R.M. Sahai, J.
1. Having heard parties at length we are inclined to grant interim order. But before doing so we propose to give out reasons as the learned senior standing counsel for Union of India vehemently pressed for the same.
2. At the outset it may be mentioned that no interim order is granted by this court in either jurisdiction that is, writ or civil unless an application supported by an affidavit is filed and not only prima facie case is made out but balance of convenience is also found to be in favour of applicant,
3. The petitioner is a small enterpreneur engaged in activities of lami-native textile fabric and made fabric and duty paid paper. The proprietor of the firm claims to have certain textile industries for 36 years in Ethopia from where he came and invested his savings in building and construction work etc. It is claimed by petitioner that it was granted a lease on easy instalments by UP State Industrial Development Corporation, which also financed for purchase of machinery etc. It was also granted a licence in 1975. In October. 1932 it received a notice from Collector, Central Excise to show cause why penalty may not be imposed under Rules 9 and 170 of Central Excise Rules for contravention of Rules 9, 52-A, 173-B, 173-F. It was also called upon to show cause as to how goods falling under Tariff Item 17(2). Central Excise Tariff were cleared without payment of duty. After hearing petitioner the Collector. Central Excise levied a duty of approximately 2-50 crores and odd and also imposed penalty of Rs. 1,00,000/-. It was found that total turnover of petitioner exceeded Rs. 20 lacs and, therefore it was liable to pay excise duty According to petitioner the turnover no doubt exceeded Rs. 20 lacs vet no duty was leviable on it as under Notification No. 141/79 issued on 30th March 1979 it was clarified by Explanation 4 that for purposes of computing the aggregate value of clearance under notification, the clearance of any special goods which are exempted whole or part of the duty levied thereon by any other notification issued under Sub-rule (1) of Rule 8 of the aforesaid rules for the time being in force shall not be taken into account. The Collector. Central Excise did no! advert to this notification and if the value of the goods which were cleared after paying excise duty was excluded then the turnover of peti-tioner would come down below the exemption limit. It has been mentioned only to demonstrate that claim of petitioner that no excise duty was payable was not such as did not need any examination and therefore there was a prima facie case in favour of petitioner.
4 The learned senior standing counsel for Union of India urged that in view of decision of Supreme Court in Assistant Collector Central Excise v. Dunlop India Ltd.-(1985) 1 S.C.C. 260, this court ceased to have any jurisdiction to grant interim order in writ petitions directed against revenue matters. Reliance was placed on observations in the judgment where practice of granting interim order for mere asking was commented upon Learned counsel urged that as observed by the Hon'ble court the Government cannot run on bank guarantees therefore the application of petitioner was liable to be rejected. Learned counsel urged that as reiterated bv the court itself its decisions were binding on all courts under Article 141 of Constitution of India and the declaration of law was that no interim order should be granted.
5 We must confess our inability to appreciate the argument. The observations made by the Hon'ble court in respect of binding effect of a decision given by the highest court is only to impress upon the constitutional sanctity and effectiveness of a decision given by the highest court. It does not lay down that the High Court while exercising jurisdiction under Article 226 is debarred from granting any interim order. The argument, to say the least is misconceived based on misapprehension. The Hon'ble court on the other hand has in unequivocal terms held that in cases of gross violation of law and injustice it is the duty of the court to intervene and to give appropriate interim relief. The Hon'ble court went on to say that in case where denial of interim relief may lead to public mischief, grave irreparable injury or shake a citizen's faith in the partiality of the public administration, a court may be well justified in granting interim relief against public authority. To argue therefore that after this decision the courts have ceased to have jurisdiction to grant interim orders is misconceived. The Hon'ble court has only cautioned the courts to be discreet in exercise of their discretion Learned counsel has not appreciated the import of the decision. The only declaration of law which can be said to be binding in respect of interim order is that it is not only the prima facie case on which an interim order should be granted in taxation matters but the court must further consider if there was balance of convenience in favour of petitioner.
