Stay and waiver of Pre-deposit - factors to be considered

PJ/Case Laws/2011-12/1475

Case: M/s BENARA VALVES LTD Vs COMMISSIONER OF CENTRAL EXCISE

Citation: 2006-TIOL-156-SC-CX

Issue:- Grant of stay and waiver of pre-depsoit – factual scenario and consequences of direction given in application to be considered before passing order.

Brief Fact:- Allegations against the appellants were to the effect that they were removing excisable goods clandestinely without payment of duty and without raising Central Excise invoices/bills under the guise of estimates/rough estimates to their front trading firms which they called 'houses' and consequently to the ultimate customer. Searches were conducted at the premises of manufacturing units and other connected concerns, through whom the goods were allegedly sold. During the search, incriminating documents were allegedly recovered from various premises and statements of the concerned persons have also been recorded.

Challenge in these appeals is to the order passed by the Allahabad High Court dismissing the writ petitions filed by the appellants who had filed the writ petitions questioning correctness of the order passed by the Customs Excise and Service Tax Appellate Tribunal, New Delhi dealing with the applications filed for staying recovery of duty and penalty imposed pending disposal of the appeals before the Tribunal.

Appellant’s Contention:- Learned counsel for the appellants submitted that demands raised will not stand the test of appeal as correct legal and factual position were not kept in view while adjudicating the issues.

Respondent’s Contention:- Learned Additional Solicitor General for the respondents submitted that demands have been raised after detection of large scale manipulations and evasions and no relief should be extended to such dishonest manufacturers. According to him, neither any prima facie case has been established, nor any case of irreparable loss or balance of convenience has been made out.

Reasoning of Judgment:- 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 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 is no rule of universal application in such matter and the order has to be passed keeping in view the factual scenario involved. Merely because this court has indicated the principal does not give an authority to pass an order which cannot be sustained on the touchstone of fairness legality and public interest. Where denial of denial of interim relief may lead to public mischief, grave irreparable private injury or shake a citizen’s faith in the impartiality of public administration, the interim relief can be given.

In the instant case the tribunal has rightly observed that rival stand has to be examined in detail with reference to material on record. Considering the nature of the dispute and difficulties highlighted by the appellant seeking dispersion of deposit, we direct that the appeal shall now be heard without requiring further deposit, if the appeal is free from any other defects in accordance of law. However for the balance the amount demanded,with a view to safeguard interest of the revenue, the appellant shall furnish such security as may be stipulated by tribunal.

Decision:- Appeal disposed of.

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PJ/Case Laws/2011-12/1475

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