( 1 ) ASHOK Bhan, J noticing the difference of opinion regarding the scope of exercise of jurisdiction under proviso to Section 35f of Central Excise Act, 1944 (for short, 'the Act')between the two Single Bench judgments of this Court in M/s. AUMA (INDIA) LTD. , vs UNION OF INDIA and m/s. SUNSHINE TUBE PVT. LTD. vs THE COMMISSIONER OF customs AND ANOTHER Learned Single Judge has referred the writ Petition to a larger Bench for resolving the conflict. ( 2 ) REFERRING judge in M/s. Auma (India) Ltd. Supra and in the order of reference is of the opinion that while considering the case of 'undue hardship', in exercise of its jurisdiction to dispense the condition of pre-deposit of the duty/penalty the authority is bound to examine the prima facie merits of the dispute as well while bharuka, J. , in M/s. Sunshine Tube limited has seemingly taken the view that while considering 'undue hardship' the authorities have to consider the existence of the financial hardship only. ( 3 ) THE facts leading to this controversy are: the petitioner is a Public Limited Company having its head office at Calcutta. It is engaged in the manufacture of cigarettes of many brands. It has factories in various places in India. The present Writ petitions are with reference to the factory situated at Bangalore. The controversy surrounding the interpretation of Section 4 of the central Excise and Salt Act, 1944, with reference to the post manufacturing expenses (PME) was set at rest by the Supreme Court of India in the case of UNION OF INDIA vs BOMBAY TYRE international LIMITED. Since' various Collectors of Central excise have jurisdiction over the petitioners, they were issuing show- cause notices on the proper method of determining assessable value, the Director General of Inspection (Customs and Central Excise) was named as the Authority for the purpose of adjudicating all such show cause notices issued from different Collectorates. Director general ultimately passed an order on 10. 4. 1986. In pursuance to the orders of the Director General, a Workshop was held by a team of officers and the total amount of differential duty pertaining to the various units was worked out. In so far as the Bangalore Unit was concerned the duty was determined at Rs. 3,32,70,390-75 ps. Director general ultimately passed an order on 10. 4. 1986. In pursuance to the orders of the Director General, a Workshop was held by a team of officers and the total amount of differential duty pertaining to the various units was worked out. In so far as the Bangalore Unit was concerned the duty was determined at Rs. 3,32,70,390-75 ps. The quantification of the duty had been done by adding the additional consideration (PME) (Advertisement Expenses and interest on Cash security Deposits) to the wholesale price for the period 1. 10. 1975 to 28. 2. 1983 in respect of the clearance of the cigarettes. By an order dated 15. 7. 1986 a demand for the said amount of differential duty was created and the petitioner complied with the demand and paid the amount. No appeal was filed against the order of the Director general either by the Department or by the assessee. ( 4 ) BY an order dated 29th September 1937 Assistant Collector Central Excise, Bangalore (for short, 'the Assessing Officer') called upon the petitioner to pay a sum of Rs. 27,57,93,086-93. This amount was arrived at by adding the additional consideration to the assessable value of cigarettes instead of wholesale price. Before creating the additional demand no show-cause notice was issued to the petitioner to provide an opportunity* to participate in the enquiry for determining the additional amount of duty. The order was successfully challenged by the petitioner by filing a Writ Petition in the High Court of Madras which had the jurisdiction at the point of time. The order was set aside by the High Court of Madras giving liberty to the Assessing Officer to pass fresh orders in accordance with law after giving notice to the petitioner and providing an opportunity to put forth their objections. This order was passed on 30th November 1993. (WP. 9766/87 ). ( 5 ) ASSESSEE was served with a show-cause notice dated 31st December 1997 Annexure 'h' proposing to levy the additional demand of Rs. 27,57,93,086-93 ps by calculating the PME on the assessable value instead of the whole sale price as had been done while framing the provisional assessment which resulted in the creation of additional demand of Rs. 3,32,70,390-75 ps. 27,57,93,086-93 ps by calculating the PME on the assessable value instead of the whole sale price as had been done while framing the provisional assessment which resulted in the creation of additional demand of Rs. 