Customs cases pre-deposit relaxation. In Sea Queen sincerity diligence caused loss and doors for justice were unjustifiably closed whereas Techmax by adopting delaying tactics tax payer gained.

M/s. Sea Queen Shipping Services (P) Ltd. Versus The Additional / Joint Commissioner Of Customs & Anr. - 2026 (9) TMI 1057 - SC Order  ( In short Sea Queen case)

M/s. Sea Queen Shipping Services P Ltd. Versus The Additional / Joint Commissioner of Custom (Gr. 1 And 2), And Anr. - 2026 (7) TMI 2026 - DELHI HIGH COURT

M/s. Tecmax Electronics Versus The Principal Commissioner Of Customs (Import). -  2025 (9) TMI 203 - DELHI HIGH COURT  (In short Tecmax case)

Customs Act, 1962 provisions considered

Sea Queens case

Section 129 - Appellate Tribunal

In M/s. Tecmax Electronics

1. Section 28 - Recovery of duties not levied or not paid or short-levied or short-paid or erroneously refunded
2. Section 28AA - Interest on delayed payment of duty
3. Section 114A - Penalty for short-levy or non-levy of duty in certain cases
4. Section 114AA - Penalty for use of false and incorrect material
5. Section 129E - Deposit of certain percentage of duty demanded or penalty imposed before filing appeal
6. Section 130 - Appeal to High Court

In sea Queen case supra. The High Court referred Tecmax case in which it was held as follows vide paragraph 18:

"18. However, since there is a financial distress which is pleaded, the Appellant is permitted to pay the pre-deposit of Rs. 23,88,667/- within a period of six months with the CESTAT. If the said amount is deposited within six months, the appeal shall be restored to its original position."

Observations of learned author:

In both cases petitioner approached the High Court by way of WP or appeal respectively seeking relaxation about pre-deposit payable, because the CESTAT has no power to waive or relax pre-deposit after enactment of S. 129E.

Grounds and contentions raised in petitions by both parties are not fully mentioned in the judgment. However, learned author find the following similarities and differences in two cases:

1. Both have prayed before High Court to seek exemption or relaxation about mandatory pre-deposit, which Commissioner and CESTAT cannot allow in view of S.129E.
2. Though in case of Tecmax it was by way of an appeal u.s. 130 against order of CESTAT but it was by way of WP in case of Sea Queen. However, discretion to the High Court was available and both parties have approached the Court to seek some relaxation so that they can seek justice.
3. Making a WP or appeal in such case itself is an indication of distress and financial difficulty, otherwise a taxpayer will not take a risk of not filing appeal after paying pre deposit, as required. Though due to difference in drafting in one petition one could emphasis it and another could not suitably and forcefully brought on record by way of proper explanation in the petition.
4. In fact in Sea Queen, taxpayer took precautionary step and filed WP to seek waiver or relaxation, this was a quick action to seek relief.
5. Whereas in Tecmax taxpayer first filed appeal before CESTST, it prayed time for payment of pre -deposit twice, and on third occasion when appeal was fixed for hearing before CESTAT the learned counsel submitted that they have approached the High Court by e-filing.
6. Since there was no order by the High Court in favour of the appellant the CESTAT dismissed appeal in case of Tecmax.
7. As mentioned earlier, the High Court allowed six months time to Tecmax to enable and restore appeal which has been dismissed by CESTAT.

Observation of author:

As discussed above Tecmax adopted delaying practice by filing appeal before CESTAT without paying pre-deposit. Then sought time to make pre-deposits, and passed long time but still did not make deposit against requisite pre deposit. Thereafter filed appeal before High Court and prayed for relaxation from pre-deposit.

On the other hand in Sea Queen tax payer shows sincerity and diligence by directly seeking relaxation from High Court by filing a WP, in absence of effective alternate remedy available. Sea Queen, could also have followed delaying tactics and gained time and relaxation.

The honourable High Court in Sea Queen discussed and dismissed the WP as follows, highlights added by learned author:

ORDER

1. In substance, the Writ Petition prays for exemption/reduction in the amount of pre-deposit for the purpose of filing appeal as is mandatory under Section 129(E) of the Customs Act, 1962 [hereinafter referred to as 'Act'].

