Mandatory pre-deposit under Section 129-E Customs Act upheld, appeal requires 7.5-10% deposit before filing

Gujarat HC dismissed petition challenging mandatory pre-deposit requirement under Section 129-E of Customs Act, 1962. Court held that aggrieved party must deposit 7.5% or 10% of total demand as pre-condition for filing appeal before appellate authority. HC ruled this mandatory provision cannot be declared inapplicable and must be adhered to by petitioner. Court declined to consider merits or prima facie case due to mandatory nature of pre-deposit requirement, but allowed petitioner to raise all contentions before appropriate authority.

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Issues involved:
The issues involved in this case are the challenge to the Order-in-Original dated 15.12.2022 passed by the Additional Commissioner before the appellate authority, the requirement of mandatory pre-deposit under Section 129-E of the Customs Act, 1962 for considering an appeal, and the financial constraints of the petitioner in meeting the pre-deposit requirement.

Challenge to Order-in-Original:
The petitioner challenged the Order-in-Original dated 15.12.2022, which confiscated seized Cut and Polished Natural diamonds and rough rejection (mix) of natural diamonds, alleging improper export by mis-declaring quantity, description, and value. The Order imposed confiscation, redemption fines, and penalties on the petitioner under various sections of the Customs Act, 1962. The petitioner, aggrieved by this, filed a Statutory Appeal No. 1669/2023 before the Commissioner of Customs (Appeals).

Mandatory Pre-deposit Requirement:
The petitioner, in the appeal process, was required to make a mandatory pre-deposit amounting to 7.5% of the penalties imposed, totaling Rs. 1,82,00,29,000, and deposit a maximum amount of Rs. 10 crores for admission of the appeal. Due to the petitioner's weak financial condition and inability to arrange the required amount, a petition was filed under Article 226 of the Constitution of India seeking exemption from the pre-deposit requirement.

Legal Analysis and Decision:
The Court noted that Section 129E of the Customs Act mandates the deposit of a certain percentage of duty demanded or penalty imposed before filing an appeal, which is a prerequisite for the appellate authority to entertain the appeal. Despite the petitioner's financial constraints, the Court held that the mandatory pre-deposit requirement cannot be declared inapplicable as it is a necessary condition for the appeal to be considered on merits. The Court emphasized that it did not delve into the merits of the case but dismissed the petition as devoid of merit, allowing the petitioner to raise all contentions before the appropriate authority.

Conclusion:
In conclusion, the Court dismissed the petition challenging the Order-in-Original and the mandatory pre-deposit requirement under Section 129E of the Customs Act, emphasizing the necessity of complying with statutory provisions for the appeal process to proceed. The petitioner's financial constraints were acknowledged, but the Court upheld the mandatory pre-deposit requirement as essential for the appeal to be considered on its merits.

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