Pre-deposit waiver under excise law requires a proper undue hardship inquiry, and a merits-based refusal can be set aside.

Section 35F of the Central Excises & Salt Act, 1944 allows waiver of pre-deposit where insisting on deposit would cause undue hardship, while still protecting revenue through suitable safeguards. The Tribunal's refusal to grant exemption was defective because it did not apply the statutory undue hardship test and instead commented on the merits of the appeal. The High Court quashed the refusal order and remitted the application for fresh consideration in accordance with Section 35F.

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Issues: Whether the Tribunal, while deciding the request for exemption from deposit of duty pending appeal under Section 35F of the Central Excises & Salt Act, 1944, was required to consider whether such deposit would cause undue hardship, and whether the impugned order deserved to be quashed and the matter sent back for reconsideration.

Analysis: Section 35F empowers the appellate forum to dispense with pre-deposit where insisting on deposit would cause undue hardship, subject to safeguards protecting revenue. The impugned order was found defective because the Tribunal had not addressed the statutory test of undue hardship while disposing of the application, and instead made observations on the merits of the appeal.

Conclusion: The order refusing exemption from pre-deposit was quashed and the Tribunal was directed to re-decide the application in accordance with Section 35F.

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