3,32,70,390-75 ps. Petitioner filed a detailed reply inter alia pleading that the additional consideration under Rule 5 of the Central Excise Valuation Rules (tor short, 'the Rules') has to be added to the whole sale price and thereafter the assessable value has to be worked backwards for determination of the duty levied. Reliance was placed on several pronouncements including the order passed by a special Bench consisting of three members of the Central Excise and Gold (Control) appellate Tribunal (hereinafter referred to as !cegat') in Company's own case to which the Collectorate of Bangalore was a party and affirmed by the Supreme Court of India. Judgment of the Tribunal is reported in 1994 (72) E. L. T. 315. Against this order Civil Appeal No. 9286-9290/1995 was filed in the Supreme Court of India. Supreme court dismissed the Civil appeals in limine on 29th March 1996 by observing that the Civil appeals are dismissed on merits. ( 6 ) ASSESSING Officer afforded a personal hearing on 28th January 1998. He did not agree with the contentions raised by the petitioner before him and confirmed the additional demand for differential duty of Rs. 27,57,93,086-93 ps with reference to Assessable value of cigarettes in stead of whole sale value. ( 7 ) PETITIONER filed an appeal against the order of the Assessing Officer before the Commissioner of Central Excise (Appeals), bangalore, for short the appellate Authority along with an application under Section 35 of the Act for waiver of the pre-deposit of the duty levied. Appellate Authority partly allowed the application by its order annexure-M dated 3/11th August 1998. Petitioner was directed to deposit a sum of Rs. 15 Crores within 90 days of the receipt of the order subject to which the deposit of the balance amount of duty was dispensed with and its recover was stayed pending disposal of the appeal. Appellate Authority observed that"the petitioner had some very valid arguments which I am sure have to be examined detailly when the matter is taken up for examination and decision on merit. Appellate Authority observed that"the petitioner had some very valid arguments which I am sure have to be examined detailly when the matter is taken up for examination and decision on merit. Accordingly considering the complicate nature of the case and the facts and circumstances and my findings above, in my considered view it would be appropriate in the fitness of things and in the interest of justice , that the recovery is partly stayed pending examination of the case for decision on merit. "and thereafter passed necessary order dispensing with the deposit of the part of the amount and asked the petitioner to deposit Rs. 15 crores. ( 8 ) AGGRIEVED against this the petitioner filed the Writ Petition which in turn has been referred to us for adjudication. ( 9 ) THE reasoning adopted by the Appellate Authority is that since both the petitioner and the Department have a strong arguable case, a conditional order of waiver of the amount of duty is granted to safeguard the interest of both the parties. The grievance of the petitioner is that the Appellate Authority did not apply its mind to the prima facie merits of the case while exercising its discretionary jurisdiction; that since the petitioner had a strong prima facie case the Appellate Authority should have dispenses with the deposit of the entire amount of duty after applying its mind to the points raised and specially in view of the decision of the special Bench of the cegat in the assessee's own case to which the respondents were also a party in (1994 (72) E. L. T. 315) which was later confirmed on merits of the Supreme Court of India in C. A. Nos. 9286-9290/1995 dated 29th of March 1996. ( 10 ) IN the order of reference Single Judge has drawn the areas of difference of opinion in M/s. Auma (India) Ltd. vs Union of India and Sunshine Tube Pvt Ltd vs The Customs and another. In M/s. Auma (India) Ltd. the Single Judge had relied upon a Division Bench decision of this Court in M/s;,wipro INFOTECH LTD vs CEGAT. In M/s. Auma India Limited supra it was held that prima facie merits of the dispute have to be examined by the Appellate Authority while determining the 'undue hardship' in exercise of the powers conferred under proviso to Section 35 of the Act. In M/s. Auma India Limited supra it was held that prima facie merits of the dispute have to be examined by the Appellate Authority while determining the 'undue hardship' in exercise of the powers conferred under proviso to Section 35 of the Act. Whereas in M/s. Sunshine tube Pvt. Ltd. , the view taken was: "15. It is now well established that the finding regarding 'undue hardship' has to be recorded by