The court upheld the discretionary nature of the order and emphasized the importance of complying with the provisions of Section 35-F of the Central Excise Act, 1944.

1. The petitioners have invoked the extraordinary writ jurisdiction of this Court vested in terms of Article 226 of the Constitution of India read with Section 103 of the Constitution of Jammu and Kashmir to assail the order dated 20.04.2012 passed by the Customs, Excise and Service Tax Appellate Tribunal (for short 'Tribunal') in Excise stay No. 2704/2010 in Excise appeal No. 2652/2010 whereby the petitioners have been ordered to make a deposit of 15% of the duty demanded within six weeks and the rest of the duty has been waived off for the purposes of admission of appeal.

2. Having heard learned counsel for the parties and perused the record; it would be appropriate to first set out the provisions of Section 35-F of Central Excise Act, 1944 which deals with the pre deposit. Section 35-F reads thus:

"35-F. Deposit, pending appeal of 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:

Provided further that where an application is filed before the Commissioner (Appeals) for dispensing with the deposit of duty demanded or penalty levied under the first proviso, the Commissioner (Appeals) shall, where it is possible to do so, decide such application within thirty days from the date of its filling".

3. From a bare reading of Section 35-F, it is evident that where an appeal is directed against any duty demanded or penalty levied, the same would be entertained only if a person, desirous of appealing, deposits with the adjudicating authority the whole of the duty demanded or penalty levied. Under proviso to Section 35-F, a discretion has been given to the Appellate Tribunal to waive off the pre-deposit wholly or partly, if it is of the opinion that the deposit of the duty demanded or penalty levied would cause undue hardship to such person. It is in terms of the aforesaid proviso, the petitioners filed an application before the Appellate Tribunal seeking waiver of the pre-de-posit.

4. The Tribunal, after considering the submissions of the petitioners herein and also the Revenue, found the petitioners entitled to waiver of pre-deposit to the extent of 85 percent of the duty demanded and directed the petitioners to make a deposit of 15% only. The petitioners appear to be unhappy even with the direction of the Tribunal asking them to deposit 15% of the duty demanded and, are therefore, before this Court in these proceedings.

Briefly stated, the facts leading to the filing of this petition, are that petitioner No. 1 is a manufacturer of menthol products. The main raw materials for the manufacture of menthol and other allied products are crude mentha oil, crude mentha oil shivalik, crude thymol oil etc. The petitioners claimed exemption under Notification No. 56/2002-CE, dated 14th November, 2002 as a unit situated in Jammu. As per the terms of the aforesaid Notification, whatever excise duty is paid by the petitioners through PLA is refundable and the buyer of the product is entitled to take Cenvat credit of the duly paid by him to the petitioners. Thus, the payments made through PLA by the units like the petitioners located in Jammu are refunded twice i.e. once to the Unit in Jammu by cash and then to the unit purchasing product by way of cre