Pre-deposit waiver for financial hardship granted where a sick unit showed inability to deposit pending appeal

A stay application may justify waiver of pre-deposit where the assessee shows financial hardship and inability to deposit duty and penalty. The classification dispute and limitation plea were treated as matters for final hearing, not as grounds for immediate relief. On the prima facie record, the assessee's status as a sick unit and its substantial losses supported waiver, and recovery was stayed pending appeal.

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Issues: Whether the appellants were entitled to waiver of pre-deposit of duty and penalty and stay of recovery pending appeal.

Analysis: The classification dispute and the plea of limitation were treated as matters for final hearing and not as grounds for immediate relief. At the stay stage, the determination turned on prima facie assessment and balance of hardship. The appellants were shown to be a sick unit declared by the BIFR, and the financial material indicated substantial losses, supporting a case of inability to make the pre-deposit.

Conclusion: The requirement of pre-deposit of duty and penalty was waived and recovery was stayed pending the appeal.

Ratio Decidendi: In a stay application, pre-deposit may be waived where the assessee demonstrates financial hardship, even if the merits of classification and limitation remain open for final adjudication.

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