the Tribunal by attending to all the relevant materials placed on record and by applying itself to the said materials through a speaking order which should reflect application of objective and judicious mind. The occasion to impose conditions under the proviso to safeguard the interest of the revenue can arise only if the Tribunal comes to a conclusion of 'undue hardship' on the party of the appellant. To my reading no balance need to be struck between the "undue hardship' requirement and the interest of revenue for exercise of the discretion under the interest of revenue for exercise of the discretion under the proviso. The Tribunal has to form its opinion on "undue hardship' aspect solely by assessing the hardship of the appellant which has to be governed by the relevant materials placed on the record by the parties. Once the Tribunal comes to a finding that the appellant has successfully made out a case of 'undue hardship', it is only then that the Tribunal had to take care of the interest of 'the revenue by imposing appropriate conditions, so as to ensure that in case of failure of the appeal the adjudicated amount is knot lost for good and thereby the interest of the revenue is put to jeopardy. 16. To substantiate his submissions in the present cases the tribunal has failed to exercise its jurisdiction judiciously by not giving due consideration to all relevant materials and factors having bearing on the issue of 'undue hardship'. Mr. Chander kumar has referred to various judicial pronouncements in this regard. Now 1 proceed to deal with the said precedents. xx xx xx xx xx xx 24. In the case of M/s. RUBICON vs COLLECTOR OF central EXCISE (1989 (22) E. C. R. 269 Ker), the Kerala High court has held that: 18. In dealing with an application invoking the discretion under the proviso to Section 35f, the Appellate Authority is not dealing with an application for stay. xx xx xx xx xx xx 24. In the case of M/s. RUBICON vs COLLECTOR OF central EXCISE (1989 (22) E. C. R. 269 Ker), the Kerala High court has held that: 18. In dealing with an application invoking the discretion under the proviso to Section 35f, the Appellate Authority is not dealing with an application for stay. The deposit is required because. it is a condition precedent for the entertainability of the appeal. Therefore, in such an application, the question whether there is any duty admittedly due is irrelevant. The factor made relevant is 'undue hardship' to the appellant. Even if there is any amount admittedly due, the Appellate Authority can dispense with the deposit of the duty and penalty as a precondition for entertaining the appeal, if insistence on such deposit will causes 'undue hardship' to the appellant. The line of enquiry is only whether 'undue hardship' will ensure to the appellant by insistence on deposit of the duty and the penalty, and not whether any portion of the amount is admitted to be due or not. The latter is germane in considering an application for stay, but not while dealing with an application under the proviso to Section 35f. The Distinction between the two types of applications assumes importance because while non-compliance with an order under the proviso to Section 35f entails rejection of the appeal itself, there is no such forfeiture incurred by non-compliance with the direction contained in an order of stay. The only consequence is that the assessee expose himself to coercive process for recovery of the duty and penalty. ' 25. I have serious reservations regarding enunciation of law declared in the above paragraph by the Kerala High Court. A plain reading of Section 35f shows that the disputed amount of duty or penalty should be paid during the pendency of the appeal. It cannot be said to be a condition precedent to the entertainment of the appeal. The appeal can very well be entertained even if the amounts are not depo'sited. But if the Appellate Authority, directs for the pre-deposit, the non-compliance thereof may result in dismissal of the appeal. Secondly, if no order is passed under section 35f, then in such a situation the Excise authorities will be competent to proceed with recovery proceedings of the disputed amounts in accordance with the statutory proceedings in this regard. But if the Appellate Authority, directs for the pre-deposit, the non-compliance thereof may result in dismissal of the appeal. Secondly, if no order is passed under section 35f, then in such a situation the Excise authorities will be competent to proceed with recovery proceedings of the disputed amounts in accordance with the statutory proceedings in this regard. But if an order is passed by the Appellate Authority dispensing with the requirement