JUDGMENT [ENTITY], J.
1. The Commissioner of Customs (Appeals), Delhi by an interim order, impugned in this writ petition, passed under [SECTION] of the [ACT] directed the petitioner to pre-deposit a sum of Rs. 5 crores, while waiving the remainder of the duty amount held recoverable from it. Dissatisfied with the said order, the petitioner has filed the present writ petition and prayed for a complete waiver of the pre-deposit.
2. The petitioner company is a subsidiary of M/s. Cisco Systems Management B.V. (Netherlands), which in turn, is a subsidiary of M/s. Cisco Inc., USA. The latter of the two companies has entered into agreements with the petitioner for supply of equipment broadly classified into the following four different categories:
a) import of equipment for use in the STP unit;
b) import of equipment for internal use;
c) import of demonstration equipment on loan/returnable basis; and
d) import of spare parts for supply to the customers of Cisco Inc. to support replacements of failed parts of original equipment supplied by Cisco Inc.
[SECTION]. According to the petitioner, the prices of the imported goods are determined on the basis of a reference price list of Cisco Inc. called "the Global Price List" ("[ACT]" for short) and universally adopted by the Cisco Inc. for all the exports made to different countries. The goods exported by Cisco Inc. are normally made at a discount which varies from equipment to equipment. In the case of capital goods imported for the STP Unit, the value of the imports is equal to 40% of the [ACT], which price has been revised to 46% of [ACT] with effect from 12th June, 2004. Similarly, in the case of equipment imported for internal use the value is equal to 46% of the [ACT]. That is true in respect of equipment for demonstration also, which are imported at 46% of the price mentioned in the [ACT]. In the case of spare parts with which, we are concerned in this writ petition, the imports are made at [SECTION]5% of the price mentioned in the [ACT]. Keeping in view the special relationship between the selling and the buying companies, however, the issue regarding the correct valuation of the imported spare parts was referred to the Special Valuation Branch (for short "the SVB") of Delhi Customs. While the matter was still pending before the SVB, the value of goods imported in terms of a particular bill of entry was enhanced by the customs authorities at Bangalore by 70%. The assessment of the duty even after the said enhancement remained provisional, which was challenged by the petitioner before the Commissioner of Customs (Appeals) and then before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT). The petitioner's case is that the Tribunal has set aside the order passed by the authorities below and directed refund of the extra duty of Rs. 18.15 crores on imports made from January, 2002 to December, 200[SECTION]. In the meantime, the SVB at Delhi assessed the value of the imported goods at 58% of the [ACT] of Cisco Inc. taking into consideration the value of similar goods supplied to unrelated parties. Aggrieved by the said order, the petitioner has preferred an appeal before the Commissioner of Customs (Appeals) and applied for waiver of the pre-deposit of duty in terms of [SECTION] of the [ACT]. The Commissioner has partly allowed the said application and directed a pre-deposit of Rs. 5 crores only as against a demand of R.9.22 crores raised by the Department against it. The present writ petition assails the correctness of the said order, as noticed earlier.
4. We have heard, learned counsel for the parties and perused the record.
5. In the order made by him the Commissioner has noticed that the goods had been sold to unrelated buyers at various percentages of the [ACT] ranging between 10% to 90%. Some of the invoices which the petitioner had placed on record before the Commissioner even showed that goods had been sold at 0% of [ACT] to M/s. Wipro Ltd., which was in the opinion of the Commissioner an absurdity of sorts. The Commissioner noted from the data furnished to him that 70% of the invoices raised to unrelated buyers were at a price ranging from 52% to 69% of the [ACT]. Whereas about [SECTION]0% of the such invoices were at a price higher than 69% or less than 52% of the [ACT]. The Commissioner has, on that basis, prima facie, drawn the conclusion that the [ACT] has no sanctity whatsoever and that the petitioner's invoicing pattern was wholly arbitrary. The logic underlying the invoicing system had not, it appears, been disclosed to the Commissioner by the petitioner as indeed the same was not disclosed even to this Court. What is significant is that the Commissioner found that the petitioner-company had invoiced goods at [SECTION]5% of [ACT] in cases where customs duty was leviable, while in cases where customs duty was not leviable such imports have been made at 46% of the [ACT]. The Commissioner observed:
"In the instant case the same goods manufactured by the same supplier have been sold at widely varying prices to different buyers. I observe that the appellant have admitted that they have been invoicing the goods at [SECTION]5% when Customs Duty is leviable i.e. on imports of Spares and 46% when such duty was not leviable i.e. on imports made for the Software Technology Park (STP) Unit. The buyer and seller being virtually the same in the instant case, no convincing arguments for this blatant difference in the values declared to the Customs have been placed on record."
