TaxTMI 
TaxTMI 
2025 (11) TMI 973
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....mbers of the members of the Association of the South East Asian Nations (ASEAN) since India had entered into India-ASEAN Preferential Tariff Agreement/Free Trade Agreement, known as Comprehensive Economic Cooperation Agreement. The petitioner claims that it is thus entitled to benefits provided under the aforesaid agreement, as well as benefits provided under the Act. The petitioner imports goods through Mangalore Port and also has storage tanks for receiving the imported cargo in Mangalore. The petitioner is also said to be a regular importer of crude palm oil, falling under tariff item (CTI) 1511 10 00 of the First Schedule to the Customs Tariff Act, 1975 from Indonesia and Malaysia for manufacturing of final product. The petitioner, in terms of the aforesaid agreement, had availed the benefit of exemption from basic customs duty under Sl.No.3 of the Notification No. 48/2021-Customs dated 13-10-2021 (hereinafter referred to as 'Exemption Notification') and the petitioner pays Agriculture Infrastructure and Development Cess (AIDC) at the rate of 5% in terms of Sl. No. 2 of the Notification No. 49/2021-Customs for the said imports. 2.2. On and from the month of June 2022, export....
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....a concessional rate of duty, as provided under the Comprehensive Economic Co-operation Agreement. The 1st respondent denies the claim of the assessee, holds that crude palmolein cannot be exempted under the Exemption Notification, since it only covers crude palm oil and therefore, the assessee was directed to pay the differential basic customs duty at Rs.416,87,71,557 in terms of Section 28(1) of the Act r/w Section 5(1) of the Integrated Goods and Serves Tax Act, 2017 ('IGST' Act) along with interest and penalty. The aforesaid are the contents of the order in original. 2.5. The petitioner-assessee prefers an appeal before the 2nd respondent-CESTAT challenging the Order-in-Original dated 27-01-2025. In terms of Section 129-E(ii) of the Act, the assessee is required to deposit 7.5% of the duty demanded, which will not exceed Rs. 10 crores. The assessee is now at the doors of this Court seeking waiver of the payment of deposit stipulated under Section 129-E(ii) of the Customs Act and admit the appeal without the mandatory pre-deposit amount. 3. Heard Sri Prabhuling K Navadgi, learned senior counsel appearing for petitioner and Sri Aravind V Chavan, learned counsel appearing for....
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....not in dispute. The issue that has driven the petitioner to this Court is, the claim of waiver of the mandatory pre-deposit for entertainment of an appeal under Section 129-E of the Act. To consider the said issue, the facts need not bear iteration, as they are all a matter of record. Since the crux lies in claim for waiver, it is necessary to notice Section 129-E of the Act, it reads as follows: "Section 129-E. 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, - (i) 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 Principal Commissioner of Customs or Commissioner of Customs; (ii) 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 percent of the duty, in case where du....
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.... to amount to unreasonable restrictions rendering the right almost illusory (vide : the latest decision in Anant Mills Ltd. v. State of Gujarat [(1975) 2 SCC 175 : AIR 1975 SC 1234]). Counsel for the appellants, however, urged that the conditions imposed should be regarded as unreasonably onerous especially when no discretion has been left with the appellate or revisional authority to relax or waive the condition or grant exemption in respect thereof in fit and proper cases and, therefore, the fetter imposed must be regarded as unconstitutional and struck down. It is not possible to accept this contention for more than one reason. In the first place, the object of imposing the condition is obviously to prevent frivolous appeals and revision that impede the implementation of the ceiling policy; secondly, having regard to sub-sections (8) and (9) it is clear that the cash deposit or bank guarantee is not by way of any exaction but in the nature of securing mesne profits from the person who is ultimately found to be in unlawful possession of the land; thirdly, the deposit or the guarantee is correlated to the landholdings tax (30 times the tax) which, we are informed, varies in the St....
