Pre-deposit relief in excise appeals may be reduced where financial hardship would make the appellate remedy ineffective.

Financial hardship can justify reduction of pre-deposit under the proviso to Section 35F of the Central Excise Act, 1944 even where the department has a prima facie case. The High Court balanced the assessee's accumulated losses and inability to pursue the appeal if a heavy deposit were insisted upon against the department's prima facie strength, and held that the deposit should not become an unbearable burden. The condition was therefore modified, and waiver of the balance was directed on deposit of Rs. 5 lakhs by the stipulated date.

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Issues: Whether the condition of pre-deposit under the proviso to Section 35F of the Central Excise Act, 1944 ought to be waived or reduced on the petitioner's showing of financial hardship despite the department's prima facie case.

Analysis: The petitioner's financial losses and accumulated losses were not disputed. The existence of a prima facie case in favour of the department did not, by itself, justify imposing a heavy pre-deposit where the appellate remedy would otherwise be jeopardised. The requirement had to be balanced against the assessee's ability to pursue the appeal on merits, and the court found that a reduced deposit would meet the ends of justice.

Conclusion: The pre-deposit condition was modified and waiver of the balance was directed on deposit of Rs. 5 lakhs by the stipulated date, in favour of the petitioner.

Ratio Decidendi: While considering waiver or reduction of pre-deposit, financial hardship and preservation of the right of appeal must be weighed against the department's prima facie case, and pre-deposit should not be fixed at a level that imposes an unbearable burden.

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