6. The Commissioner also held that the petitioner was not correct in asserting that a refund of Rs. 18 crores was due to it pursuant to the order passed by the CESTAT. The amount of duty paid by the petitioner had, according to the Commissioner, to be adjusted against the Bills of Entry in regard to which the payment was made, keeping in view the order passed by the SVB. The Commissioner had, on that basis, concluded that a pre-deposit of Rs. 5 crores would meet the ends of justice.
7. There is, in our opinion, neither any error of jurisdiction nor any error of law in the said direction. The power to waive pre-deposit to avoid hardship to the party against whom the demand is raised is discretionary. So long as the discretion is not exercised in an arbitrary and whimsical fashion, a writ court would not interfere with the order of waiver of pre-deposit or refusal thereof. The mere fact that the issues that arise for consideration of the appellate authority are arguable is not in itself sufficient for a complete waiver of pre-deposit. The policy of law underlying [SECTION] clearly is that the party against whom a claim for duty has been made must pre-deposit the duty amount unless the appellate authority considers it proper to waive such pre-deposit either in whole or in part to avoid hardship to it. What is to be seen is whether there is any hardship if pre-deposit is not waived for hearing of the appeal on merits. The answer to that question would largely depend upon the facts and circumstances of each case which the appellate authority has to consider while examining its discretion.
8. It was argued, on behalf of the petitioner, on the authority of the decision of this Court in Sri [PRECEDENT] v. Union of India, 1998 (104) ELT [SECTION]25 that insistence upon a pre-deposit in cases where the appellant is most likely to be exonerated from payment will itself amount to undue hardship. This Court has in [PRECEDENT]'s case (supra) observed:
"Mr. [ENTITY], the learned Counsel for the respondent submitted that the impugned order being a discretionary order is not liable to be interfered with in exercise of writ jurisdiction of this Court. He relied on the decision of the Supreme Court in [PRECEDENT], and [PRECEDENT], . Suffice it to observe that while disposing of an application under [SECTION] of the [ACT] the Tribunal is obliged to adhere to the question of undue hardship. The order of the Tribunal should show if the pleas raised before it, have any merit prima facie or not. If the appellant has such a prima facie strong case as is most likely to exonerate him from payment and still the Tribunal insists on the deposit of the amount it would amount to undue hardship."
9. The present is not, in our view, a case where the demand of duty may be said to be so palpably erroneous or that the appellant is most likely to be exonerated from any such demand. The Commissioner has, in our opinion, rightly held that the matter may be arguable on either side but the very fact that it is so arguable may not call for a total waiver of the pre-deposit. The principles underlying interference by a writ Court with discretionary orders remains firmly settled by a long string of decisions of the Supreme Court. A writ Court, would, therefore, be slow in interfering with the discretionary order like the one in the instant case. That is, especially so where the appellant has not pleaded any financial hardship as such before the appellant authority. No such hardship has, in fact, been pleaded even before us in the writ petition. Howsoever, wide a meaning the Court may give to the term "undue hardship" the party required to make the deposit shall have to make out a case in its favor by pleading facts necessary to show how a pre-deposit would result in any such undue hardship to it. We need hardly refer to the pronouncements of the Supreme Court in which their Lordships have expressed their anguish over grant of interlocutory orders by the High Courts for the mere asking. The Court has ruled that recovery of taxes cannot be stayed under [SECTION] of the [ACT] except under exceptional circumstances. In [PRECEDENT]., , the Court observed:
"We are constrained to make the observations which follows as we do feel dismayed at the tendency on the part of some of the High Courts to grant interlocutory orders for the mere asking. Normally, the High Courts should not as a rule in proceedings under [SECTION] of the [ACT] grant any stay of recovery of tax save under very exceptional circumstances. The grant of stay in such matters should be an exception and not a rule. It is needless to stress that a levy or impost does not become bad as soon as a writ petition is instituted in order to assail the validity of the levy. So also there is no warrant for presuming the levy to be bad at the very threshold of the proceedings. The only consideration at that juncture is to ensure that no prejudice is occasioned to the rate payers in case they ultimately succeed at the conclusion of the proceedings. This object can be attained by requiring the body or authority levying the impost to given an undertaking to refund or adjust against future dues."
