Pre-deposit dispensation under excise law turns on undue hardship, not prima facie merits or stay principles.

In applications for dispensation of pre-deposit under Section 35F of the Central Excises and Salt Act, the governing enquiry is undue hardship caused by the statutory deposit itself, not the existence of a prima facie case. The considerations used for interlocutory stay, including balance of convenience and prima facie merits, do not apply to this distinct statutory discretion. Where the applicant showed a small-scale business with losses and limited liquidity, complete waiver was not justified, but partial relief could be granted through a reduced cash deposit and security for the balance.

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Issues: (i) Whether, in deciding an under Section 35F of the Central Excises and Salt Act, 1944 for dispensing with pre-deposit, the existence of a prima facie case is a relevant consideration; (ii) whether the applicant had shown undue hardship warranting partial dispensation of the deposit.

Issue (i): Whether, in deciding an application under Section 35F of the Central Excises and Salt Act, 1944 for dispensing with pre-deposit, the existence of a prima facie case is a relevant consideration.

Analysis: The statutory requirement under Section 35F is distinct from the grant of an interlocutory stay in a pending proceeding. The provision makes maintainability of the appeal conditional upon deposit, unless dispensed with, and the governing consideration is undue hardship caused by the deposit itself. The reasoning applicable to interim stay, including balance of convenience and prima facie case, cannot be imported into the exercise of discretion under Section 35F.

Conclusion: The existence of a prima facie case is not a relevant factor under Section 35F for dispensation of pre-deposit.

Issue (ii): Whether the applicant had shown undue hardship warranting partial dispensation of the deposit.

Analysis: The applicant was a small scale partnership firm with demonstrated losses in the relevant balance-sheets. The material placed before the Tribunal showed limited liquidity, and the demand to deposit the entire balance along with penalty would impose hardship connected with the ability to make the statutory deposit. On that footing, full dispensation was not justified, but some relief was warranted by requiring only a token deposit and security for the balance.

Conclusion: Partial dispensation was granted by directing a reduced cash deposit and a bank guarantee for the remaining amount.

Final Conclusion: The application succeeded only to a limited extent, with the Tribunal granting conditional relief against recovery by modifying the pre-deposit requirement.

Ratio Decidendi: Under Section 35F, the relevant enquiry is whether the statutory pre-deposit would cause undue hardship linked to the deposit itself, and the test of prima facie case applicable to interim stay does not govern that enquiry.

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