Per V.P. Gulati :

The prayer in the application is for dispensation of pre-deposit of duty amount of Rs. 38,29,012.35 as also a penalty of Rs. 9,00,000/- levied on the company and in addition to another penalty of Rs. 1,00,000/- levied under section 114 (iii). Under the impugned orders, 5 Directors have also been penalised but they have not filed any appeals before the tribunal. The learned advocate for the appellants has pleaded that he is reserving all his pleas on merits for being adduced at the time of final hearing and is finding his pleas only on the financial hardship aspect. He has, on a query from the bench, clarified that the duty has been demanded in respect of the goods which had been earlier imported by the appellants under the EOU scheme without payment of duty and which were found short on check by the authorities. He has raised plea of financial hardship and referred to the balance sheet for the year ending 31st March 1996 and pleaded that the appellants have made a net loss of Rs. 46 lakhs and the unit now is also closed. He has pleaded the appellants are not in a position to pay the entire amount of duty and penalty as demanded in terms of impugned order. He was asked to refer to the balance sheet and his attention was drawn to the various entries in the same, particularly, the amounts available under the heading Sundry Debtors, Reserves Surplus, Loans Advances. These amounts, it was pointed out by him, aggregated over Rs. 11 Crores. In that context, it was pointed out that the appellant could not plead financial hardship and large amounts are lying by way of reserves and surplus and are pending realisation from Sundry Debtors as well as from the persons to whom loans and advances have been given. He has pleaded the appellants have liability of over Rs. 2.85 crores to exim bank, and Rs. 8 crores to State Bank of India. He has pleaded taking these factors into consideration, it could not be said that the appellants' financial position is in any way sound. He has therefore prayed for a nominal amount to be ordered by the bench.

2. Heard the SDR for the Department.

3. We have considered the pleas made by the learned advocate. We observe that the appellants had been allowed import of goods duty free and an element of faith had been reposed in the appellants and they were required to contribute to the export effort the purpose for which the EOU scheme was introduced. The appellant in total disregard of all the norms have prima facie has not lived upto the faith reposed in them and there is no explanation forthcoming from them as to how the goods of large value could not be accounted for when a plea of financial hardship has been made. This plea can be considered only in the context of what the appellants might have to say about the large quantum of goods found short and in respect of which large amounts of duty is involved and how the goods came to be missed. These goods prima facie would have been removed and the appellants would have realised the money value of the same in the Indian Market and this money value is not reflected in the balance sheet. As it is going by the figures as are reflected in the balance sheet, the appellants have an outstanding of over Rs. 11 Crores under the heading Sundry Debtors, Loans and Advances and Reserves Surplus. They have also an amount of Rs. 25 lakhs figuring under the heading "cash and bank balances". Taking into consideration even liability towards bank as urged by the advocate, the appellants have still over Rs. 3 crores which are realisable by them and which are considered good in terms of balance sheet. In view of the above we hold that so far as the duty amount is concerned, the appellants should pay-up the sum as pre-deposit. There could be some liquidity problems and since large amounts are shown under the Sundry Debtors and Loans and Advances, it is expected that these amounts will be realised by them over period of time. In view of the above, we give the app