,116) and the difficulty in assessing undue hardship in the absence of evidence of the financial capacity of the owner of the Applicant, he submitted that it is not as if there was not sufficient money for the deposit, but during the crushing season, which is on, every rupee available is required for capital and other expenditure and, accordingly, a deposit of the duty payable in terms of S. 35F would constitute undue hardship.

3. The amount of duty required to be deposited in tax of S. 35F, is in a sum of Rs. 30,046.27 only. In view of its Reserves, a deposit of this small amount does not cause any hardship to the Applicant whatsoever much less "undue hardship". It is legitimate to infer that it will not cause any undue hardship to the Brihan Maharashtra Sugar Syndicate either, when despite a suggestion to that effect, the learned Counsel was reluctant to submit their balance sheet.

4. Admittedly, there is enough money to make the deposit but the Applicant would not make the deposit either because there is a good prima facie case for him and an irreparable injury or gross violation of law will be perpetrated if the deposit is required to be made and stay not granted, or the money available is required for expenditure in the crushing season.

5. The observations of the Hon'ble Supreme Court in the 1985 ECR 4, relied upon, were, it cannot be overlooked, made in the context of the power to grant interim stay of recovery of a tax in a Writ Petition under Article 226 of the Constitution of Indianot the mandatory requirement of the pre-deposit of duty in terms of S. 35F of the Act, presumably introduced by amendment precisely for the reasons which prompted the Hon'ble Supreme Court to deprecate the indiscriminate grant of stay, ostensibly in exercise of the jurisdiction under Article 226 of the Constitution of India. In interpreting the provisions of S.35F, different considerations apply. Prescribing, as it does, a deposit as a condition precedent for the hearing of the Appeal, it is relatable to the maintainability of the Appeal itself. An Appeal remains infructuous unless a deposit is either made or dispensed with for "undue hardship". Accordingly, as was held by the Supreme Court in Petition for Special Leave No. 7762 of 1984 [Spencer & Co. Ltd., Madras v. Collector of C.E.], "undue hardship" occurring in the proviso to S.35F of the Act, "would include consideration, inter alia, of the aspect of liquidity possessed by the assessee".

6. Nor is the existence of a prima facie case of such vital importance in the context of the aforesaid provision. If the Appeal cannot be heard unless the deposit is made, an inquiry into a prima facie case to consider undue hardship in making the deposit is not called for. It is as much as to come to a conclusion on the merits of the Appeal, howsoever tentative or perfunctory a prima facie view can be. In the words of the Supreme Court, "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 the collection of public revenue for no better reason than that parties have come to the Court alleging prejudice, inconvenience or harm and that a prima facie case has been shown`` [1985 ECR 4underlining ours]. If this were so in the case of a Writ Petition under Article 226 of the Constitution of India, the observations apply with greater force to the question of existence of a prima facie case in the context of S. 35F.7. Again, it is far-fetched to say that there has been a gross violation of the law and perpetration of injustice when all that happened was that an order dated 18-2-1984 had been made in Review by the Collector and that order is, according to the Applicant, contrary to the law laid down by the Tribunal subsequently on 31-8-1984 in the case of the Military Dairy Farm, Kirkee, Pune v. Collector of C.E., Pune [1985 (19) E.L.T. 148]. Nor can it be said that gross injustice is about to be perpetrated by or in consequence of the order in question or it shakes the citizen's faith in the impartiality of public administration unless interim stay is granted. Implementation of a judicial or quasi-judicial order, rectifiable in Appeal or other appropriate proceeding, is not always and invariably an order that leads to the perpetration of gross injustice or it shakes the citizen's faith in the impartiality of public administration. It is in very exceptional and rare cases that such consequences result consequences that amount, in reality, to irreparable injury. An enumeration of such exceptional cases by the Hon'ble Supreme Court as cases where stay could be granted, could never have been relied upon to be of general applicability in spite of the fact that grant of stay in any case other than those enumerated has actually been disapproved in no unmistakable terms. If the submission is acceded to, in the facts and circumstances of the case, practically every order under Appeal is one by which gross injustice will be psrpstrated or one which shakes the citizen's faith in the impartiality of public adminis-tration and has, therefore, to be stayed, regardless of the statutory requirement in terms of S. 35F. The observations of the Supreme Court cannot, conceivably, be more transparently inapplicable than in the facts and circumstances of the instant case. This apart, these considerations are not germane when the question of insisting on the making of the deposit as a condition relating to the maintainability of the Appeal itself, in terms of S.35F, is the issue.

8. The vague statement of requiring the money, admittedly available, for current manufacturing activities is not a plea that can commend itself to conclude "undue hardship" for dispensing with the deposit either. It is a plea that disregards the scope or the meaning of "undue hardship" and, if acceded to, will render S. 35F altogether nugatory.

It is not as if money is not always required for some purpose or other and payment of revenue is the last priority _that would, invariably, cause undue hardship, if insisted upon. One can hardly be heard to say that despite ample resources, deposit as a pre-requisite for an Appeal that one is intent upon pursuing is an undue hardship just because there are other liabilities as well, current or contingent or anticipatory. If the Appeal is to be pursued, the current manufacturing activities that will, in the submission of the learned Counsel, consume the whole of the available money, have necessarily to be curtailed to the extent of the mandatory deposit. The Applicant cannot have it both ways.

9. In the premises, we see no merits in the application. We find that the deposit of the duty in a sum of Rs. 30,046.27, in terms of S. 35F, will not cause undue hardship to the Applicant possessed of Reserves to the tune of Rs. 1,29,98,116, in any view of the matter, and this aspect of the Applicant's liquidity, in terms of the Hon'ble Supreme Court's aforesaid order in the case of M/s. Spencer & Co., is a matter that requires to be considered and is decisive for the disposal of the instant Application under S. 35F. The Applicatiou is, accordingly, dismissed.


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