LexM/S. BENARA VALVES LTD. AND ORS. versus COMMISSIONER OF CENTRAL EXCISE AND ANR.
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
MIS. BENARA VALVES LTD. AND ORS.
A
v.
COMMISSIONER OF CENTRAL EXCISE AND ANR.
NOVEMBER 23, 2006
[ARIJITPASAYAT ANDLOKESHWARSINGHPANTA,JJ.]
B
Central Excises and Salt Act, 1944-s.35-F-Stay/Dispensation of pre-
deposit of duty and penalty-Demand of huge sum of duty and penalty-
Direction of Tribunal to pay 2 5% of duty demanded/penalty-Application for C
stay of pre-deposit of duty and penalty-Rejected-On appeal, Held: Assessee
already deposited Rs.34 lacs-Considering the difficulties highlighted by
assessee, appeal be heard without further deposit, however assessee directed
to furnish security to safeguard the interest of revenue.
Interim order-Principles governing grant of stay pending disposal of D
matter before concerned forums-Discussed.
Words and Phrases-Expression 'undue hardship'-Meaning of-
Discussed.
The Central Excise Department found that appellants (BAPL and BVL) E
had been removing excisable goods from its factory clandestinely. Department
raised demand of duty of Rs. 2 crores in respect of BAPL and also imposed
penalty of same amount. Department also confirmed demand of Rs.24 lacs in
respect of BVL and imposed penalty of equal amount. Additional penalties were
imposed on several other persons. Aggrieved appellants filed appeals before
Tribunal and also application for stay of demand of duty/penalty till disposal F
of appeals in terms of Section 35-F of Central Excises Act, 1944. Tribunal
directed the appellants to pre-deposit 25% of duty demanded/penalty. On writ
petition, High Court directed the extension of time to deposit the amount
however, rejected the prayer for stay/dispensation of pre-deposit. Hence these
appeals.
Disposing of the appeals, the Court
HELD: 1. In matters relating to grant of stay pending disposal of the
matters before the concerned forums though discretion is available, the same
341
G
H
342
SUPREME COURT .REPORTS [2006) SUPP. 9 S.C.R.
A has to be exercised judicially. {344-H; 345-A)
B
SilliguriMunicipality and Ors. v. Amalendu Das and Ors., AIR (1984)
SC 653; Mis 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, relied on.
2. 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
C 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 tot.he forum/
authority to pass an order which cannot be sustained on the touchstone of
D 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.
3.1. The two significant expressions used in Section 35F of the Central
Excis~s Act, 1944 are "undue hardship to such person" and "safeguard the
E interests of revenue". (346-C)
3.2. 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. The word "undue" adds something more than
F just hardship. It means an excessive hardship or a hardship greater than the
circumstances warrant. 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. (346-D-G)
G
3.3. 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. It is for the Tribunal to impose such conditions as are deemed proper
to safeguard the interest of revenue. Therefore, the Tribunal while dealing
with the application has to consider materials to be placed by the assessee
relating to undue hardship and also to stipulate condition as requiExcerpt shown. Read the full judgment & AI analysis in Lexace.