TaxTMI 
TaxTMI 
TaxTMI 
Appeal before First Appellate Authority
Section 128 of the Customs Act, 1962 (‘Act’ for short) provides for filing of appeal before the Commissioner of Customs (Appeals) by any person aggrieved by any decision or order passed under this Act by an officer of customs lower in rank than a Principal Commissioner of Customs or] Commissioner of Customs within 60 days from the date of communication of the order.
Pre – deposit
Section 129E (i) of the Act provides that the appellant, for filing appeal before the Commissioner of Customs (Appeals), has to pay 7.5% of the duty, in case where duty or duty and penalty are in dispute, or penalty, where such penalty is in dispute, in pursuance of a decision or an order passed by an officer of customs lower in rank than the Principal Commissioner of Customs or Commissioner of Customs.
Section 129E (iii) of the Act provides that in an appeal against the decision under Section 129A(i) of the Act the appellant has to pay 10% of duty or duty and penalty are in dispute, or penalty, where such penalty is in dispute, in pursuance of the decision or order appealed against.
Waiwal of pre – deposit
The pre deposit as mentioned under Section 129E is mandatory. Without filing the pre deposit the appeal cannot be entertained by the Appellate Authority. There is no discretion to the appellate authorities to reduce the pre deposit below the level of 7.5%.
In Samuvel Chandran Versus The Commissioner of Customs and anr. - 2024 (10) TMI 1470 - BOMBAY HIGH COURT, the Additional Commissioner of Customs imposed penalties upon the petitioner under Sections 112(b) and 114AA of the Act vide his order-in-original dated 31.05.2024 for his involvement in smuggling 618 kgs. of gold. The petitioner filed an appeal before the Commissioner of Customs (Appeals) challenging the order of Additional Commissioner. However, the petitioner has chosen to file a writ petition before the High Court in WP (L) No. 26265 of 2024 with the prayer to the High Court to give directions to the Commissioner (Appeals) to hear his appeal without insisting of the mandatory requirement of deposit of Rs.3.375 crores, a 7.5% of the penalty amount. The said writ petition was withdrawn by the petitioner with the liberty for file a fresh petition.
The petitioner again filed the present writ petition challenging the order dated 31.05.2024. The petitioner contended that the impugned order violates the principles of natural justice since the petitioner was given opportunity to cross examine the witnesses, whose statements are recorded in the adjudication proceedings. The petitioner was not allowed to cross examine them. In the case of failures in adopting the principles of Natural Justice the petitioner should not be relegated to the alternate remedy under the Act.
The Department contended the following before the High Court-
- In respect of the cross examination issue the order gave detailed reasons.
- Apart from the statements in the adjudication proceedings for which the opportunity of cross examination has been given to the petitioner, there are other evidences to prove the case against the petitioner.
- There are evidences to prove that the petitioner has smuggled 618 kgs of gold.
- The petitioner can raise these issues before the First Appellate Authority.
- No extraordinary circumstances exist for deviating from the usual rule of exhaustion of alternate remedies.
The High Court considered the submissions of both the parties. The High Court observed the pleadings of the petitioner in the petitioner. The petitioner could not able to pay the pre deposit to the tune on of Rs.3.375 crores due to his worst financial conditions. The petitioner filed a writ petition before this High Court with the prayer for the waival of the pre deposit for the appeal. However, he withdrew the said writ petition and now again he filed a writ petition before the High Court challenging the impugned order.
Though the petitioner contended that he could not able to pay the mandatory 7.5% of deposit which amounts to Rs.3.375 crore, the petitioner did not give any justification for the same. Without paying the mandatory pre deposit the petitioner he sought for he waival of the same which is not permissible.
The High Court relied on a judgment of Supreme Court in Kotak Mahindra Bank Pvt. Limited Versus Ambuj A. Kasliwal & Ors. - 2021 (2) TMI 1251 - Supreme Court, a case under the Recovery of Debts and Bankruptcy Act, 1993. In this case, the Supreme Court held that the High Court does not have the power to waive the pre deposit in its entirety, nor can it exercise discretion which is against the mandatory requirement of the statutory requirement under Section 21 of the said Act. The said section 21 requires a pre deposit of 50% of the debt due as a pre-condition for entertainment of an appeal. However, the Appellate Authority is given the discretion to reduce the 50% to 25% of the deposit. The Supreme Court held that even the High Court or Supreme Court is not empowered to waive the pre-deposit below the 25% limit.
The High Court analysed the impugned order. The Adjudicating Authority gave reasons for his findings. These reasons could be tested before the Appellate Authority by the petitioner. This case is not a case of ‘no notice’ or ‘no opportunity to defend the allegations in the show cause notice’. The petitioner has also filed an appeal before the First Appellate Authority. Therefore, prima facie proof of prejudice may be necessary. The High Court held that these matters can be looked into by the Appellate Authority.
The High Court declined to entertain the present writ petition. It is open to the petitioner to pursue the remedy of appeal by complying with the mandatory conditions prescribed under the law. Therefore, the High Court dismissed the writ petition.
The appellant filed a special leave petition before the Supreme Court in Special Leave Petition (Civil) Diary No. 824 of 2025 [SAMUVEL CHANDRAN Versus THE COMMISSIONER OF CUSTOMS & ANR. - 2025 (4) TMI 383 - SC Order (LB)]. The Supreme Court dismissed the same on the ground that there was not ground for the Supreme Court to interfere with the impugned judgment.