Pre-deposit waiver under FEMA requires prima facie case, hardship and revenue protection; complete waiver was refused on the facts.

Under the second proviso to Section 19(1) of FEMA, waiver of pre-deposit depends on a prima facie case, undue hardship and protection of revenue through suitable conditions. The Tribunal found that the appellants raised arguable points and showed some loss, but the material did not justify complete waiver at the interlocutory stage. As recovery had to be secured, full dispensation was declined and conditional relief was granted by requiring deposit of 30% of the penalty and a bank guarantee for the balance.

---

---

Issues: Whether the appellants were entitled to complete waiver of pre-deposit of the penalty under the second proviso to Section 19(1) of the Foreign Exchange Management Act, 1999 on the grounds of a prima facie case and undue hardship.

Analysis: The Tribunal considered the settled parameters for dispensation of pre-deposit, namely existence of a prima facie case, whether insistence on deposit would cause undue hardship, and the need to protect recovery of the penalty by suitable conditions. On the materials placed, the Tribunal found that the appellants had shown some loss and that the plea raised arguable points, but the matter could not be finally adjudicated at the stage of waiver. The loss pleaded was not shown to be of such magnitude as to justify full waiver, and recovery needed to be secured.

Conclusion: Complete waiver was declined. The appellants were directed to deposit 30% of the penalty and furnish bank guarantee for the balance, in favour of the Revenue to that extent.

---