6. What is under challenge in this petition is not final order passed by Collector, Central Excise but the order of the Tribunal under Section 35F of Central Excises and Salt Act. This provision requires a person desirous of appealing against to deposit with the adjudicating authority the duty demanded or penalty levied. Proviso to it which is material reads as under : -
'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 condition as he or it may deem fit to impose so as to safeguard the interests of revenue.'
This proviso confers a discretion on the Tribunal or the Appellate Authority to dispense with such deposit of penalty or the the duty levied resulted in undue hardship to the person subject to such condition as may safeguard the interests of revenue. When the appeal was presented the Tribunal directed petitioner to deposit 25 per cent of the duty demanded and furnish bank guarantee of the balance. In pursuance of this order the petitioner approached the bank but as there were no liquid assets of petitioner the bank did not grant any guarantee. The petitioner was therefore left in helpless position. It filed a writ petition in this court which was decided by a learned single judge of this court on 19th April 1984. It was held that refusal of the bank to give bank guarantee as desired was not considered by the Tribunal. He therefore directed the Tribunal to reconsider the application for modifying its order dated 23rd December, 1983 keeping in view the fact that State Bank of India insisted upon making cash deposit. The Tribunal by its order dated 22nd June, 1984 held that it did not see any reason to modify its earlier order because although petitioner had shown losses in the balance sheet of 31st March, 1983, but the amount of Rs. 5,72,000/-shown as sundry debts was not explained. Further petitioner failed to show that if State Bank of India was insisting for cash deposit whether petitioner approached any other bank. The petitioner then filed another writ petition in this court on 10th September, 1984, The petition was disposed of by saying that petitioner should approach the Tribunal again and placed the relevant material to establish if there were any assets available with it. In pursuance of this order petitioner filed another application, copy of which has been filed as Annexure 8 to this writ petition. In paragraph 3 of the same it was stated that the land situated at Industrial Estate, Unnao, had been taken on lease with U.P. State Industrial Development Corporation, and the said property was mortgaged with State Bank of India. In paragraph 4 it was stated that the entire plant and machinery had been purchased under hire purchase scheme from U.P. Small Scale Industrial Corporation, ownership of which is vested in the Corporation and there was still a balance of Rs. 1,16,000/- which the petitioner was required to pay. In paragraph 5 of the affidavit it was stated that the proprietor of petitioner did not have another property other than this belonging to the applicant's business. No counter-affidavit appears to have been filed by the department. The allegations in the affidavit, therefore, that petitioner had no assets, from which he could deposit 25 per cent or could furnish the guarantee stood unrebutted. The Tribunal however, relying on certain observations in Dunlop India Ltd. (Supra) again held that sufficient sympathy has been shown to petitioner and it was not possible to grant any indulgence. In doing so the Tribunal obviously did not appreciate the import of the words 'undue hardship' to the applicant used in proviso to Section 35F. There is no finding in the order as to what would happen if the interim order is not granted in favour of petitioner. In the absence of any finding of undue hardship the exercise of discretion by the Tribunal is patently erroneous. But as observed by Hon'ble Supreme Court it is not the legal aspect but the balance of convenience which only can entitle the petitioner to seek an interim order. On facts stated above and on the unrebutted allegations made before Tribunal it does not call for any argument that in case an interim order is not granted in favour of petitioner then the entire business which is on a small scale shall come to a stand still. The petitioner is not like Dunlop India Ltd. or big industrial magnate whose assets run in crores who has no difficulty in finding liquid assets for furnishing bank guarantee. Here is a case of small Industrial enterpreneur and on the principle laid down by Supreme Court the power under Article 226 can be exercised of granting interim relief to save the assessee from grave private injury.
7, For reasons mentioned above we are of opinion that the operation of the order passed by the Tribunal directing deposit of 25 per cent cash and bank guarantee for the balance for entertaining the appeal shall remain stayed. This order shall not prevent the Tribunal from deciding the appeal at an early date.