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M/S Hindustan Ferro & Industries Ltd & Another v. Customs Excise & Service Tax Appellate Tribunal & Ors - WRIT TAX No. 1293 of 2004 [2004] RD-AH 819 (17 September 2004)


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Court No.37

Civil Misc. Writ Petition No. 1293 of  2004

M/s. Hindustan Ferro & Industries Ltd., Kanpur and another v. The Customs, Excise & Service Tax Appellate Tribunal, New Delhi and others.

Hon'ble R.K.Agrawal, J.

Hon'ble K.N.Ojha, J.

By means of the present writ petition filed under Article 226 of the Constitution of India, the petitioners seek a writ, order or direction in the nature of certiorari quashing the order dated 26th April, 2004 passed by the Customs, Excise & Service Tax Appellate Tribunal, New Delhi, respondent No.1, filed as Annexure 8 to the writ petition and other consequential reliefs.

Briefly stated the facts giving rise to the present writ petition are as follows:  

A demand of Central Excise duty to the tune of Rs.19,69,836/- has been confirmed by the Commissioner Central Excise(Appeals) which covers two periods i.e. June to March, 1994 amounting to Rs.7,98,225/- and April to July, 1994 amounting to Rs.11,71,611/-.  The petitioners preferred an appeal before the Tribunal.  Along with the appeal an application for waiver of pre-deposit of the duty was also made.  The Tribunal by the impugned order had found that the merits of the case are debatable and the financial position of the company is sound as they have cash in hand nearly Rs.one crore besides other assets etc. to the tune of Rs. seven crores. As seen from the balance sheet of 2002-03. The Tribunal, however, granted partial waiver of pre-deposit and had directed the petitioner to deposit a sum of Rs.four lacs only.

Heard Sri Rakesh Kumar, learned counsel for the petitioner and Sri Ashok Singh, the learned Standing Counsel for the respondents.

Learned counsel for the petitioner submitted that the finding that the petitioners had Rs. one crore as cash in hand is based on misreading of the documents and the balance sheet as in the said balance sheet for the year ending 31st March, 2003 cash in hand was only to the tune of Rs.10.00 lakhs and odd  and not Rs.one crore.  He also submitted that the Tribunal ought to have considered the application on the question of undue hardship and referred to the Division Bench decision of this Court dated 23rd October, 2003, in Civil Misc. Writ Petition No.1219 of 2003, I.T.C. Ltd. v. Commissioner(Appeals), Customs and Central Excise and others wherein this Court has held as follows:-

"In view of the above, the aforesaid authorities make it clear that the Court should not grant interim relief/stay of the recovery merely by asking of a party.  It has to maintain a balance between the rights of an individual and the State so far as the recovery of sovereign dues is concerned.  While considering the application for stay/waiver of a pre-deposit, as required under the law, the Court must apply its mind as to whether the appellant has a strong prima facie case on merit.  Incase it is covered by the judgment of a Court/Tribunal binding upon the Appellate Authority, it should apply its mind as to whether in view of the said judgment, the appellant is likely to succeed on merit.  If an appellant having strong prima facie case, is asked to deposit the amount of assessment so made or penalty so levied, it would cause undue hardship to him, though there may be no financial restrain on the appellant  running in a good financial condition.  The arguments that appellant is in a position to deposit or if he succeeds in appeal, he will be entitled to get the refund, are not the considerations for deciding the application.  The order of the Appellate Authority itself must show that it had applied its mind to the issue raised by the appellant and it has been considered in accordance with law.  The expression "undue hardship" has a wider connotation as it takes within its ambit the case where the assessee is asked to deposit the amount even if he is likely to exonerate from the total liability on disposal of his appeal.  Dispensation of deposit should also be allowed where two view are possible. While considering the application for interim relief, the Court must examine all pros and cons involved in the case and further examine that in case recovery is not stayed, the right of appeal conferred by the legislature and refusal to exercise the discretionary power by the authority to stay/waiver the pre-deposit condition, would be reduced to nugatory/illusory.  Undoubtedly, the interest of the Revenue cannot be jeopardized but that does not mean that in order to protect the interest of the Revenue, the Court or authority should exercise its duty under the law to take into consideration the rights and interest of an individual.  It is also clear that before any good could be subjected to duty, it has to be established that it has been manufactured and it is marketable and to prove that it is marketable, the burden is on the Revenue and not on the manufacturer.

In view of the above, we are of the considered opinion that as the Appellate Authority has not addressed to itself any of the issues involved in the appeal rather has gone to the issue of financial hardship which was unwarranted and uncalled for in the fact situation of this case.  The order impugned cannot be sustained in the eyes of law and we have no option but to allow this petition and set aside the order impugned."

Sri Singh submitted that as the financial position of the petitioner was sound and, therefore, the Tribunal was justified in declining the full waiver of pre-deposit.  

Be that as it may, the Court finds that the Tribunal has not taken into consideration the principle laid down by this Court in the case of I.T.C. Ltd. referred to above.  In this view of the matter, the order dated 26.7.2004 passed by the Tribunal is set aside.  The Tribunal is directed to pass an order on the application for waiver afresh in accordance with law in the light of the observations made above.

The writ petition succeeds and is allowed.




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