Ms Devi Iron Power Ltd and Another vs Commissioner Central Excise Raipur and Another

Hon''ble Shri Prashant Kumar Mishra, J.—In this writ petition under Article 226 of the Constitution of India the petitioner has called in question the legality and validity of the order dated 18/01/2012 passed by the Customs, Excise & Service Tax Appellate Tribunal, New Delhi which in turn has been preferred against the order dated 30th September, 2010 passed by the Commissioner, Customs & Central Excise, Raipur. Facts of the case, in nutshell, which are relevant for disposal of the present writ petition are that before the said appellate authority the petitioner moved an application for waiver of pre-deposit in accordance with Section 35F of the Central Excise Act, 1944 on the ground that the demand notice of Rs. 135 Lakhs together with equal amount of penalty is based on pure interpretation of legal provisions and there is no allegation that the petitioner has either evaded the tax or has concealed anything which would attract the amount of penalty as well as the original levy, he is entitled to waiver of pre-deposit.

Learned counsel for the petitioner would argue that the very basis of exercise of jurisdiction to consider a prayer for waiver of pre-deposit is based on the question of undue hardship to the assessee in the event he is required to deposit the amount in question, however, there is no whisper in the impugned order by which it can be gathered that the said aspect of the matter has been considered by the appellate Tribunal and for this reason alone the impugned order deserves to be set-aside.

Shri Sharma, learned counsel for the respondents would argue that though question concerning undue hardship has not been considered in express terms but the said has to be gathered on a reading of the entire order and on reading of the order it would clearly appear that the Tribunal has considered all aspects of the matter before directing the petitioner to deposit Rs. 100 Lakhs as a condition for hearing the appeal on merits.

In the matter of Benara Valves Ltd. and Others Vs. Commissioner of Central Excise and another reported in (2006) 13 SCC 347 it has been held thus in paragraphs 11 to 16 :-

Two significant expressions used in the provisions are "undue hardship to such person" and "safeguard the interests of the Revenue". Therefore, while dealing with the application twin requirements of consideration i.e. consideration of undue hardship aspect and imposition of conditions to safeguard the interest of the Revenue have to be kept in view.

As noted above there are two important expressions in Section 35F. One is under 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 Vs. State of Karnataka and others, 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.

For a hardship to be "undue" it must be shown that the particular burden 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" ads something more than just hardship. It means an excessive hardship or a hardship greater than the circumstances warrant.

The other aspect relates to imposition of condition to safeguard the interests of the 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 interests of the 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 conditions as required to safeguard the interest of the Revenue.

In the instant case the Tribunal has rightly observed that the rival stands have to be examined in detail with reference to material on record.

In view of what has been settled by the Hon''ble Supreme Court in the matter of Benara Valves Ltd. (supra) it appears to this Court that to consider the issue of waiver of pre-deposit, the appellate Tribunal is required to apply its mind and record a definite finding as to whether in the given set of facts the assessee would suffer "undue hardship" if waiver of pre-deposit is not allowed. It is also to be seen that while considering "undue hardship" the Tribunal or for that matter the Court has to strike a balance between the undue hardship which the petitioner may suffer and the interest of revenue, however, in the present case the Tribunal has not considered and has not recorded any finding with regard to the issue as to whether the petitioner would suffer undue hardship if he is made liable to deposit amount of Rs. 100 Lakhs. Taking guidance from what has been settled by the Hon''ble Supreme Court this Court is of the considered opinion that the impugned order deserves to be set-aside and the mater deserves to be remitted back to the appellate Tribunal for deciding the application preferred by the petitioner seeking waiver of pre-deposit in accordance with law as settled by the Hon''ble Supreme Court in the matter of Benara Valves Ltd. (supra).