Judicial discretion in pre-deposit waiver requires recorded reasons on hardship and prima facie case; consequential dismissal cannot stand alone.

A waiver of pre-deposit under Section 35F of the Central Excise Act must be exercised judicially on recorded reasons, with consideration of undue hardship and the assessee's prima facie case. An order directing deposit of 25% of the duty demanded, without findings on net worth or prima facie case, was treated as unsustainable and quashed. A dismissal of appeals based solely on that pre-deposit direction could not survive once the underlying order was set aside, so the appeals were restored and the matter remanded for fresh consideration of the waiver applications.

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Issues: (i) Whether the CESTAT's order directing pre-deposit of 25% of the duty demanded under Section 35F of the Central Excise Act, 1944 was sustainable in the absence of findings on the assessee's net worth and prima facie case. (ii) Whether the dismissal of the appeals for non-compliance with that pre-deposit order could survive after the underlying order was set aside.

Issue (i): Whether the CESTAT's order directing pre-deposit of 25% of the duty demanded under Section 35F of the Central Excise Act, 1944 was sustainable in the absence of findings on the assessee's net worth and prima facie case.

Analysis: The power under Section 35F is discretionary, but it must be exercised judicially and on recorded reasons. The relevant consideration is whether insisting on pre-deposit would cause undue hardship, which is judged in the context of the existence of a strong prima facie case. The impugned order recorded the parties' submissions and directed deposit of 25% of the duty demanded, but it contained no finding on the company's net worth or on prima facie case. In the absence of such findings, the order could not be sustained.

Conclusion: The pre-deposit order was unsustainable and was rightly quashed and set aside.

Issue (ii): Whether the dismissal of the appeals for non-compliance with that pre-deposit order could survive after the underlying order was set aside.

Analysis: The dismissal of the appeals was founded entirely on the earlier pre-deposit order. Once that foundational order was set aside, the dismissal order, being purely consequential, could not stand independently. The appeals were therefore liable to be restored to their original file and number.

Conclusion: The dismissal of the appeals was set aside and the appeals were restored.

Final Conclusion: The writ petition succeeded, the pre-deposit direction and the consequential dismissal of the appeals were quashed, and the matter was remanded to the Tribunal for fresh consideration of the waiver applications.

Ratio Decidendi: While deciding an application for waiver of pre-deposit under Section 35F of the Central Excise Act, 1944, the Tribunal must exercise discretion judicially and record reasons showing consideration of undue hardship, including the assessee's prima facie case; a consequential dismissal based solely on an unsustainable pre-deposit order cannot survive.

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