Explore a detailed legal analysis focusing on the pre-deposit requirement under the Customs Act. Delve into the court’s in-depth examination of the provisions, their application, and the impact on appellants. Gain valuable insights into the evolving legal framework governing pre-deposit obligations in customs matters.
Facts
- The Commissioner of Customs (Preventive) of West Bengal, Kolkata imposed a penalty of Rs.75 lakhs on the appellant for carrying smuggled Gold from Bangladesh.
- The appellant was accompanied by another person during the incident.
- The High Court upheld the Commissioner’s order imposing the penalty.
- The High Court rejected the appellant’s appeal against the Tribunal’s order under Section 129E of the Customs Act, 1962.
- The appellant failed to comply with the pre-deposit requirement under Section 129E of the Act.
- Both the appellant and the other person were intercepted while traveling on a train and were asked to pay penalties.
- The appellant failed to make the required pre-deposit as mandated by the Tribunal.
- As a result, the appeal was dismissed by the Tribunal.
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Arguments
- The appellant’s counsel argues that demand for pre-deposit is not justified in law.
- The appellant is entitled to have the case dealt with under Section 129E of the Customs Act, 1962.
- Section 129E of the Act, before it was substituted by Act 25 of 2014, required deposit of duty, interest, or penalty pending appeal.
- The appellant must deposit the duty, interest, or penalty demanded or levied while appealing against the decision or order.
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Analysis
- The appellant argued that they should be governed by Section 129E prior to the substitution because the act in question relates to the year 2013.
- The original provision allowed the Commissioner (Appeals) or the Appellate Tribunal to dispense with the deposit of duty, interest, or penalty if it would cause undue hardship, subject to certain conditions.
- The revised provision, inserted in 2014, requires appellants to deposit a certain percentage of duty or penalty before filing an appeal.
- The revised provision specifies different percentages based on the nature of the dispute, with a maximum deposit limit of Rs. 10 crores.
- The revised provision does not apply to stay applications or appeals pending before any appellate authority prior to the 2014 amendment.
- Section 129E was substituted which resulted in a repeal of the earlier provision and its replacement by the new provision.
- The substitution does not apply to stay applications and appeals pending before the Appellate Authority prior to the commencement of the Finance Act (2) of 2014.
- The first proviso of Section 129E limits the total amount demanded by way of pre-deposit.
- The law giver intended to bring about a significant change in the pre-deposit amount from the previous regime to a percentage of the amount in dispute.
- Under the new provision, the appellant is required to deposit seven and a half percent of the amount in dispute for the appeal to be maintainable.
- The first proviso states that the amount required to be deposited should not exceed Rs.10 Crores.
- The first proviso also provides the Commissioner (Appeals) or the Appellate Tribunal with the power to dispense with the deposit, subject to conditions deemed fit to safeguard the interest of the revenue.
- The concept of ‘undue hardship’ was discussed in the case of Benara Valves Ltd. vs Commissioner of Central Excise, where it was stated that the burden must be out of proportion to the requirement for it to be considered ‘undue hardship’.
- The new provision represents a departure from the previous regime, reducing the appeal deposit from 100% to 7.5% while removing the discretion of scaling down the pre-deposit by the appellate body.
- The appellant is required to pay the amount as per the substituted provision of Section 129E, which is a far lesser amount compared to the full amount.
- The appellant cannot avail the benefit of the discretionary power under the proviso of the substituted provision when not required to pay the full amount.
- It is determined that there is no merit in the appellant’s contention for seeking the proviso’s benefit in this case.
- In the interest of justice, the period for complying with Section 129E is extended by two months from the date of the judgment.
- The appeal will stand dismissed, and there will be no order as to costs.
- Any pending applications are disposed of accordingly.
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Case Title: CHANDRA SEKHAR JHA Vs. UNION OF INDIA (2022 INSC 246)
Case Number: C.A. No.-001566 / 2022
