Interim pre-deposit modification balances revenue interests and open merits, while leaving production-capacity objections undecided.

Withdrawal of earlier appeals against annual capacity determination under section 3A did not finally prevent the assessee from relying on actual production figures under section 3A(4); that objection was left open for decision in the main appeal. On the interim pre-deposit issue under section 35-F, the court balanced the prima facie merits and revenue interests, found repeated remands undesirable, and modified the Tribunal's direction instead of setting it aside. The deposit requirement was reduced to Rs. 75 lakhs while the substantive issues in the appeal were expressly kept open.

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Issues: (i) Whether withdrawal of the earlier appeals against determination of annual capacity of production barred the assessee from contending in the subsequent proceedings that actual production was lower than the capacity determined under section 3A. (ii) Whether the Tribunal's order directing substantial pre-deposit under section 35-F required modification at the interim stage.

Issue (i): Whether withdrawal of the earlier appeals against determination of annual capacity of production barred the assessee from contending in the subsequent proceedings that actual production was lower than the capacity determined under section 3A.

Analysis: The withdrawal of the appeals against determination under section 3A(2) did not, at the interim stage, conclusively foreclose the assessee's contention based on actual production under section 3A(4). The dispute on the effect of the withdrawal and on the relevance of the actual production figures remained a matter for consideration in the main appeal. The Court did not finally decide the jurisdictional or merits-based objections raised by the assessee.

Conclusion: The assessee's contention was not finally rejected, and the issue was left open for adjudication in the main appeal.

Issue (ii): Whether the Tribunal's order directing substantial pre-deposit under section 35-F required modification at the interim stage.

Analysis: The Court found that repeated remands were undesirable at the interlocutory stage, but also held that the assessee's submissions deserved some consideration while the appeal remained pending. Balancing the interests of both sides, the Court modified the pre-deposit direction instead of setting aside the order in its entirety or remanding the matter again.

Conclusion: The pre-deposit was reduced and the assessee was directed to deposit Rs. 75 lakhs.

Final Conclusion: The interlocutory order was modified in part, the larger pre-deposit demand was reduced, and the substantive questions in the appeal were expressly kept open for decision by the Tribunal.

Ratio Decidendi: At the stage of interim pre-deposit, the Court may balance the prima facie merits and the interests of revenue and modify the deposit amount without finally deciding the substantive issues in appeal.

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