Pre-deposit default cannot by itself defeat a statutory appeal where the demand remains recoverable and merits must be heard.

A statutory excise appeal should not be dismissed solely for non-compliance with a pre-deposit direction when the revenue can still pursue recovery of the adjudicated demand. The Court held that the proper course is to hear the appeal on merits, rather than terminate it for the default, while preserving the revenue's right to recover the amount through lawful proceedings. The assessee was therefore granted the benefit of merit-based adjudication of the statutory appeal, and the dismissal consequence attached to non-compliance was not approved.

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Issues: Whether, in proceedings under Article 226/227, the appellate authority could dismiss the pending excise appeal for non-compliance with the pre-deposit direction, and whether the assessee was entitled to have the appeal heard on merits despite such non-compliance.

Analysis: The order impugned before the Court arose from rejection of the stay application filed along with the statutory appeal under Section 35F of the Central Excise Act, 1944. The Court found no reason to interfere with the order as a whole, but held that the appeal could not be made liable to dismissal merely for non-compliance with the adjudicating authority's direction. The proper course was to hear the appeal on merits, while leaving the revenue free to recover the adjudicated amount from the petitioner.

Conclusion: The assessee was given the benefit of having the appeal heard on merits, and the direction that the appeal would stand dismissed for non-compliance was not approved; the revenue was permitted to proceed with recovery of the adjudicated amount.

Final Conclusion: The petition was disposed of with a limited protective direction in favour of the assessee, ensuring adjudication of the statutory appeal on merits while preserving the revenue's right to recover the demand.

Ratio Decidendi: A statutory appeal should not be dismissed solely for non-compliance with a pre-deposit direction where the revenue can secure the demand by recovery proceedings, and the appeal must be decided on merits.

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