Undue hardship can justify reduced or waived pre-deposit when financial capacity makes the statutory burden excessive.

Pre-deposit under Section 35F of the Central Excises and Salt Act, 1944 may be reduced or waived where payment would cause undue hardship, and the assessee's liquidity and financial position are relevant factors. Applying that standard, full waiver was declined, but substantial reduction was granted for the corporate appellant and two individual appellants because the burden was found excessive in light of their financial position. For the employee-appellant, pre-deposit was dispensed with altogether because the required deposit was unreasonable. The stay applications were thus disposed of by granting limited relief while preserving statutory compliance.

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Issues: Whether pre-deposit of the penalties could be waived or reduced on the ground of undue hardship, having regard to the appellants' financial position and the nature of the offence.

Analysis: The requirement under Section 35F of the Central Excises and Salt Act, 1944 was applied with emphasis on undue hardship. The financial statements and liquidity position were considered, and the principle was invoked that the burden of pre-deposit must be commensurate with the offence and should not impose excessive hardship. On that basis, the requested full waiver was declined, but substantial reduction was granted in respect of the corporate appellant and the other individual appellants. For the employee-appellant, the burden was held to be unreasonable and pre-deposit was dispensed with.

Conclusion: Partial relief was granted on the pre-deposit applications. The corporate appellant was directed to deposit a reduced amount, two individual appellants were directed to deposit reduced amounts, and the employee-appellant was exempted from pre-deposit.

Final Conclusion: The stay applications were disposed of by granting limited relief against pre-deposit, balancing statutory compliance with financial hardship.

Ratio Decidendi: For the purpose of pre-deposit, undue hardship includes the assessee's liquidity position, and the amount required to be deposited may be reduced or waived to the extent necessary to avoid excessive hardship.

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