Pre-deposit waiver in excise matters denied on merits and hardship, while duty deposit was still directed.

Waiver of pre-deposit of duty and penalty was sought on merits and financial hardship, but no prima facie case for complete waiver was made out. The Tribunal noted that the final product being treated as non-excisable did not by itself displace the then-applicable Modvat provisions, so the duty deposit requirement remained. The plea of accumulated losses was also found insufficient to justify total waiver. Deposit of the duty amount was directed, while the penalty pre-deposit was waived conditionally subject to compliance, with recovery stayed pending disposal of the appeal.

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Issues: Whether waiver of pre-deposit of duty and penalty should be granted on the basis of the merits of the case and alleged financial hardship.

Analysis: The applicants sought waiver on the footing that the final product had been held to be non-excisable and that the Modvat provisions, including the rule invoked by the department, were inapplicable. Financial hardship was also pleaded on the basis of accumulated losses. The Tribunal held that a prima facie case for waiver on merits had not been made out, and that the declared inputs, though ultimately found not liable to duty, did not by themselves exclude the operation of the Modvat provisions then in force. On the financial aspect, the plea of losses was not accepted as sufficient for complete waiver.

Conclusion: Waiver of pre-deposit was refused, and deposit of the duty amount was directed. The penalty pre-deposit was waived conditionally on compliance with the duty deposit direction, with stay of recovery pending disposal of the appeal.

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