Pre-deposit conditions must account for undue hardship and may be relaxed where financial stringency is shown.

When an appellate authority insists on pre-deposit as a condition for admitting an excise appeal, it must consider the assessee's plea of undue hardship under the proviso to Section 35F. The text states that a refund claim not directly involved in the appeal did not by itself control the admission question, but the appellant's financial stringency and asserted unrecovered refund were relevant circumstances requiring consideration before demanding full cash deposit. On that basis, the pre-deposit condition was liable to relaxation, and only 50% of the disputed amount should have been directed to be deposited before admission of the appeal.

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Issues: Whether the Tribunal was bound to consider the plea of undue hardship while insisting upon pre-deposit of the disputed duty before admitting the appeal.

Analysis: The Tribunal was correct in holding that the refund claim was not directly involved in the appeal, but the proviso to Section 35F of the Central Excise and Salt Act, 1944 required consideration of the circumstances shown by the appellant for seeking dilution or dispensation of the deposit condition. The appellant had asserted that a larger amount was refundable from the Department and that non-settlement of that claim caused financial stringency and undue hardship. That circumstance ought to have been considered before directing full cash deposit as a condition for admission of the appeal.

Conclusion: The pre-deposit requirement was liable to be relaxed, and the Tribunal should have directed deposit of only 50% of the demanded amount before admitting the appeal.

Ratio Decidendi: While imposing a statutory pre-deposit condition, the appellate authority must consider the assessee's plea of undue hardship and may relax or dispense with the deposit where the circumstances justify such relief.

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