10. To the same effect are the decisions of the Apex Court in [PRECEDENT]., , [PRECEDENT], & [PRECEDENT]. The following observations made by the Supreme Court in [PRECEDENT]'s case (supra)are instructive:
"In cases where denial of interim relief may lead to public mischief, grave irreparable private injury or shake a citizon's faith in the impartiality of public administration, a Court may well be justified in granting interim relief against public authority. But since the law presumes that public authorities function properly and bona fide with due regard to the public interest, a court must be circumspect in granting interim orders of far reaching dimensions or orders causing administrative, burdensome inconvenience or orders preventing collection of public revenue for no better reason than that the parties have come to the Court alleging prejudice, inconvenience or harm and that a prima facie case has been shown. There can be and there are no hard and fast rules. But prudence, discretion and circumspection are called for. There are several other vital consideration apart from the existence of a prima facie case. There is the question of balance of convenience. There is the question of irreparable injury. There is the question of the public interest. There are many such factors worthy of consideration. We often wonder why in the case (of) indirect taxation where the burden has already been passed on to the consumer, any interim relief should at all be given to the manufacturer, dealer and the like."
11. On behalf of the petitioners, it was, strenuously argued by Mr. [ENTITY] that the view taken by the Commissioner based on similar supply of goods to un-related buyers was not in tune with the provisions of [SECTION] of the [ACT] and [SECTION] & [SECTION] of the said Rules. A similar contention was urged even before the Commissioner (Appeals), who had while dealing with the submission noticed the absurdity that would arise out of a mechanical application of the "transaction value" of similar goods sold to unrelated buyers. That is not only because some of the invoices raised by the seller company show the value of the goods as 0% of [ACT] but also because the value varied over a long range between 10% to 90% of the value shown in the [ACT]. The Commissioner has, keeping those circumstances in view, found that almost 70% of the invoices raised to unrelated buyers were at a price ranging from 52% to 69% of [ACT]. It was on that broad and prima facie basis that the Commissioner arrived at a pre-deposit figure of Rs. 5 crores which represents almost 50% of the total duty amount demanded from the petitioner. There is neither any illegality nor any perversity in that line of reasoning to call for interference by this Court. A wooden or mechanical application of the provisions of [SECTION] of the [ACT] was indeed bound to lead to anomalous results and had, therefore, to be avoided. Besides, we cannot ignore the fact that the entire object underlying the exercise undertaken by the authorities below was to determine the true transaction value of the imported goods keeping in view the fact that the seller and the buyers were related parties and taking into consideration the transaction value of identical goods or of similar goods in sales to unrelated buyers in India. The Commissioner's order including that passed by him on 24th October, 2005, dismissing the application filed by the petitioner for modification, takes into account the relevant facts and circumstances and determines tentatively the pre-deposit at Rs. 5 crores which determination needs to be respected in the absence of any manifest irrationality or perversity in the impugned order. That is true even about the total outstanding against the petitioner regarding which the Commissioner has in the later order observed:
"There was an outstanding demand of Rs. 9.22 crores against the applicant and so they were directed to deposit Rs. 5 crores out of this Rs. 9.22 crores. Even if Rs. 1.11 crores (which is lying excess with the Department) being the difference in 70% loading and 65.7 loading for the period 01.01.200[SECTION] is taken into account, the applicant still have outstanding demand of Rs. 8.22 crores."
12. The petitioner has not been able to disprove the above findings and observations.
1[SECTION]. In the result, this writ petition fails and is hereby dismissed but in the circumstances no order as to costs.