2024 (1) TMI 539 - HC - Customs

Requirement of mandatory pre-deposit under Section 129-E of Customs Act, 1962 - HELD THAT - On perusal of Section 129E of the Customs Act, it is clear that it is mandatory for the person being aggrieved by the order passed by the authority to deposit 7.5% or 10%, as the case may be, of the total demand as pre-condition and pre-deposit towards preferring appeal before the appellate authority. This mandatory provisions are required to be adhered to by the petitioner - the same cannot be declared to be inapplicable in the facts of the case as it is mandatory requirement for the petitioner to pre-deposit requisite amount so as to enable the appellate authority to consider the appeal on merits. It is made clear that the merits of the matter or prima face case of the petitioner in view of the mandatory provision requiring the petitioner to pre-deposit requisite amount as per section 129E of the Customs Act, not considered. The petitioner would be entitled to raise all the contentions raised in this petition before the appropriate authority. Petition dismissed.

Summary

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.