The discretionary power to waive pre-deposit under Section 129-E of the Customs Act should be exercised to avoid hardship, and the mere arguability of the issues does not warrant a complete waiver.

( 1 ) THE Commissioner of Customs (Appeals), delhi by an interim order, impugned in this writ petition, passed under Section 129-E of the Customs Act, 1962 directed the petitioner to pre-deposit a sum of Rs. 5 crores, while waiving the remainder of the duty amount held recoverable from it. Dissatisfied with the said order, the petitioner has filed the present writ petition and prayed for a complete waiver of the pre-deposit.

( 2 ) THE petitioner company is a subsidiary of M/s. Cisco Systems Management B. V. (Netherlands), which in turn, is a subsidiary of M/s. Cisco Inc. , USA. The latter of the two companies has entered into agreements with the petitioner for supply of equipment broadly classified into the following four different categories : a)import of equipment for use in the STP unit; b)import of equipment for internal use; c)import of demonstration equipment on loan/ returnable basis; and d)import of spare parts for supply to the customers of cisco Inc. to support replacements of failed parts of original equipment supplied by Cisco Inc.

( 3 ) ACCORDING to the petitioner, the prices of the imported goods are determined on the basis of a reference price list of Cisco Inc. called the Global Price list (GPL for short) and universally adopted by the Cisco Inc. for all the exports made to different countries. The goods exported by Cisco Inc. are normally made at a discount which varies from equipment to equipment. In the case of capital goods imported for the stp Unit, the value of the imports is equal to 40% of the gpl, which price has been revised to 46% of GPL with effect from 12th June, 2004. Similarly, in the case of equipment imported for internal use the value is equal to 46% of the GPL. That is true in respect of equipment for demonstration also, which are imported at 46% of the price mentioned in the GPL. In the case of spare parts with which, we are concerned in this writ petition, the imports are made at 35% of the price mentioned in the gpl. Keeping in view the special relationship between the selling and the buying companies, however, the issue regarding the correct valuation of the imported spare parts was referred to the Special Valuation Branch (for short the SVB) of Delhi Customs. While the matter was still pending before the SVB, the value of goods imported in terms of a particular bill of entry was enhanced by the customs authorities at Bangalore by 70%. The assessment of the duty even after the said enhancement remained provisional, which was challenged by the petitioner before the Commissioner of Customs (Appeals) and then before the Customs, Excise and Service tax Appellate Tribunal (CESTAT ). The petitioner s case is that the Tribunal has set aside the order passed by the authorities below and directed refund of the extra duty of Rs. 18. 15 crores on imports made from January, 2002 to December, 2003. In the meantime, the SVB at Delhi assessed the value of the imported goods at 58% of the gpl of Cisco Inc. taking into consideration the value of similar goods supplied to unrelated parties. Aggrieved by the said order, the petitioner has preferred an appeal before the Commissioner of Customs (Appeals) and applied for waiver of the pre-deposit of duty in terms of section 129-E of the Customs Act. The Commissioner has partly allowed the said application and directed a pre- deposit of Rs. 5 crores only as against a demand of R. 9. 22 crores raised by the Department against it. The present writ petition assails the correctness of the said order, as noticed earlier.

( 4 ) WE have heard, learned counsel for the parties and perused the record.

( 5 ) IN the order made by him the commissioner has noticed that the goods had been sold to unrelated buyers at various percentages of the GPL ranging between 10% to 90%. Some of the invoices which the petitioner had placed on record before the commissioner even showed that goods had been sold at 0% of GPL to M/s. Wipro Ltd. , which was in the opinion of th