Supreme Court waives excessive deposit in export business penalty case, emphasizes undue hardship consideration.

The Supreme Court set aside the Division Bench's order directing the appellant to deposit Rs.20,00,000 for each appeal due to penalty imposition in an export business case. The Court emphasized the Appellate Authority's discretion to waive pre-deposit based on undue hardship, finding the enhancement to Rs.20,00,000 improper. The appellant was directed to deposit Rs.5,00,000 within two months, leading to the quashing of penalty orders and a fresh hearing of the appeals on merits, with no costs incurred.

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Issues:
Appeal against orders of Appellate Authority for penalty imposition and dismissal of appeals due to failure in pre-deposit.

Analysis:
The appellant, engaged in the export business, failed to meet its export obligations under two Advance Licences issued in 1991. Consequently, show-cause notices were issued, leading to penalty imposition by the Adjudicating Authority under Section 11(2) of the Foreign Trade (Development and Regulation) Act, 1992. Despite filing appeals against the penalty orders, the Appellate Authority directed a pre-deposit of Rs.5,00,000 for each appeal, which the appellant failed to comply with, resulting in dismissal of the appeals.

The appellant then approached the High Court through a Writ Petition seeking to set aside the orders of the Appellate and Adjudicating Authorities, requesting an extension for the pre-deposit, and seeking more time to fulfill export obligations. The Single Judge dismissed the petition, leading to an appeal before the Division Bench, which allowed the appellant to deposit Rs.20,00,000 in each appeal within 8 weeks. A subsequent Review Application was also dismissed by the Division Bench.

Upon review, the Supreme Court found that the Division Bench's order to deposit Rs.20,00,000 for each appeal was erroneous. Referring to the provisions of Section 15 of the Act, the Court highlighted the discretion vested in the Appellate Authority to dispense with pre-deposit of penalties based on undue hardship. As the Appellate Authority had already directed a pre-deposit of Rs.5,00,000, the Division Bench's enhancement to Rs.20,00,000 was deemed improper.

Consequently, the Supreme Court set aside the Division Bench's order and directed that if the appellant deposits Rs.5,00,000 within two months, the Appellate Authority's orders imposing penalties will be quashed, and the appeals will be heard afresh on merits. The Court allowed the appeals with no costs incurred.

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