2022 (3) TMI 606 - SC - Customs

Maintainability of appeal - non-compliance with the pre-deposit of the amount - Section 129E of the Customs Act, 1962 - HELD THAT - The first proviso of Section 129E of the present Section enacts a limitation on the total amount which can be demanded by way of pre-deposit. The first proviso provides that the amount required to be deposited should not exceed ₹ 10 Crores. In this regard, the law giver has purported to grant relief to an appellant. The second proviso contemplates that Section 129(e) as substituted would not apply to stay applications and appeals which are pending before the Appellate Authority prior to the commencement of the Finance Act (2) of 2014 - Substitution of a provision results in repeal of the earlier provision and its replacement by the new provision. The substitution has effected a repeal and it has re-enacted the provision as it is contained in Section 129E. In fact, the 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 129E. The appellant filed the appeal in 2017. What the appellant is called upon to pay is the amount in terms of Section 129E after the substitution, namely, the far lesser amount in terms of the fixed percentage as provided in section 129E. 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 129E under the earlier avtar. When the appellant is not being called upon to pay the full amount but is only asked to pay the amount which is fixed under the substituted provision, there are no merit in the contention of the appellant - appeal dismissed.

Summary

Issues:
Appeal against Tribunal's order under Section 129E of the Customs Act, 1962 - Compliance with pre-deposit requirement - Interpretation of Section 129E pre and post substitution.

Analysis:
The appellant's appeal against the Tribunal's order under Section 129E of the Customs Act, 1962 was rejected by the High Court due to non-compliance with the pre-deposit requirement. The appellant was intercepted while traveling in a train and was found carrying smuggled Gold from Bangladesh, resulting in a penalty of ?75 lakhs imposed by the Commissioner of Customs. The Tribunal dismissed the appeal as the appellant failed to make the pre-deposit, leading to the High Court upholding the order.

The appellant argued that the demand for pre-deposit was not warranted in law, citing the provisions of Section 129E before and after the substitution. The appellant contended that the substitution of Section 129E was made after the incident in 2013, and thus, the earlier provision should apply. Under the substituted provision, a fixed percentage of the disputed amount needed to be deposited, unlike the previous requirement of depositing the entire disputed amount.

The Court analyzed the changes brought about by the substitution of Section 129E, highlighting the reduction in the deposit amount from 100% to 7.5% under the new regime. The discretion previously available to the appellate body to scale down the pre-deposit was removed in the new provision. The Court referred to the case law on undue hardship to interpret the requirement of pre-deposit in the context of the appellant's case.

The legislative intent behind the substitution of Section 129E was to limit the total amount demanded as pre-deposit to ?10 crores, providing relief to appellants. The Court clarified that the appellant could not avail the benefit of the discretionary power under the proviso of the substituted provision since the appellant was only required to pay the fixed percentage as per the new provision. The Court extended the period for complying with Section 129E by two months in the interest of justice, but ultimately dismissed the appeal.

In conclusion, the judgment clarified the application of Section 129E before and after the substitution, emphasizing the legislative changes aimed at reducing the pre-deposit amount and removing the discretionary power of the appellate body to scale down the deposit.