Pre-deposit waiver under Central Excise law may be reduced where the deposit condition is disproportionate and unreasonable.

The High Court considered whether a pre-deposit condition imposed under the proviso to Section 35F of the Central Excise Act was unreasonable where the appellate authority had power to waive deposit on showing undue hardship while safeguarding revenue. It noted that the authority had considered the prima facie case and financial difficulty, but found the waiver granted in one matter disproportionately low when compared with the connected case, making the condition unreasonable to that extent. The Court therefore modified the deposit requirement in one petition by reducing the payable amount and granting waiver of the balance on compliance, while dismissing the connected writ petition.

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Issues: Whether the appellate authority's order under the proviso to Section 35F of the Central Excise Act, requiring pre-deposit of adjudicated dues, was arbitrary to the extent it granted only a nominal waiver in one case and whether the pre-deposit amount should be reduced.

Analysis: The petitioners' appeals were pending and the appellate authority had power to dispense with deposit on being satisfied that it would cause undue hardship, while also imposing conditions to protect revenue. The authority had considered the pleaded prima facie case and financial difficulty. However, in one matter the waiver allowed was only about Rs. 40,000 out of a demand of Rs. 2,90,000, which was found to be disproportionately low when compared with the other case where more than half the demand was waived. That disparity rendered the condition unreasonable to that extent.

Conclusion: The pre-deposit condition in one petition was modified by reducing the amount payable to Rs. 1,40,000, with waiver of the balance upon deposit of that sum. The connected writ petition was dismissed.

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