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....to safeguard the interest of the revenue. Stay applications and the issue of whether a case of undue hardship was made out, gave rise to endless litigation. There would be orders of remand in the litigative proceedings. All this was liable to result in a situation where the disposal of stay applications would consume the adjudicatory time and resources of the Tribunal or, as the case may be, of the Commissioner (Appeals). Parliament has stepped in by providing a requirement of a deposit of 7.5% in the case of a First Appellate remedy before the Commissioner (Appeals) or to the Tribunal. The requirement of a deposit of 10% is in the case of an appeal to the Tribunal against an order of the Commissioner (Appeals). This requirement cannot be regarded or held as being arbitrary or as violative of Article 14. Above all, as the Supreme Court held in Shyam Kishore (supra), the High Court under Article 226 of the Constitution is vested with the jurisdiction in an appropriate case to dispense with the requirement of pre-deposit and the power of the Court under Article 226 is not taken away. This was also held by the Supreme Court in P. Laxmi Devi (supra) in which the Supreme Court observed ....
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....t which considers the very issue. 10.1. The Apex Court in the case of CHANDRA SEKHAR JHA V. UNION OF INDIA (2022)14 SCC 152, has held as follows: "7. On a conspectus of the provisions of Section 129-E before and after the substitution, it becomes clear that the lawgiver has intended to bring about a sweeping change from the previous regime and usher in a new era, under which the amount to be deposited was scaled down and pegged at a certain percentage of the amount in dispute. In other words, while under Section 129-E, as it stood prior to the substitution, the appellant was to deposit the duty and the interest demanded or the penalty levied, in the present regime, the appeal is maintainable upon the appellant depositing seven-and-a-half per cent of the amount. Under the earlier regime, in other words the entire amount which was in dispute had to be deposited. Under the earlier avatar of Section 129-E, the lawgiver also clothed the appellate body with power as contained in the first proviso. The first proviso provided the Commissioner (Appeals) or as the case may be, Appellate Tribunal the power to dispense with such deposit, subject to conditions as he deemed fit to im....
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....he acceptance of the argument would involve a dichotomy in law. On the one hand, what the appellant is called upon to pay is not the full amount as is contemplated in Section 129-E before the substitution. The order passed by the Commissioner is dated 23-11-2015 which is after the substitution of Section 129-E. The appellant filed the appeal in 2017. What the appellant is called upon to pay is the amount in terms of Section 129-E after the substitution, namely, the far lesser amount in terms of the fixed percentage as provided in Section 129-E. The appellant, however, would wish to have the benefit of the proviso which, in fact, appropriately would apply only to a case where the appellant is maintaining the appeal and he is called upon to pay the full amount under Section 129-E under the earlier avtar. 12. We would think that the legislative intention would clearly be to not to allow the appellant to avail the benefit of the discretionary power available under the proviso to the substituted provision (sic pre-substitution provision) under Section 129-E. When the appellant is not being called upon to pay the full amount but is only asked to pay the amount which is fixed und....
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....posit of at least twenty-five per cent of the debt due would be permissible, but not entire waiver. Therefore, any waiver of pre-deposit to the entire extent would be against the statutory provisions and, therefore, not sustainable in law. The order of the High Court is, therefore, liable to be set aside. *** *** *** 19. Having arrived at the above conclusion the issue is also with regard to the extent to which pre-deposit is to be ordered in the instant case. Though the learned Senior Advocates on either side have indicated different figures as the actual debt due as on today, we do not propose to enter into that aspect of the matter since the actual amount due is a matter which would be taken note of by the DRAT while considering the appeal on merits and at the point of recovery if any, in the execution proceedings. However, for the present we would take note of the amount as indicated in the order dated 27-2-2019 passed by the DRAT. Hence, for the purpose of determining the pre-deposit, the decretal amount due is taken at Rs. 68,18,92,841 (Rupees sixty-eight crores, eighteen lakhs, ninety-two thousand, eight hundred and forty-one). *** *** *** ....