of the pre-deposit either in part or whole, then as per the instructions of the Board, the Excise authorities are restrained from going ahead with recovery proceedings since the Board has directed to treat such orders as stay orders in respect of disputed demands. I am further of the view that appeals are taken only against disputed dues and therefore an order of dispensation can be passed under the said proviso only in respect of disputed dues and not the admitted dues. " (Emphasis Supplied) referring Judge did not agree with the view expressed in Sunshine tube Pvt. Ltd. , specially the underlined portion of the order and was. of the view that:"if the mandate of the section is that a deposit shall be made of the duty or penalty if the appellant is desirous of appealing against the decision, then, perhaps the view of the learned Judge that the deposit to be made of the duty or penalty is not a condition precedent required reconsideration. "he was further of the view that prima facie merits of the appeal have to be examined while considering the 'undue hardship'; and the pleading of the financial inability to pay was not the only consideration as has been held in the other judgment. ( 11 ) COUNSEL for the parties have been, heard at length. ( 12 ) SECTION 35f of the Act reads:"section 35f. ( 11 ) COUNSEL for the parties have been, heard at length. ( 12 ) SECTION 35f of the Act reads:"section 35f. Deposit, pending appeal, ot duty demanded or penalty levied:- Where in any appeal under this Chapter, the decision or order appealed against relates to any duty demanded in respect of goods which are not under the control of Central excise authorities or any penalty levied under this Act, the person desirous of appealing against such decision or order shall, pending the appeal, Deposit with the adjudicating authority the duty demanded or the penalty levied; provided that where in any particular case, the (Commissioner (Appeals) or the appellate Tribunal is of opinion that the deposit of duty demanded or penalty levied would cause undue hardship to such person, the (Commissioner (Appeals))or, as the case may be, the appellate Tribunal, may dispense with such deposit subject to such conditions as he or it may deem fit to impose so as to safeguard the interests of revenue. " ( 13 ) COUNSEL for the petitioner has strenuously argued that the phrase 'undue hardship' would cover a case where the appellant has a strong prima facie case. In such an event the relevant consideration would be whether the order of pre-deposit causes undue hardship or not. It is so because an assessee will suffer undue hardship if he was to pay an amount which was not legally due. It is not necessary to show that in addition to strong prima facie case the assessee would suffer a financial hardship as well. To substantiate the plea strong reliance was placed upon the following judgments of the High Courts of Calcutta, Bombay, Delhi, Karnataka and Kerala. Reference was also made to certain Supreme Court judgments as well: 1. J. N. CHEMICAL (PVT)LTD. vs CEGAT4 2. BONGAIGAON REFINERY and PETROCHEM. LTD vs COLLR. OF C. EX (A) 3. HOOGHLY MILLS COMPANY LIMITED vs union OF INDIA 4. METAL PRESS INDIA AND ANOTHER vs union OF INDIA and OTHERS 5. SRI KRISHNA vs UNION OF INDIA 6. ASHA RUBBER INDUSTRIES, BANGALORE. vs COLLECTOR OF CENTRAL EXCISE 7. M/s. WIPRO INFOTECH LIMITED vs CUSTOMS, EXCISE and GOLD (CONTROL) APPELLATE TRIBUNAL 8. VIT SEA FOODS vs COLLECTOR OF CUSTOMS 9. NAVIN CHANDRA CHHOTELAL vs central BOARD OF EXCISE and CUSTOMS and OTHERS 10. VIJAY PRAKASH D. MEHTA vs COLLECTOR OF CUSTOMS 11. SANGFROID REMEDIES LTD. ASHA RUBBER INDUSTRIES, BANGALORE. vs COLLECTOR OF CENTRAL EXCISE 7. M/s. WIPRO INFOTECH LIMITED vs CUSTOMS, EXCISE and GOLD (CONTROL) APPELLATE TRIBUNAL 8. VIT SEA FOODS vs COLLECTOR OF CUSTOMS 9. NAVIN CHANDRA CHHOTELAL vs central BOARD OF EXCISE and CUSTOMS and OTHERS 10. VIJAY PRAKASH D. MEHTA vs COLLECTOR OF CUSTOMS 11. SANGFROID REMEDIES LTD. , vs UNION OF INDIA counsel for the respondent could not cite any judgment taking a contrary view. ( 14 ) IN VIT SEA FOODS' case supra, Kerala High Court while interpreting Section 129e of the Customs Act which is in paramateria to the proviso to Section 35f of the Act held:"11. In exercising the discretion under the proviso to Section 129e, the Tribunal should consider, at least prima facie, the question. involved in the appeal. Inter alia, the existence of a prima facie case on merits, constitutes an important relevant factor in the consideration of the question of undue hardship. This is so because it causes undue hardship to any assessee to be called upon to make payment of amounts which are not legally