Pre-deposit orders must consider proven financial hardship before insisting on duty and penalty deposits.

A pre-deposit direction can be sustained only after the Tribunal properly considers an assessee's pleaded financial inability and the supporting material. Where financial statements and a chartered accountant's certificate showing losses were placed on record, those documents were relevant to the pre-deposit exercise and required a reasoned appraisal. In the absence of such consideration, the order was vitiated by non-consideration of relevant circumstances. The pre-deposit order was set aside and the matter was remitted to the Tribunal for fresh consideration, with liberty to the assessee to file further evidence.

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Issues: Whether the Tribunal's order directing pre-deposit of Rs. 5 crores towards duty and penalty could be sustained without properly considering the assessee's alleged financial inability and the material placed in support of that plea.

Analysis: The Court found that the Tribunal had not given any cogent reason for rejecting the assessee's contention that it was not in a position to deposit the amount. The financial statements and chartered accountant's certificate showing losses for the relevant assessment years were relevant material that ought to have been considered while determining the pre-deposit requirement. In the absence of a proper appraisal of such material, the order suffered from non-consideration of relevant circumstances and could not stand.

Conclusion: The pre-deposit order was set aside and the matter was remitted to the Tribunal for fresh consideration, with liberty to the assessee to place further evidence on record.

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