Pre-deposit waiver under excise appeal rules may be granted in part where undue hardship and a strong prima facie case are shown.

Section 35F permits pre-deposit of adjudicated dues, but its proviso allows waiver where deposit would cause undue hardship. On the facts, the denial of credit was linked to procedural deficiencies, and the appellant had shown a strong prima facie case. The appellate authority was therefore required to consider partial waiver at the first appeal stage. The impugned order was unsustainable, and partial exemption from pre-deposit was warranted, with the deposit requirement modified accordingly.

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Issues: Whether the appellate authority ought to have waived the pre-deposit condition, wholly or partly, in the first appeal against the excise demand.

Analysis: Section 35F required pre-deposit of the adjudicated dues, but its proviso empowered the appellate authority to grant waiver where deposit would cause undue hardship. The impugned order was found unsustainable because the denial of credit rested on procedural deficiencies and the petitioner had shown a strong prima facie case. On the facts, the Court held that partial exemption from pre-deposit was warranted at the stage of the first appeal.

Conclusion: The waiver request should have been allowed in part, and the pre-deposit requirement was modified by directing a deposit of Rs. 1.5 lakhs while waiving the balance.

Final Conclusion: The petition succeeded to the extent of securing partial relief against the pre-deposit condition, and the impugned appellate order was set aside with consequential modification of the deposit requirement.

Ratio Decidendi: Where the proviso to Section 35F is attracted, the appellate authority may grant partial waiver of pre-deposit when the appellant shows undue hardship and a strong prima facie case.

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