Mandatory pre-deposit under Section 129E upheld where export realisation proof missing; frozen bank account not a ground

HC refused to waive the mandatory pre-deposit requirement under Section 129E for recovery of duty drawback where proof of export realisation was not submitted. Citing precedent, the court held the right of appeal is statutory and subject to legislative conditions, and a frozen bank account does not justify relaxing the pre-deposit regime. The petitioner was directed to make the pre-deposit and allowed to prosecute the appeal on merits. Petition disposed of.

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1. ISSUES PRESENTED AND CONSIDERED

Whether a statutory mandatory pre-deposit requirement under Section 129E (as amended by the Finance Act No.2 of 2014) - imposing 7.5%/10% pre-deposit for appeals - can be waived or reduced solely on the ground that the appellant's bank account has been frozen by the department, preventing access to funds.

2. ISSUE-WISE DETAILED ANALYSIS

Issue: Whether freezing of the bank account of an appellant constitutes a permissible ground for discretionary waiver or relaxation of the mandatory pre-deposit requirement under the statutory scheme.

Legal framework: The Finance Act introduced a uniform mandatory regime of pre-deposit (7.5%/10% of duty or penalty) for all appeals filed on or after 06.08.2014. Section 129E prescribes the pre-deposit condition for prosecuting appeals; the right of appeal is statutory and subject to the conditions imposed by the legislature. The duty drawback was originally availed under Section 75(1) of the Customs Act and the Drawback Rules, but the appeal regime is governed by the mandatory pre-deposit rules.

Precedent Treatment: The Court treated prior authority from this High Court as directly applicable and binding on the issue, and noted consistent views from other High Courts and tribunals which hold that the mandatory pre-deposit regime cannot be relaxed merely because a bank account is frozen. The earlier judgment of this Court was followed; similar positions of the Bombay High Court and CESTAT, Delhi were cited as supporting authorities. A contrary view from another High Court was referenced by counsel but not followed.

Interpretation and reasoning: The Court reasoned that the right of appeal is a statutory right and therefore may be made subject to conditions enacted by the legislature. The mandatory pre-deposit regime is not an unfettered discretion of the adjudicatory authority to be relaxed on equitable grounds; permitting an exception solely because an appellant's account is frozen would effectively nullify the legislative compulsion. The Court held that exclusion or prevention of access to funds due to freezing by the department does not create a legal basis to disregard the statutory pre-deposit requirement. Binding precedent requires adherence to the legislative mandate unless overruled by a higher authority.

Ratio vs. Obiter: Ratio - The statutory mandatory pre-deposit requirement under Section 129E cannot be waived or relaxed solely on the ground that the appellant's bank account has been frozen by the department; the right of appeal is subject to legislative conditions and the mandatory pre-deposit must be complied with. Obiter - References to alternative or equitable considerations (e.g., hardships caused by freezing) were mentioned but not accepted as legal grounds to impinge the mandatory statutory requirement.

Conclusions: The Court concluded that the mandatory pre-deposit regime cannot be waived merely because the appellant's bank account is frozen. The proper course is compliance with the statutory pre-deposit condition. However, where the appellant offers to make the pre-deposit, the appellate authority must revive and decide the appeal on merits after compliance and hearing. The Court, while refusing to recognize freezing as a standalone ground for waiver, permitted the appellant to make the statutory pre-deposit (7.5%) within a specified period and directed revival of the appeal upon such compliance; failure to comply would result in confirmation of the impugned order.

Cross-references: The Court expressly relied on and followed its earlier decision on identical legal proposition and noted consonant decisions of other High Courts and tribunals; a contrary High Court decision cited by the petitioner was considered but not followed.

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