due. The very mandate of Article 265 of the Constitution is that there can be no levy or collection of tax without the authority of law. The accepted rule of interpretation of provisions regarding appeals is to adopt that interpretation which will uphold the right of appeal rather than defeat it. " ( 15 ) HIGH Court of Delhi in SRIKRISHNA's case supra while considering proviso to Section 129e of the Customs Act observed:"suffice it to observe that while disposing of an application under section 129 of the Customs Act, 1962 the Tribunal is obliged to adhere to the question of undue hardship. The order of the tribunal should show if the pleas raised before it, have any merit prima facie or not. If the appellant has such a prima facie strong case as is most likely 'to exonerate him from payment and still the Tribunal insists on the deposit of the amount it would amount to undue hardship. The order of the tribunal should show if the pleas raised before it, have any merit prima facie or not. If the appellant has such a prima facie strong case as is most likely 'to exonerate him from payment and still the Tribunal insists on the deposit of the amount it would amount to undue hardship. " ( 16 ) BOMBAY High Court in Metal Press India's case Supra took the view:"we are of the opinion that on the face of the decisions relied upon by the petitioners which are also referred to in the impugned order and the satisfaction of the CEGAT itself in regard to the existence of a prima fcie good arguable case, the CEGAT was not justified in directing the petitioner to deposit a sum of Rs, 6 lakhs as a pre-condition for admission of the appeal. We, therefore, modify the impugned order and direct the CEGAT to admit the appeal of the petitioners without pre-deposit of any part of the disputed demand. " ( 17 ) IN J. N. CHEMICAL (PVT)LTD, Supra a Division Bench of the Calcutta High Court took the view that if the assessee had a good prima facie case then the authorities under the Act would be justified in dispensing with the requirement of pre-deposit of the disputed amount of duty and penalty. On the facts of that case it was held that there was justification in the exercise of the power vested with the Tribunal to dispense with the requirement of pre-deposit in as much as the case of the assessee was fully covered by a decision of the Special Bench of the Tribunal and still to insist upon the deposit of duty demanded and penalty levied would undoubtedly cause undue hardship to the assessee. ( 18 ) IN Hooghly Mills Company Limited's case again a Single Judge of the Calcutta High Court took the same view and held that where the assessee had a strong prima facie case then that by itself independent of other factors would come within the relevant consideration while determining whether the order of pre-deposit would cause undue hardship or not; that the assessee would suffer undue hardship if he is to pay the amount which is not legally due. ( 19 ) THE point in issue was considered by a Division Bench of this Court in M/s. WIPRO INFOTECH LIMITED' s case. ( 19 ) THE point in issue was considered by a Division Bench of this Court in M/s. WIPRO INFOTECH LIMITED' s case. In that case the Company was engaged in manufacture of mini and micro computer systems for which purpose they had been importing diskettes and manuals from! outside the country. During the relevant period the appellant made 3 importations at Bangalore, Madras and bombay in respect of which duty has been demanded and penalty imposed came to approximately Rs. 80,19,719/- Company filed an appeal along with an application to waive the pre-deposit of the duty and penalty demanded. On consideration of the matter the appellate Authority required the company to deposit Rs. 40,16,000/ - which was roughly one half of the total demand raise and waived the deposit of the remaining amount. Company being not satisfied filed the Writ Petition in this Court contending that as the Company had a prima facie case on merits, the Appellate Authority should have waived the deposit of the entire amount. It was argued that the Appellate Authority had not taken into consideration each and every point which had been raised before it. On these facts it was held:"in each case therefore the authority concerned has to draw balance between the interest of the exchequer and what is just and fair keeping in view the nature of the controversy, the amount of tax demanded. . . . "the question as to whether the interim order should be made in a given case is primarily a matter in the discretion of the authority, concerned and discretion so vested has to be exercised judicially. So long as the exercise is not palpably erroneous