Pre-deposit waiver for financial hardship may be granted despite weak merits, while recovery can still proceed.

Pre-deposit of duty demand and penalty in an excise appeal application may be waived on financial hardship even where no prima facie case is shown on merits. The application here failed to support the exemption claim on captive consumption, but the applicant's status as a sick industry before the Board for Financial Reconstruction was treated as sufficient hardship to justify deposit relief. Recovery was not stayed, so the department remained free to proceed in accordance with law.

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Issues: Whether pre-deposit of the duty demand and penalty should be waived in the appeal application, and whether any stay of recovery should be granted.

Analysis: The application disclosed no prima facie case on the merits of exemption, as the contention regarding captive consumption was unsupported and the order referred to liability arising in the absence of exemption under the relevant excise rules. However, the applicant was shown to have been declared a sick industry by the Board for Financial Reconstruction, which was treated as sufficient hardship to justify relief at the stage of deposit.

Conclusion: Pre-deposit of the duty and penalty was waived, but recovery was not stayed.

Final Conclusion: The appellant obtained relief only at the stage of deposit, while the department was left free to proceed with recovery in accordance with law.

Ratio Decidendi: Waiver of pre-deposit may be granted on the ground of financial hardship even where the applicant does not make out a prima facie case on merits.

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