1. Vide order dated 8.10.99 despatched on 2.11.99, the present applicant was directed to deposit Rs. 50,000 as pre-condition for hearing of the appeal. In the order, the Tribunal had indicated that the recovery for the remaining sum was not stayed and that the revenue was free to recover the amount using legal means. In this modification application, it has been maintained that in terms of Section 35F, the Tribunal is not competent to pass the order favouring both sides. On this ground, the prayer is made for modification of the order.
2. Shri Biradar did not file any case law in support of the contentions made.
3. We have carefully considered the submissions. Section 35F in its entirety reads as below: Deposit, pending appeal, of duty demanded or penalty levied--Where in any appeal under this Chapter, the decision or order appealed against relates to any duty demanded in respect of goods which are not under the control of Central Excise authorities or any penalty levied under this Act, the person desirous of appealing against such decision or order shall, pending the appeal, deposit with the adjudicating authority the duty demanded or the penalty levied: Provided that where in any particular case, the Commissioner (Appeals) or the Appellate Tribunal is of opinion that the deposit of duty demanded or penalty levied would cause undue hardship to such person, the Commissioner (Appeals) or, as the case may be, the Appellate Tribunal, may dispense with such deposit subject to such conditions as he or it may deem fit to impose so as to safeguard the interests of revenue.
4. The power vested in the Tribunal under the said Section is for granting dispensation with the deposit which is mandatory in terms of the first part of that Section. In making such orders, in terms of the proviso to the said Section, the Tribunal is required to take into account two factors viz: (1) whether pre-deposit, which is mandatory, would cause undue hardship on the applicant and; (2) whether the order being made by the Tribunal would safeguard the revenue interests.
5. Although, the said proviso does not give express authority to the Tribunal to stay the recovery of the contested duties and penalties, it gives as a natural corollary to the power of the Tribunal to waive the deposit. If the Tribunal waived the deposit and at the same time the department were enabled to recover the same, then the power vested in the Tribunal would become redundant. But that does not take away the power of the Tribunal to make the order such as in dispute before us.
In dealing with the plea of hardship, the Tribunal ordinarily sees the final accounts. In some cases, accounts are produced which may not be reliable. In some cases, the client's affidavits would be on record. In the present case, the supporting evidence of the plea consisted of the applicant's affidavit and income tax return filed by him for the year 1999-2000. This evidence was not thought sufficient to establish to any degree the financial status of the applicant. Even then, the Tribunal chose to limit the deposit to Rs. 50,000 when the penalty imposed was Rs. 5 lakhs. Even then the possibility existed that the applicant had finances which would enable him to deposit the penalty in its entirety but for the representation made by him. In that case, the Tribunal chose to give liberty to the revenue to recover the remaining amount cautioning the department to use only legal means.
6. On seeing our order and the provisions of Section 35F, we do not find that we had exceeded our legal jurisdiction in making the order.
Finding no merit in the application, we dismiss the same.
7. At this stage, we asked Shri Biradar to state whether he requires more time to comply with the Tribunal's earlier order. After consulting his client, Shri Biradar stated that his client is not in a position to make the pre-deposit. In that case, having no other alternative, we dismiss the appeal filed by Shri Nimesh Jain for failure to comply with the provisions of Section 35F of the Central Excise Act, 1944.
1. I whole heartedly agree with the order dictated by my learned brother.
2. The application for modification seeks to question the power of the Tribunal regarding grant of stay. Normally, whenever the application is filed under Section 35F of the Central Excises Act, there is also a prayer for stay of recovery. The applicant also makes such prayer on the face for the fact that the Tribunal has got inherent power. The grant of stay by the Tribunal is an incidental and ancillary power so as to fulfil exercise the power of hearing of the appeal which can be finally done only if the stay is granted. The leading case in this regard is of Md. Kunhi's case decided by the Supreme Court. In the order sought to be modified, the Tribunal taking note of the circumstances of the case has passed the order. I do not think such a power to grant stay ever can be questioned by the applicant. The prayer seems to suggest that the power of stay is not there, which to my mind, is a preposterous one. I agree with the order of my Ld. brother and dismiss the application.