Pre-deposit waiver in stay matters may be granted conditionally when prima facie case and undue hardship are shown.

In a stay application, pre-deposit may be dispensed with where the applicant shows a prima facie case and undue hardship, but the Tribunal may impose conditions to protect revenue. The Tribunal accepted that the appellants had raised an arguable challenge to jurisdiction and the validity of the show cause notice, yet held that this did not nullify the proceedings at the interim stage. Considering the balance-sheet and financial position, it found that full pre-deposit would cause undue hardship and granted only partial relief by requiring a substantial cash deposit and a bank guarantee for the balance demand.

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Issues: Whether pre-deposit of the duty demand should be dispensed with in the stay application and, if so, on what terms.

Analysis: The Tribunal found that the appellants had raised an arguable prima facie case on jurisdiction and the validity of the show cause notice, but held that the jurisdictional objection did not by itself render the proceedings void at the interim stage. It also examined the financial position from the balance-sheet and concluded that the appellants were in a reasonably sound position, though requiring full pre-deposit would cause undue hardship. Balancing these considerations, the Tribunal granted partial relief by dispensing with the full pre-deposit and directing a substantial cash deposit together with a bank guarantee, while protecting the revenue in respect of the balance demand during pendency of the appeal.

Conclusion: The stay application was allowed in part and pre-deposit was conditionally waived on specified terms.

Ratio Decidendi: In a stay application, pre-deposit may be dispensed with where a prima facie case and undue hardship are shown, but the relief may be conditioned to safeguard the revenue.

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