Pre-deposit waiver in excise appeals depends on undue hardship, and sick company status does not automatically defeat relief.

Waiver of pre-deposit under the proviso to section 35F is discretionary and turns on undue hardship while protecting revenue. A declaration that the assessee is a sick industrial company under the Sick Industrial Companies (Special Provisions) Act, 1985 does not by itself bar consideration of waiver in an excise appeal. On the facts, the Tribunal accepted that the unit had suffered serious losses and that hardship was made out; it also noted that the demand was treated as debatable and that a prima facie limitation issue arose on the extended period. The pre-deposit was waived and recovery stayed until disposal of the appeal.

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Issues: Whether the appellants were entitled to waiver of the pre-deposit directed under the proviso to section 35F of the Central Excises and Salt Act, 1944, having regard to their plea of undue hardship, sickness of the industrial unit under the Sick Industrial Companies (Special Provisions) Act, 1985, and the prima facie merits of the appeal.

Analysis: The Tribunal held that the power under the proviso to section 35F is discretionary and depends upon whether the required deposit would cause undue hardship, while safeguarding the interests of revenue. The fact that a company is declared sick under the Sick Industrial Companies (Special Provisions) Act, 1985 does not by itself bar consideration of pre-deposit in an excise appeal, because the Tribunal is not enforcing recovery of dues but deciding whether a statutory condition for appeal should be dispensed with. At the same time, the Tribunal found that the appellants had a strong case on hardship: the unit had suffered serious losses, the current assets and liabilities position did not negate hardship in the circumstances, and the adjudicating authority itself had treated the demand as debatable and had not imposed penalty. The Tribunal also noted a prima facie limitation issue in relation to the extended period.

Conclusion: The pre-deposit of Rs. 5 lakhs was waived and the recovery stayed till disposal of the appeal.

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