IMPORTANT POINT
Stay pending disposal of the matters before concerned forums though discretionary, discretion has to be exercised judicially.

Headnote:Central Excise Act, 1944 - Section 35F - Deposit, pending appeal - Appellants were alleged to have removed excisable goods clandestinely without payment of duty - Searches were conducted at premises of manufacturing units - After issuing notice, Commissioner of Central Excise raised demand of Rs. 2,05,31,762/- and penalty of equal amount u/s 11AC of the Act - Demand of Rs. 24,24,813 in respect of other company of appellant was confirmed with penalty of equal amount - Tribunal in appeal while staying recovery of amount directed appellants to pre-deposit 25% of duty demanded from them - Appeal - Principles relating to grant of stay pending disposal of appeal - Discretion has to be exercised judiciously - On mere establishing a prima facie case, interim order of protection should not be passed - Twin requirements to be satisfied u/s 35F of the Act were consideration of undue hardship aspect and imposition of conditions to safeguard the interest of Revenue - Tribunal rightly observed that rival stands were to be examined in detail with reference to material on record - Appellant had deposited Rs. 4 lakhs and Rs. 30 lakhs pursuant to direction of Supreme Court - In facts and circumstances, appeal to be heard by Tribunal without further deposit.
       Held : Principles relating to grant of stay pending disposal of the matters before the concerned forums have been considered in several cases. It is to be noted that in such matters though discretion is available, the same has to be exercised judicially.(Para 6)
       The applicable principles have been set out succinctly in Silliguri Municipality and Ors. v. Amalendu Das and Ors. (AIR 1984 SC 653) and M/s Samarias Trading Co. Pvt. Ltd. v. S. Samuel and Ors. (AIR 1985 SC 61) and Assistant Collector of Central Excise v. Dunlop India Ltd. (AIR 1985 SC 330).(Para 7)
       It is true that on merely establishing a prima facie case, interim order of protection should not be passed. But if on a cursory glance it appears that the demand raised has no leg to stand, it would be undesirable to require the assessee to pay full or substantive part of the demand. Petitions for stay should not be disposed of in a routine matter unmindful of the consequences flowing from the order requiring the assessee to deposit full or part of the demand. There can be no rule of universal application in such matters and the order has to be passed keeping in view the factual scenario involved. Merely because this Court has indicated the principles that does not give a license to the forum/authority to pass an order which cannot be sustained on the touchstone of fairness, legality and public interest. Where denial of interim relief may lead to public mischief, grave irreparable private injury or shake a citizens faith in the impartiality of public administration, interim relief can be given. (Para 8)
       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.(Para 11)
       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.(Para 12)
       The word "undue" adds something more than just hardship. It means an excessive hardship or a hardship greater than the circumstances warrant. (Para 13)
       The other aspect relates to imposition of condition to safeguard the interest of revenue. This is an aspect which the Tribunal has to bring into focus. (Para 14)
       In the instant case Tribunal has rightly observed that the rival stands have to be examined in detail with reference to material on record. (Para 15)
       The only other question that needs to be examined is whether any reduction of the amounts to be deposited as directed by the Tribunal is called for.(Para 16)
       It appears that pursuant to the direction given by this Court on 18.8.2006, the appellants have paid Rs.4 lakhs and Rs.30 lakhs within the time stipulated. Considering the nature of the dispute and the difficulties highlighted by the appellants seeking dispensation of deposit, we direct that the appeals shall now be heard without requiring further deposit, if the appeals are free from other defects in accordance with law.(Para 17)

JUDGMENT

Arijit Pasayat, J. - Leave granted.

2. Challenge in these appeals is to the order passed by the Allahabad High Court dismissing the writ petitions filed by the appellants who had filed the writ petitions questioning correctness of the order passed by the Customs Excise and Service Tax Appellate Tribunal, New Delhi (in short the Tribunal) dealing with the applications filed for staying recovery of duty and penalty imposed pending disposal of the appeals before the Tribunal. Allegations against the appellants were to the effect that they were removing excisable goods clandestinely without payment of duty and without raising Central Excise invoices/bills under the guise of estimates/rough estimates to their front trading firms which they called houses and consequently to the ultimate customer. Searches were conducted at the premises of manufacturing units and other connected concerns, through whom the goods were allegedly sold. During the search, incriminating documents were allegedly recovered from various premises and statements of the concerned persons have also been recorded.

3. After issuing notice under Central Excise Act, 1944 (in short the Act), Central Excise Rules, 1944 (in short the Rules) and Central Excise Rules, 2001 (in short the 2001 Rules) the Commissioner of Central Excise, Kanpur demanded Rs.2,05,31,762/- from M/s Benara Automotives Pvt. Ltd. (in short BAPL) and penalty of equal amount was imposed under Section 11 AC of the Act. Additionally, penalties were imposed on six other persons. The Commissioner also confirmed the demand of Rs.24, 24,813/- in respect of M/s Benara Valves Ltd. (in short BVL) and imposed penalty of equal amount. Additionally, Rs.1,00,000/- each was imposed on several other persons. Appeals were preferred before the Tribunal challenging the determination. Prayer for stay of realisation of demands raised till disposal of the appeals in terms of Section 35 F of the Act was made. The Tribunal directed as follows:

"Therefore, considering the facts and circumstances of all these cases, we direct the applicant to pre-deposit the following amounts within eight weeks under Section 35F of the Central Excise Act:

(1) M/s. BAPL and M/s. BVL are directed to pre-deposit twenty-five percent of the duty demanded from them:

(2) The other applicants are directed to pre-deposit twenty-five percent of the penalties imposed on them".

4. Questioning correctness of the order passed by the Tribunal, writ petitions were filed. By the impugned orders, the High Court directed extension of time to comply with the Tribunals order. However, the prayer for dispensation of deposit was rejected.

5. Learned counsel for the appellants submitted that demands raised will not stand the test of appeal as correct legal and factual position were not kept in view while adjudicating the issues. Mr. B. Dutta, learned Additional Solicitor General for the respondents submitted that demands have been raised after detection of large scale manipulations and evasions and no relief should be extended to such dishonest manufacturers. According to him, neither any prima facie case has been established, nor any case of irreparable loss or balance of convenience has been made out.

6. Principles relating to grant of stay pending disposal of the matters before the concerned forums have been considered in several cases. It is to be noted that in such matters though discretion is available, the same has to be exercised judicially.

7. The applicable principles have been set out succinctly in Silliguri Municipality and Ors. v. Amalendu Das and Ors. (AIR 1984 SC 653) and M/s Samarias Trading Co. Pvt. Ltd. v. S. Samuel and Ors. (AIR 1985 SC 61) and Assistant Collector of Central Excise v. Dunlop India Ltd. (AIR 1985 SC 330).

8. It is true that on merely establishing a prima facie case, interim order of protection should not be passed. But if on a cursory glance it appears that the demand raised has no leg to stand, it would be undesirable to requi

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2006 Supreme(SC) 1169

IMPORTANT POINTStay pending disposal of the matters before concerned forums though discretionary, discretion has to be exercised judicially.

Cases Referred (4)

IMPORTANT POINT
Stay pending disposal of the matters before concerned forums though discretionary, discretion has to be exercised judicially.