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....gal basis and cannot be sustained. 67. The principle enunciated in the judgments in Pioneer Corpn. case [Pioneer Corpn. v. Union of India, 2016 SCC OnLine Del 6758 : (2016) 340 ELT 63], Narender Yadav case [Narender Yadav v. Commr. of Customs, 2019 SCC OnLine Del 12415], Shubh Impex case [Shubh Impex v. Union of India, 2018 SCC OnLine Del 8793], Manoj Jha case [Manoj Kumar Jha v. DRI, (2019) 365 ELT 166] and Ganesh Yadav case [Ganesh Yadav v. Union of India, 2015 SCC OnLine All 9174] is that the court has the power to exercise discretion to waive requirement of pre-deposit of penalty in "rare and deserving cases" where a clear justification is made out for interference. In Narender Yadav case [Narender Yadav v. Commr. of Customs, 2019 SCC OnLine Del 12415], this Court had found that the order-in-original did not give any reasons for the penalty imposed on the petitioners and hence, was unwarranted. In Shubh Impex case [Shubh Impex v. Union of India, 2018 SCC OnLine Del 8793], the court found that the condition of pre-deposit would completely disable and paralyse the business of the appellant and given the financial condition and background of the appellant would suffer fin....
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....d with in a petition filed under Article 226 of the Constitution of India. The Court observes as follows: "5. Ms. Soni's contentions on the merits are irrelevant, apart from the fact that they do not impress us much. Based on these contentions, an argument about the penalty being without jurisdiction cannot be sustained. In any event, we are not required to discuss the merits of this matter; therefore, we do not go into the merits of the matter. 6. The relief the Petitioners seek contradicts Section 129E of the Customs Act, which contemplates a pre-deposit. In Kotak Mahindra Bank Pvt. Ltd. v. Ambuj A Kasliwal, the Hon'ble Supreme Court has held that even the High Court should not direct the appellate authorities to admit and hear appeals unaccompanied by the minimum pre-deposit requirement under the statute. The Hon'ble Supreme Court held that discretion under Article 226 of the Constitution of India cannot be exercised against the mandatory requirement of statutory provision. 7. In Manjit Singh v. Union of India, decided by the Coordinate Bench of this Court on 18 October 2022, relief of waiver of the minimum pre-deposit of 7.5% of the penalt....
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....Court in the case of KOTAK MAHINDRA BANK and holds that the High Court should not direct Appellate Authorities to admit and hear appeals unaccompanied by a minimum pre-deposit requirement. The Bombay High Court holds that total waiver was impermissible under Section 129-E of the Act. 10.5. The High Court of Gujarat, in ALTAFHUSEN MAYUDDIN KHATRI V. UNION OF INDIA Special Civil Application No.17850 of 2021 disposed on 28.10.2024 considers the pre-condition deposit under Section 35-F of the Central Excise Act, which is pari materia to Section 129-E of the Customs Act, which requires pre-deposit to entertain an appeal, wherein it is held as follows: "17. Therefore, the question that would arise before us is whether a prima facie case, as canvassed by learned advocate for the petitioner, can be considered at this stage to grant waiver of the amount of pre-deposit, which is a pre-condition for preferring an appeal before the CESTAT. The petitioner has relied upon the decision of the Hon'ble Jharkhand High Court in Sri. Satya Nand Jha's case (supra), which has upheld the vires of Section 35F of the Central Excise Act, 1944 by referring to the concession made by the respondent....
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....fore the CESTAT. In terms of the elucidation of law by the Gujarat High Court, interference to waive pre-deposit before the CESTAT is warranted when gross injustice is caused to the appellant or he is held excessively liable, contrary to the facts and evidence on record, or when the impugned Order-in-Original is perverse, and when the conduct of the petitioner is exemplary. 10.6. The High Court of Delhi, in its later judgment, in the case of TECMAX ELECTRONICS V. THE PRINCIPAL COMMISSIONER OF CUSTOMS CUSAA 121/2025 & CM APPL.53805/2025 disposed on 28.08.2025 has held as follows: "11. The Court has heard the parties and perused the various decisions relied upon by the parties. This issue of whether this Court has the discretion to waive of the mandatory pre-deposit under Section 129E of the Customs Act, 1962 is no longer res integra in view of the consistent decisions passed by the Supreme Court and this Court. 12. In various judgments it has now been held that after the amendment of Section 129E of the Customs Act, 1962 (hereinafter "the Act") in 2014, the pre-deposit in terms of the said provision would have to be paid mandatorily. The said section as amended ....
