Pre-deposit waiver must be decided on relevant hardship material, with a fair chance to produce evidence before conditions are fixed.

In deciding waiver or dispensation of pre-deposit, the appellate authority must take a realistic view of undue hardship and may impose conditions to protect revenue, but the discretion must be exercised on relevant material. Where the petitioner was not given a proper opportunity to place supporting evidence on financial hardship and the prima facie merits of the case, the impugned stay order could not stand. The matter was therefore remanded for fresh consideration of the stay application after both sides were allowed to produce evidence, leaving the question of pre-deposit open.

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Issues: Whether the appellate authority's order refusing full stay of pre-deposit should be set aside and the stay application reconsidered after allowing the petitioner to produce material on financial hardship and the prima facie merits of the case.

Analysis: The writ petition challenged the refusal to waive the entire pre-deposit in proceedings relating to disallowance of Modvat credit. The governing principle under the proviso to the relevant pre-deposit provision is that the appellate authority must take a realistic view where deposit would cause undue hardship, and it may impose suitable conditions to protect revenue. However, that discretion must be exercised on the basis of relevant material. The record before the High Court did not show that the lower appellate authority had been given an adequate opportunity to consider supporting material on hardship and merits before passing the impugned order, and the Court considered it appropriate that such material be placed before the authority.

Conclusion: The impugned order was set aside and the matter was remanded to the appellate authority to rehear and decide the stay application afresh after affording both sides an opportunity to produce evidence.

Final Conclusion: The petitioner obtained relief by way of remand for reconsideration of the stay application, with the question of pre-deposit left open for fresh decision by the appellate authority.

Ratio Decidendi: In deciding waiver or dispensation of pre-deposit, the appellate authority must consider undue hardship on the basis of relevant material and should afford a fair opportunity to produce supporting evidence before fixing conditions safeguarding revenue.

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