Pre-deposit waiver under Central Excise law turns on prima facie merits and undue hardship for a closed unit.

In considering waiver of pre-deposit under the proviso to Section 35F of the Central Excise Act, the appellate authority must weigh the strength of the prima facie case against undue hardship. Where the unit had already been closed, production had stopped, and the merits required detailed examination at the appeal stage, insisting on a substantial deposit was not properly justified. The stated conclusion was that the larger pre-deposit should be waived, with only a modest amount required to secure the appeal.

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Issues: Whether the Tribunal was justified in insisting on a substantial pre-deposit under the proviso to Section 35F of the Central Excise Act, 1944, or whether waiver should have been granted on account of a strong prima facie case and undue hardship.

Analysis: The dispute concerned duty on a unit that had admittedly been closed, and the Tribunal itself had observed that the merits were contentious and required detailed examination at the appeal stage. In such a situation, the appellate authority was required to balance the prima facie merits with the financial burden of pre-deposit. The closure of the mill and the fact that production had stopped supported the plea that insisting on a substantial deposit would cause hardship, while the Tribunal had not justified fixation of a large pre-deposit by adequate consideration of these circumstances.

Conclusion: The requirement of depositing Rs. 3.5 lakhs was not justified, and the petitioner was entitled to waiver of the balance on depositing Rs. 50,000.

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