and unjust, no interference with the same is warranted in the exercise of the extraordinary jurisdiction of this Court. On the peculiar facts of that case their Lordships found that there was neither error of law nor any perversity in exercise of judicial discretion vested in the Tribunal and the order of the Tribunal directing a pre-deposit of 50% of the amount from the assessee was affirmed being neither arbitrary nor unfair. ( 20 ) THE Single judge who has referred the matter also took the same view in M/s. Auma (India) Ltd. supra. ( 20 ) THE Single judge who has referred the matter also took the same view in M/s. Auma (India) Ltd. supra. ( 21 ) ON a close scrutiny of the judgment in M/s. Sunshine Tube Pvt. Ltd. , in which supposedly a discordant note taking a contrary view has been recorded, would reveal that the learned Single Judge has not categorically said that prima facie merits of the dispute are not to be examined while considering the question regarding waiver/partial waiver of the duty and penalty demanded. Facts of this case were that the Tribunal had directed the petitioner to pay a sum of rs. 4. 5 lakhs as pre-deposit against the total disputed amount of Rs. 13,98,261/- plus Rs. 10,000/- being the penalty amount. Single Judge has upheld the order of the Tribunal relying upon the following observations of the Supreme Court in the case of Vijayaprakash's case supra:"in the facts and circumstances of the case and all the relevant factors, namely the probability of the prima facie case of the appellant, the conduct of the parties, have been taken into consideration by the Tribunal. The purpose of the Section is to act in terrarium to make the people comply with the provisions of law. "which clearly indicates that the Single Judge did not mean that prima facie merits of the dispute are not to be examined at all while considering undue hardship. It rather indicates that the Single Judge was of the view that prima facie merits of the dispute have to be seen while examining undue hardship. But this did not mean that in each and every case a condition of pre-deposit had to be waived on showing a prima facie case. That a strong prima facie case had to be made out and the discretion was to be exercised keeping in view the facts and circumstances of each cases. ( 22 ) IN paragraph 15 of the order (already extracted) the Judge says that the Tribunal has to judge 'undue hardship' by attending to all the relevant materials placed on record and by applying itself to the said materials through a speaking order which should indicate the application of objective and judicious mind. It also indicates that material facts have to be considered while considering the case of undue hardship which would include prima facie disputes of the case as well. It also indicates that material facts have to be considered while considering the case of undue hardship which would include prima facie disputes of the case as well. Of course in later part of this paragraph learned Single judge says that Tribunal has to form its opinion solely, on hardship of the appellant which has to be governed by the material placed on record by the parties. This observation by itself cannot be taken to mean that the learned Single Judge held that prima facie merits of. the case are not to be examined. In any case if these observations of the Single Judge are taken to mean that prima facie merits of the dispute are not to be seen while considering undue hardship then the same run counter to ,the Division Bench judgment of this Court in 'wipro Infotech limited' case and therefore not good law. . ( 23 ) FURTHER the observations, made by the Single Judge in Para 25 of the Judgment in M/s. Sunshine Tube Pvt. Ltd. (supra) which have been underlined by us that the appeal can be entertained even - if the amount is not deposit and only if the Appellate Authority directs for pre-deposit, the non-compliance thereof would result in dismissal of the appeal run counter to the observations made by the Supreme court in a NAVIN CHANDRA CHHOTELAL's case. Their Lordships while considering a similar proviso to Section 129 (1) of the customs act held: "18. No doubt Section 129 does not expressly provide for the rejection of the appeal for non-compliance with the requirement regarding the deposit of penalty or duty; but when sub-section (1) of Section 129 makes it obligatory on an appellant to deposit the duty or penalty pending the appeal and if a party does not comply either with the main sub-section or with any order that may be passed under the proviso the appellate authority is fully competent to reject the appeal of non-compliance with the provisions of Section 129 (1 ). That is exactly what the first respondent had done in this case. Accepting the contention of mr. Trevedi will mean that the appeal will have to be kept on file for ever even when the requirement of Section 129 (1) has not been complied with. That is exactly what the first respondent had done in this case. Accepting the contention of mr. Trevedi will mean that the appeal will have to be kept on file for ever even when the requirement of Section 129 (1) has not been complied with. Retention of such an appeal on file will serve no purpose whatsoever because unless Section 129 (1) is complied with, the appellate authority cannot proceed to hear an ' appeal on merits. Therefore, the logical consequence of failer to comply with Section 129 (1) is the rejection of appeal on that ground. It is evident from the reading of the underlined portion of paragraph 25 of the judgment of the Single Judge and the above observations of the Supreme Court that the observations made by the Single judge run counter to the view taken by the Supreme Court. Supreme court has held that it is obligatory on the assesee to deposit the duty or penalty pending the appeal and if a party does not comply with the main sub-section or with any order that may be passed under the proviso the Appellate Authority would be competent and justified to reject the appeal for non-compliance of the provision. It is well established principle of law that right to appeal is neither an absolute right nor an ingredient of natural justice the principles of which must be followed in all judicial and quasi-judicial proceedings. Section 35f provides a conditional right of appeal on the deposit of (unless waived under the proviso to the Section) the duty demanded or penalty levied. Though the Section does not expressly provide for rejection of appeal for non-deposit of the duty or penalty demanded yet makes it obligatory to deposit the duty or penalty pending the appeal failing which the appellate Authority would be fully competent to reject the appeal. In view of this we are of the opinion that the Learned Single Judge took a erroneous view of the matter in this-regard and to that extent the view expressed is held to be not good law. In view of this we are of the opinion that the Learned Single Judge took a erroneous view of the matter in this-regard and to that extent the view expressed is held to be not good law. ( 24 ) WE respectfully endorse the view taken in M/s. WIPRO INFOTECH LTD's case supra and hold that the authorities under the Act are required to take a prima facie view of the merits of the dispute and pass an order after drawing a balance between the interest of the ex-chequer and what is just and fair keeping in view the nature of the controversy involved in the given facts of the case. ( 25 ) DISCRETION vested has to be exercised judiciously. The power is not to be exercised in a perfunctory manner or as a matter of course in view of the Special nature of taxation and revenue laws. Prima facie merit would amount to, on the face of it and not where it has to be resolved by long drawn out arguments as if the main case is being argued. Discretionary power has to be exercised only when a strong prima facie cases is made out. Stay would be granted in most deserving and appropriate cases keeping in view the given facts and circumstances of the case. ( 26 ) WHILE considering the case of 'undue hardship' the authority is required to examine the prima facie on merits of the dis'pute as well. Pleading of financial disability would not be the only consideration. Where the case is fully covered in favour of the assessee by a binding precedent like that of the judgment of the supreme Court, jurisdictional High Court or a Special Bench of the tribunal, then to still insist upon the deposit of duty and penalty levied would certainly cause 'undue hardship to the assessee. Absence of the Financial hardship in such a case would be no ground to decline the dispensation of pre-deposit under the proviso to Section 35f. The power to dispense with such deposit is conferred under the authorities has to be exercised precisely in cases like this type and if it is not exercised under such circumstances then this Court will require it to be so exercised. Such like cases where two views are not possible then the condition of pre-deposit before the appeal is heard on merits, can be dispensed with. Such like cases where two views are not possible then the condition of pre-deposit before the appeal is heard on merits, can be dispensed with. In case two views are possible on interpretation, based on conflicting judgments of the tribunal or different High Courts in the absence of the judgment