2. A Coordinate Bench of this Court in CUSAA 121/2025 captioned M/s. Tecmax Electronics vs. The Principal Commissioner of Customs (Import), decided on 28.08.2025, had held that the Commissioner or Central Excise and Service Tax Appellate Tribunal [hereinafter referred to as 'CESTAT'] has no power to admit appeal without the pre-deposit.

3. The Petitioner claims that he does not have the requisite funds i.e. disposal for pre-deposit as mandatory under Section 129(E) of the Act.

4. This Court has considered the parties submissions, however, in view of the findings in the judgment M/s. Tecmax Electronics (supra) and more particularly, considering the fact that the Petitioner has failed to make out an exceptional case, this Court does not find merits to interfere in the matter.

5. The present Writ Petition, along with pending application, stands disposed of."

Unquote:

In both cases the Court has considered that pre-deposit is mandatory. So there is no difference, as a ground for different order.

There is no discussion in both cases about what is exceptional case made out by Tecmax and not such case made out by Sea Queen.

In the order in case of Tecmax there are more discussions about subject matter of appeal and not much about exceptional case of financial difficulties. About this issue we refer to para 17 and 18 with highlights added:

"17. This Court is not inclined to grant waiver from pre-deposit in exercise of writ jurisdiction since the present case, in the opinion of the Court, is not a rare case necessitating interference.

18. However, since there is a financial distress which is pleaded, the Appellant is permitted to pay the pre-deposit of Rs. 23,88,667/- within a period of six months with the CESTAT. If the said amount is deposited within six months, the appeal shall be restored to its original position."

However, in case of Sea Queen the Court held as follows:

" 4. This Court has considered the parties submissions, however, in view of the findings in the judgment M/s. Tecmax Electronics (supra) and more particularly, considering the fact that the Petitioner has failed to make out an exceptional case, this Court does not find merits to interfere in the matter."

Un quote:

In both cases the Court did not find an exceptional case.

However, in one case allowed six months time to Tecmax and on payment of the same CESTAT appeal will be restored.

Whereas in case of Sea Queen such relaxation is not allowed and WP was dismissed.

This forced Sea Queen to approach the Supreme Court. Before Supreme Court it appears that ld. Counsels could not point out full applicability of judgment in case of Tecmax and similar relief.

Ld. Counsel also could not press arbitrariness of High Court in not following fully Tecmax ruling while considering the Sea queen case.

Ld. Counsel could not emphasize that if honourable SC also dismiss WP and confirm order of HC, the doors for justice will be closed forever in case of Sea Queen.

From order of Honourable Supreme Court :

For the Petitioner(s): Mr. Madhu Prakash, Adv. Mr. Chandan Kumar, AOR

For the Respondent(s): None.

"ORDER

1. Heard Mr. Madhu Prakash, learned counsel appearing for the petitioner.

2. Having considered the matter in detail, we do not find any ground warranting interference by this Court. Accordingly, the Special Leave Petition stands dismissed.

3. Pending application(s), if any, shall stand disposed of."

Observations of learned author:

In this case any one for revenue was not present.

With due respect, learned author feel that though the Supreme Court that counsel of petitioner was heard, and have considered the matter id detail.

However, there are no words about what was submitted by ld. Counsel of Petitioner and how their lordships have considered the matter in details?

There is nothing to show as to why the High Court did not fully follow the precedence relied and why the precedence was not fully relied.

Therefore, any reader of this judgment whether be a person from public or other judges, in any manner and situations will not be in a position as to what prevailed in minds of their lordships after hearing the counsel and after considering in details that lead to their lordships to approve the order of High Court. Particularly when the order in appeal was not based on the precedence referred and followed y the High Court in case of Sea Queeen and those in case of Tecmax.

With due respect to their lordships of honorable Supreme Court and High Court, learned author feels that both Courts while dealing with the case of Sea Queen have ignored sincerity and diligence shown in case of Sea Queen and Sea Queen has been penalised for such sincerity and diligence shown by filing WP at first instance. Whereas Tecmax by following delaying practices have been ale to buy lot of time and also further opportunity for hearing its case by CESTAT.

If such practices continue in courts, then the courts are also responsible for burden of cases pending before courts.