Pre-deposit waiver requires balanced consideration of prima facie merits and undue hardship before discretion is exercised.

While deciding waiver of pre-deposit under section 35F of the Central Excises and Salt Act, 1944, the appellate authority must consider both prima facie merits and undue hardship, and the discretion must be exercised honestly, bona fide and on relevant materials. Undue hardship is not limited to financial difficulty and may include a strong prima facie case. If the authority addresses only one relevant factor and omits the other, the exercise of discretion is incomplete and may justify writ intervention. The court, finding insufficient consideration of financial hardship, directed only partial dispensation of the pre-deposit by requiring 10% cash deposit and security for the balance.

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Issues: Whether the appellate authority was required to consider undue hardship and prima facie merits while deciding waiver of pre-deposit under section 35F of the Central Excises and Salt Act, 1944, and whether the writ court should interfere where such discretion was not properly exercised.

Analysis: The power to dispense with pre-deposit is discretionary, but it must be exercised on relevant materials, honestly, bona fide and objectively. Undue hardship is not confined to financial hardship alone and includes the existence of a strong prima facie case. Where the appellate authority considers only one aspect and ignores the other relevant consideration, the exercise of discretion is incomplete. In the present matter, the appellate authority had dealt with prima facie merits but had not properly considered the pleaded financial hardship, and the writ court found the case fit for partial waiver without entering into the merits of the underlying Modvat dispute.

Conclusion: The writ court interfered with the impugned stay orders and granted only partial dispensation of the pre-deposit condition by directing deposit of 10% in cash and security for the balance, leaving the appeals to be heard on compliance.

Ratio Decidendi: While deciding waiver of pre-deposit, the authority must exercise discretion on relevant considerations of prima facie case and undue hardship, and failure to do so may justify writ intervention for partial dispensation.

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