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....ng an appeal, before the CESTAT, after 6th August, 2014, to contend that, merely because the period of dispute, in its case, or the date when show cause notice was issued to it, was prior, in point of time to the amendment of Section 35F of the Central Excise Act/Section 129E of the Customs Act, it would not be required to make mandatory pre-deposit, or that it was entitled to seek waiver thereof, either in whole or in part. 13. Thought it may be argued that, this writ Court, in exercise of the inherent powers conferred on it by Article 226 of the Constitution of India in appropriate cases, may allow the appellant to prosecute its appeal before the CESTAT, without requiring to pay the mandatory pre-deposit. 14. In Pioneer Corporation v. Union of India, (2016) 340 ELT 63, Shubh Impex v. Union of India, (2018) 361 ELT 199 (Del) and Manoj Kumar Jha v. DRI, (2019) 365 ELT 166 (Del), this Court, even while dealing with cases in which the appeal had been filed before the CESTAT after 6th August, 2014, nevertheless, allowed the appeal to be prosecuted on payment of partial pre-deposit, given the financial stringency in which the respective appellants, before it, were pla....
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....t also of the second proviso thereto, and would reduce the command of the legislature to a dead letter. 23. Inasmuch as the judgment in Pioneer Corporation (supra), Shubh Impex (supra) and Manoj Kumar Jha (supra) are contrary to the law laid down in Anjani Technoplast (supra) as well as to the law laid down in Vice-Chancellor, University of Allahabad v. Dr. Anand Prakash Mishra (supra), A.B. Bhaskara Rao v. C.B.I. (supra), Manish Goel v. Rohini Goel (supra) and State of Bihar v. Arvind Kumar (supra), none of which have been noticed in the said decisions, it is not possible for us to follow the decisions in Pioneer Corporation (supra), Shubh Impex (supra) and Manoj Kumar Jha(supra), on which learned counsel places reliance." 14. Thus, in view of the above legal position, the pre-deposit under Section 129E of the Act would also be mandatory and the CESTAT cannot entertain the appeal without the pre-deposit. 15. It would be relevant to note that the Co-ordinate Bench of this Court in the above decision has held that in exercise of the jurisdiction under Article 226 of the Constitution of India, in appropriate cases the mandatory pre-deposit may be condoned. ....
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....fore 6-8-2014) in (i) above, would be applicable in the circumstances where the infringing act or the lis occurred prior to the amendment. [...] 41. Thus, an analysis of the conspectus of law as enunciated above gives a clear understanding that after passing of the Amendment Act on 6-8-2014, the amended Section 129-E of the Act and also Section 35-F of the CE Act shall be applicable in those cases where the appeal has been filed after 6-8-2014. 42. However, as discussed above, the Coordinate Benches of this Court have exercised and, thus, preserved the power as available under Article 226 of Constitution of India to either waive the pre-deposit condition or to grant the right to appeal subject to a part deposit or security. The power, albeit, has been exercised only in rare and exceptional cases. 43. It was held by the Allahabad High Court, speaking through Dr D.Y. Chandrachud, Chief Justice (as His Lordship then was) in Ganesh Yadav case [Ganesh Yadav v. Union of India, 2015 SCC OnLine All 9174] that: "8 Whether the writ jurisdiction under Article 226 should be exercised, having due regard to the discipline which has been laid down unde....
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.... the law on this issue is now clear, that CESTAT does not have the power to admit appeal without the pre-deposit, however, this Court in exercise of writ jurisdiction may waive the same in rare circumstances, on a case to case basis. 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." (Emphasis supplied) 11. The learned senior counsel, as observed hereinabove, submits that pre-deposit must be waived, if the appellant would be able to demonstrate financial hardship when he approaches the Constitutional Court. 12. The Bombay High Court in LALIT KULTHIA supra, no doubt distinguished MOHAMMED AKMAM UDDIN AHMED supra, where waiver of pre-deposit was made owing to the facts obtaining before it. The appellants in MOHAMMED AKMAM UDDIN A....