Pre-deposit waiver for a sick industrial unit granted on prima facie case and financial hardship grounds.

Dispensation of pre-deposit of duty and penalty was granted where the appellants showed a prima facie case, financial hardship, and status as a sick industrial unit under the rehabilitation regime. The Bench took into account the BIFR sickness declaration and the protective framework applicable to sick industrial companies, and found that insisting on immediate deposit would cause undue hardship. Pre-deposit was therefore waived, while revenue authorities were left free to proceed in accordance with law.

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Issues: Whether the appellants were entitled to dispensation of pre-deposit of duty and penalty on the ground of prima facie case, financial hardship, and the company being a sick industrial unit.

Analysis: The appeal arose from a demand of duty and penalty, and the Bench considered whether insistence on deposit would cause undue hardship. The record showed that the unit had been declared sick by the Board for Industrial and Financial Reconstruction, and the order of rehabilitation and the protection flowing from the statutory regime for sick industrial companies were taken into account. The Bench also noted the financial position of the appellant and the contention that recovery during sickness would be oppressive. In these circumstances, the Bench found it appropriate to dispense with the pre-deposit, while leaving liberty to the revenue authorities to proceed in accordance with law.

Conclusion: The requirement of pre-deposit of duty and penalty was dispensed with in favour of the appellants.

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