of the jurisdictional High Court then the authorities may pass the order under proviso to Section 35f of the Act keeping in view the facts of the case in hand. ( 27 ) COMING to the facts of the present case it would be seen that the dispute is regarding the basis of calculation of differential duty on the additional consideration. According to the petitioner the additional consideration has to be added to the whole sale price and not to the assessable value as has been worked out by the assessing Officer. Special Bench of CEGAT in COLLECTOR OF central EXCISE vs VST INDUSTRIES has taken the view as under: "a harmonious construction of Section 4 of the Act and Rule 5 can lead only to one conclusion that the extra accrual should be added to the wholesale price and the assessable value worked back after allowing admissible deductions. Addition of such extra accruals to the assessable value would distort the meaning, of section because there is no way in which abatement of excise duty while is permitted by Section 4 can be given if the extra accruals is directly added to the assessable value. ( 28 ) LATER on a three member bench in the case of the assessee itself in 1994 (72)E. L. T. 315 reiterated the same view and held. "the next question which has to be dealt with, is whether the freight administrative charges as an additional consideration is to be added to the price, or to the assessable value. In this context, the very same question, we find, has been considered and dealt with by the Tribunal in the VST Industries case. There the Tribunal considered the notional the notional interest on security Deposits taken by the assessee to get working capital. The Tribunal held that these interest charges had to be considered while arriving at the assessable value. It also held that it should be added to the wholesale price and not to the assessable value. There the Tribunal considered the notional the notional interest on security Deposits taken by the assessee to get working capital. The Tribunal held that these interest charges had to be considered while arriving at the assessable value. It also held that it should be added to the wholesale price and not to the assessable value. "this very Assessing Officer in the connected Writ Petition No. 27373/ 98 has followed the Special Bench decision of the Tribunal in 1994 (72}e. L. T. 315. As has been observed earlier against the order of the Special Bench of the Tribunal an appeal was filed in the supreme Court by the Department which has been dismissed on merits in timine. On these facts we would hold that the petitioner had a strong prima facie case. In a case like this there would be justification to exercise the power vested under proviso to Section 35f and dispense with the requirement of pre-deposit of the duty levied. If the deposit of duty demanded is insisted upon in a case like the present one then it would certainly cause undue hardship t6 the petitioner. The petitioner would suffer undue hardship if he is to pay an amount which is not legally due from him. Tribunal erred in not granting the waiver of the deposit of the entire amount of duty demanded. ( 29 ) FOR the reasons stated above, we do not approve the view taken by the Single Judge in M/s. Sunshine Tube Ltd. , to the extent indicated herein before. The view expressed in M/s. Auma (India) ltd. is affirmed. For the reasons stated the requirement of pre-deposit of the duty demanded from the petitioner is dispenses with subject to the condition that in case the petitioner does not succeed then it shall be liable to pay the amount along with interest at the rate of 12% per annum from the date the demand was created till its actual disbursement. The amount of duty demanded shall be the first charge on the property of the Petitioner. Appellate Authority is directed to dispose of the appeal without insisting upon the deposit of the duty levied. ( 30 ) ANYTHING said in this order shall not be taken as an expression of opinion on merits. The amount of duty demanded shall be the first charge on the property of the Petitioner. Appellate Authority is directed to dispose of the appeal without insisting upon the deposit of the duty levied. ( 30 ) ANYTHING said in this order shall not be taken as an expression of opinion on merits. Appeflate Authority is to dispose of the appeal in accordance with law without influencing itself by any of the observations made in this order touching upon the merits of the dispute. Petition is accepted and the order annexure-M passed by the Appellate Authority is modified and instead of partial waiver the petitioner is granted the waiver of deposit of the entire amount of duty demanded. --- *** --- .