Pre-deposit waiver operates as a stay on recovery, so a contrary departmental deposit demand was quashed.

A waiver of pre-deposit under Section 35F of the Central Excise Act, 1944 operates as a stay on recovery of the balance demand once the stipulated condition is complied with. Because the Tribunal's pre-deposit condition had been satisfied, the departmental direction requiring deposit of the disputed amount was inconsistent with the subsisting stay order. The direction was therefore quashed, and recovery of the stayed demand could not be pursued.

---

---

Issues: Whether recovery proceedings could be pursued despite the Tribunal's stay order waiving pre-deposit on the stipulated condition and whether the consequential departmental direction to deposit the disputed amount was liable to be quashed.

Analysis: The Tribunal had already waived pre-deposit of the remaining duty and penalty subject to deposit of Rs. 80,000, and the condition had been complied with. A waiver of pre-deposit operates as a stay of recovery of the balance demand under Section 35F of the Central Excise Act, 1944. The departmental direction requiring deposit of the disputed amount was therefore inconsistent with the subsisting stay order.

Conclusion: The direction to deposit the disputed amount was quashed, and recovery of the stayed demand could not be pursued.

---