M/S. I.T.C. Ltd. vs Cce, Bangalore on 25 April, 2001
The Division bench of the Karnataka High Court, in the case of ITC Ltd. v. CCE & C ILR 2000 KAR 25, examined all the judgments of various High Courts pertaining to pre-deposit and concluded that the view expressed by the Single Judge in Sunshine Tube Pvt. Ltd. v. CC and Anr. is not correct and affirmed the view expressed in Auma (India) Ltd. v. UOI WP No. 30161/1998, . After detailed examination of various judgments, the Division Bench held that prima facie case on merits would mean that the case is covered fully 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. It held that inspite of prima facie case, if the assessee is directed to pre-deposit duty and penalty, then it would cause "undue hardship" to the assessee. It also noted that 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 of the Act. It has been held that the power to dispense with such deposit is conferred under the authorities and if it is not exercised under such circumstances, then this Court will require it to be so exercised.