Customs appeal- pre-deposit relaxations - discretion to Commissioner (Appeals) and CESTAT is desired to avoid need to file Writ Petitions, and appeal on this issue.

Abbreviations used

CA or Act means the Customs Act, 1962.

PCC means Principal Commissioner of Customs

CC means Commissioner of Customs

C(A) means Commissioner of (Appeal) Customs.

Jr. AO means Adjudicating Officer an officer of customs lower in rank than a PCC or CC.

Sr. AO means PCC or CC who passed order of adjudication.

Orders against which appeal require a pre-deposit by appellant / tax payer:

1. Order passed under the Act by an officer of customs lower in rank than a Principal Commissioner of Customs or Commissioner of Customs. (Jr.AO)
2. a decision or order passed by the 15 [Principal Commissioner of Customs or Commissioner of Customs] as an adjudicating authority; (Sr.AO)
3. an order passed by the Commissioner (Appeals) under section 128A;

Section 129E - Deposit of certain percentage of duty demanded or penalty imposed before filing appeal

{As per substituted section Section 89 of the Finance (No. 2) Act, 2014 w.e.f. 06-08-2014}

Customs Act, 1962
Chapter XV
Appeals and Revision

5[129E. Deposit of certain percentage of duty demanded or penalty imposed before filing appeal

The Tribunal or the Commissioner (Appeals), as the case may be, shall not entertain any appeal,-

1. under sub-section (1) of section 128, unless the appellant has deposited seven and a half per cent. 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 6[Principal Commissioner of Customs or Commissioner of Customs];

Observations: This relates to appeal before CC(A) against order passed by any Jr. AO.

1. against the decision or order referred to in clause (a) of sub-section (1) of section 129A, unless the appellant has deposited seven and a half per cent. 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 the decision or order appealed against;

Observations: This is appeal before Tribunal /CESTAT against order of any senior AO.

1. against the decision or order referred to in clause (b) of sub-section (1) of section 129A, unless the appellant has deposited ten per cent. 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 the decision or order appealed against:

Observations: This is appeal before Tribunal /CESTAT against order of any CC(A). This is in nature of second appeal, may be for this reason requirement is prescribed for 10% pre-deposit.

Provided that the amount required to be deposited under this section shall not exceed rupees ten crores:

Observations- maximum pre-deposit amount is restricted to Rs. Ten crores. Therefore, after certain amount of disputed dues, percentage will be irrelevant. For example if disputed demand is say Rs.200 crore, maximum pre-deposit will remain Rs. ten crore whether it be against order of JR AO or Sr. AO and or CC(A).

Provided further that the provisions of this section shall not apply to the stay applications and appeals pending before any appellate authority prior to the commencement of the Finance (No. 2) Act, 2014.]

Observations:

Appeals pending before 06.08.2014 are not affected and they are governed by pre amendment provisions.

Discretion to appellate is desired:

Before amendment w.e.f. 06.08.2014 the CC(A) and CESTAT had discretion to reduce or waive requirement of pre-deposits. However, after amendment, whereby certain percentage is prescribed, the discretion has altogether been withdrawn. For this reason, many taxpayers under Customs Act has to approach the High Court by way of Writ Petition and if he is not satisfied with order of the High Court, then he will have to make appeal before the Supreme Court. This is causing delays and pendency of cases before Courts. As observed by learned author in his article titled "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" published on 19.09.2026.

The ground realities is that tax officers try to play in the safest possible mode and they raise demand or excessive demand whenever there is a scope of raising disputes. Furthermore, if they receive any information from any investigation wing or receive audit objections, they start raising demand just to play safe, even if there is no relevance and no merit in such information. This lead to lot of litigation due to heavy, unreasonable demand.

It is a routine for them not to follow precedence, not to follow earlier instances in case of assessee, not to follow judgments of higher courts by simply mentioning 'facts are different'.

Whereas an importer or exporter is working in highly competitive conditions and he has to take a decision in a reasonable manner so as to try to minimise his costs including costs by way of tax, duty, cess and fees statutorily levied and without volitation of law to avoid penal actions.

If tax authorities also consider matter in a reasonable manner, there will not be huge tax disputes and litigation.

Therefore, discretion to appellate authorities, Tribunal is desired and the discretion can be with suitable guidelines for consideration of:

Merits of case of appellant/ tax payer.

Available judgments in favour and against assessee and pending appeals of department.

Chances of winning of case by appellant/ tax payer as well as weakness of case of revenue.

Financial status of tax payer and his establishments by way of fixed assets, manufacturing facilities, people employed etc. For example, a trading house, vis a vis a manufacturing company will have to be considered from different perspectives.

Financial difficulties having substantial adverse effect on operations and employment of people.