TaxTMI 
TaxTMI 
2010 (8) TMI 720
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....cts are that the Appellant firm/Company are exporters of garments covered by eight shipping bills through ICD, irugur, coimbatore and the same were exported through Tuticorin Port. The value of the outstanding export proceeds is Rs. 1,13,20,461/- in respect of M/s. Fayshaw Apparels and Rs. 87,92,412/- in respect of M/s. Shaw Garments Private Limited. In terms of Section 8 of Foreign Exchange Management Act (in short, "FEMA") the exporters are required to take all reasonable steps to realise and repatriate to India the amount of foreign exchange within prescribed period and manner as mentioned in the GR forms. According to the Department, the Appellants have failed to take all reasonable steps to realise and repatriate to India the foreign exchange to the tune of Rs. 1,13,20,461/- and Rs. 87,92,412/- and hence they are liable for appropriate action under fEMA, 1999. 3. The case of Appellants is that shipments were not realised in respect of two shipments and only part realisation was received. Show cause notices were issued to the Appellant firms and their Managing Director alleging that the Appellants failed to prove reasonable steps to realise the outstanding export procee....
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....posing condition of pre-deposit of penalty would cause "undue hardship" to the Appellants. It was further contended that for more than 14 years, the Appellants were exporting garments and are having clean record of exports and earned foreign exchange to the tune of more than Rs. 16 Crores and the past history of earning foreign exchange by the Appellants ought to have been taken into account by the Appellate Tribunal. It was further submitted that under the proviso to Section 19 of Foreign Exchange Management Act, discretion has to be exercised judicially and the insistence of pre-deposit of the penalty, which itself was a huge sum would deprive the Appellant the statutory right of the appeal, which would cause "undue hardship" to the Appellant. The learned senior counsel would further urge that there is no revenue loss to the Government and the penalty was imposed on the notional loss of foreign exchange on account of non-realisation of export proceeds. 7. Countering the arguments, Mr. Dhandapani, learned counsel for Respondents submitted that even though goods were exported in 2002, till show cause notices were issued, the Appellants have not taken any steps to realise th....
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....hlighted the relevant aspects while rejecting the prayer for dispensation of pre-deposit. In the said judgment, the Supreme Court observed as under : "9......The three aspects to be focussed while dealing with such applications are : (a) prima facie case, (b) balance of convenience, and (c) irreparable loss. The Tribunal categorically found that these factors were established by the respondents. Even when the Tribunal decides to grant full or partial stay it has to impose such conditions as may be necessary to safeguard the interest of revenue. This is an imperative requirement under Section 129-E of the Act. (Customs Act) ....." 10. The expression used in proviso to Section 19(1) is not mere hardship, but "undue hardship". "Undue hardship" means something which is not merited by the conduct of the Claimant. Section 35-F of the Central Excise Act is identical to Section 19(1) of FEMA. Under Section 35-F of Central Excise Act, the person desirous of preferring an appeal against any decision or order has to deposit the duty or penalty before filing the appeal. Proviso to Section 35-F is identical to the proviso to Section 19(1), where the Appellate Tribunal is of the op....
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.... Therefore, the Tribunal while dealing with the application has to consider materials to be placed by the assessee relating to undue hardship and also to stipulate conditions as required to safeguard the interests of the Revenue." 12. The questions falling for our consideration are, whether the Appellants have shown undue "hardship" while rejecting the application for dispensation of pre-deposit and whether the Appellate Tribunal has judicially exercised the discretion. It is true that merely establishing a prima facie case, interim order of dispensation of deposit should not be passed. Only where it appears that the penalty imposed has no legs to stand or it would be undesirable to ask the Appellant to pay the full or part of the penalty, the Appellate Tribunal can dispense with the condition of pre-deposit of penalty on such conditions as it may deem fit. But such petition should not be disposed off in a routine manner unmindful of the consequences on the revenue flowing from the order requiring the Appellant to deposit full or part of the penalty. 13. As rightly contended by the learned counsel for Respondents, Government is encouraging exports to foreign countri....
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....o stand on, 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 can be no rule of universal application in such matters and the order has to be passed keeping in view the factual scenario involved. Merely because this court has indicated the principles that does not give a licence to the forum/authority to pass an order which cannot be sustained on the touchstone of fairness, legality and public interest, where 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, interim relief can be given, vide (2006) 13 SCC 347 = 2006 (204) E.L.T. 513 (S.C.)." 14. In the instant case, the amount payable by a foreign buyer in respect of exported goods is necessarily a question of fact. The learned counsel for Respondents submitted that even though goods were exported in 2002, till show cause notices were issued, there were no steps taken on the part of the Ap....
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....ing bills and the Appellants were taking all efforts to realise the sale proceeds from the said Gunasekar, agent for the buyer and these aspects were not taken note of by the Appellate Tribunal, it was further submitted that appellants are not having huge turnover but only having medium level of business and to direct the appellants to pay Rs. 1,10,00,000/- would cause undue hardship, which aspect was not kept in view by the appellate Tribunal. 17. The question whether the Appellants have taken reasonable steps for realisation of export proceeds and whether detention of the said Gunasekar under COFEPOSA has any relevance for realisation of export proceeds are the matters to be considered by the Appellate Tribunal while hearing up the Appeals. Likewise, the question whether the Appellants have taken reasonable steps for realisation of sale proceeds also falls for consideration before the Tribunal while hearing the appeals and we consciously refrain ourselves from expressing any opinion on those questions, lest we would be expressing our views on the merits of the matter. 18. As rightly submitted by the learned counsel for Respondents, the object of Foreign Exchange a....