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of <h1>Application under Section 35F for Deposit Waiver Due to Financial Hardship</h1> The Appellate Tribunal CEGAT, New Delhi, considered an application under Section 35F of the Central Excises and Salt Act regarding dispensing with a ... Appeal-Dispensation of pre-deposit of duty or penalty Issues: Application under Section 35F of the Central Excises and Salt Act for dispensing with a deposit; Consideration of undue hardship in making the deposit; Existence of a prima facie case in the context of undue hardship; Financial capacity of the applicant; Interpretation of 'undue hardship' in Section 35F; Distinction between stay of recovery and dispensing with a deposit; Criteria for granting a stay in interlocutory orders; Relevance of a prima facie case in the context of undue hardship.In this judgment by the Appellate Tribunal CEGAT, New Delhi, the application under Section 35F of the Central Excises and Salt Act was considered for dispensing with a deposit demanded towards duty and penalty. The applicant argued that the deposit would cause undue hardship due to financial constraints. The Tribunal examined the requirement of a prima facie case in the context of undue hardship, citing precedents such as the Allahabad High Court decision and other cases like Brima Sugar Ltd. and Modi Gas and Chemicals Ltd. The Tribunal emphasized the importance of considering undue hardship relating to the deposit specifically, rather than a general prima facie case. The judgment highlighted the distinction between granting a stay of recovery and dispensing with a deposit, stating that the criteria for each differ significantly.The Tribunal analyzed the financial capacity of the applicant, a partnership firm, to determine the undue hardship caused by the deposit. The applicant's plea of being a small-scale unit facing closure if required to deposit the outstanding amount was supported by balance sheets showing losses for consecutive years. The liquidity of the applicant was questioned, and it was concluded that the deposit would indeed cause undue hardship. Consequently, the Tribunal directed the applicant to deposit a specific amount towards duty and furnish a bank guarantee for the remaining outstanding sum within a specified timeframe to avoid automatic vacation of the order.The judgment clarified the interpretation of 'undue hardship' in Section 35F, emphasizing its direct link to the mandatory deposit and pecuniary difficulties. It rejected the notion that a prima facie case must be assessed in the context of undue hardship, focusing on the financial burden caused by the deposit specifically. The decision underscored the statutory provision's intent to address hardship related to the deposit itself, distinct from considerations for granting a stay in other contexts. Ultimately, the Tribunal's ruling balanced the applicant's financial constraints with the statutory requirement, providing a specific directive for compliance within a stipulated timeframe to avoid adverse consequences.
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