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M/S Iqbal Leathers Ltd & Others v. Appellate Tribunal For Foreign Exchange & Another - WRIT TAX No. 1308 of 2004 [2004] RD-AH 833 (20 September 2004)


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Court No.37

Civil Misc. Writ Petition No. 1308 of  2004

M/s. Iqbal Leathers Limited, Kanpur Nagar and others.


The Appellate Tribunal for Foreign Exchange, New Delhi and another

Hon'ble R.K.Agrawal, J.

Hon'ble K.N.Ojha, J.

The petitioners have preferred an appeal under section 19 of the Foreign Exchange Management Act, 1999 before the Appellate Tribunal for Foreign Exchange, New Delhi. Along with the appeal the petitioners have also preferred an application for waiver of the pre-deposit of the amount of penalty.  The Tribunal by the impugned order dated 19th July, 2004 had waived 50% of the amount of penalty. However, it had not assigned any reason that why only 50% ought to be waived.

Heard Sri Pankaj Bhatia, learned counsel for the petitioner and Sri K.C.Sinha, the learned Senior Standing Counsel for the respondents.

This Court in Civil Misc. Writ Petition No.1219 of 2003, I.T.C. Ltd. v. Commissioner(Appeals), Customs and Central Excise and others decided on 23rd October, 2003 has laid down the principle on which the appellate power to waive the pre-deposit of the amount for entertaining an appeal under Central Excise and Salt Act, 1944 should be exercised. This Court has laid down the following guidelines:

"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.  In case 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."

The Tribunal had not at all applied its mind on various factors as enumerated by this Court. Moreover, the order is non-speaking order; therefore, it cannot be sustained. In this view of the matter the order dated 19th July, 2004 is set aside. The Tribunal is directed to decide the application for waiver afresh in accordance with law in the light of the observations made above as expeditiously as possible preferably within two weeks from the date a certified copy of this order is produced before it.

The writ petition succeeds and is allowed.




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