(hereinafter referred to as the 'Act' for short).
as Comprehensive Economic Cooperation Agreement. The petitioner
aforesaid agreement, as well as benefits provided under the Act.
storage tanks for receiving the imported cargo in Mangalore. The
manufacturing of final product. The petitioner, in terms of the
the Notification No.49/2021-Customs for the said imports.
2.2. On and from the month of June 2022, export of crude
palm oil is said to have been banned in Indonesia. The petitioner
palm oil from Indonesia. The petitioner imports 7 consignments of
crude palmolein between the periods 17-06-2022 and 05-01-2023.
prior to the arrival of the vessel consignment. Samples of imported
goods, i.e., edible oil or non-edible oil. Samples were then sent for
of India (FSSAI) for identifying the nature of the imported goods.
deodorized'. The test report obtained by the petitioner through a
2.3. Such proceedings were conducted upon the premises of
exempted from payment of basic customs duty. The search
terms of the exemption notification. The show cause notice
Rs.488,14,60,120.
2.4. The petitioner-assessee submits his reply to the said
provided under the First Schedule to the Customs Tariff Act. The
basic customs duty. The assessee further claim that he is eligible
Comprehensive Economic Co-operation Agreement. The 1st
along with interest and penalty. The aforesaid are the contents of
2.5. The petitioner-assessee prefers an appeal before the 2nd
27-01-2025. In terms of Section 129-E(ii) of the Act, the assessee
exceed Rs.10 crores. The assessee is now at the doors of this Court
3. Heard Sri Prabhuling K Navadgi, learned senior counsel
4. The learned senior counsel for the petitioner Sri Prabhuling
hardship. It is his submission that the pre-deposit requirement
petitioner. He would seek to place reliance upon the judgments
5. Contrariwise, learned counsel for the respondents
sought by the assessee would dilute the legislative mandate. The
is entertained. The learned counsel would submit that the pre-
of the assessee, as it is not arbitrary. He would submit that the
only a fraction in the guise of exercise of discretion. The 2014
discretion to the Appellate Tribunal. The learned counsel submits
crude palmolein. He would seek dismissal of the petition in defence
6. I have given my anxious consideration to the submissions
7. The afore-narrated facts are not in dispute. The issue that
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
"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 duty or duty and penalty are in dispute, or
penalty, where such penalty is in dispute, in pursuance of
the decision or order appealed against;
(iii) against the decision or order referred to in clause (b)
of sub-section(1) of section 129A, unless the appellant
has deposited ten 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 the decision or
order appealed against :
Provided that the amount required to be deposited under
this section shall not exceed rupees ten crores :
Provided further that the provisions of this section shall not
apply to the stay applications and appeals pending before any
appellate authority prior to the commencement of the Finance
(No. 2) Act, 2014."
(Emphasis supplied)
Section 129-E mandates deposit of certain percentage of duty
demanded or penalty imposed before filing an appeal. The Tribunal
or the Commissioner of Appeals shall not entertain the appeal
against a decision made under Section 128(1), unless the appellant
has deposited 7.5% of the duty. The proviso to Section 129-E
mandates that the amount required to be deposited under Section
129-E would not exceed Rs.10 crores.
8. In the case at hand, the Order-in-Original dated
27-01-2025, while denying the claim of the assessee, holds that
crude palmolein cannot be exempted under the exemption
notification, as the said notification covers only crude palm oil and
the assessee is required to pay differential basic customs duty, as
determined in the order in original. Therefore, the assessee seeking
to file an appeal, must necessarily deposit, 7.5% of the amount
determined in the order in original, which however shall not exceed
Rs.10 crores.
9. The learned senior counsel for the petitioner has placed
reliance upon two judgments, one of the Apex Court and the other
of the High Court of Delhi. I deem it appropriate to notice the said
judgments so relied on.
9.1. The Apex Court in the case of SETH NAND LAL v. STATE
OF HARYANA1 has held as follows:
"22. It is well settled by several decisions of this
Court that the right of appeal is a creature of a statute
and there is no reason why the legislature while
granting the right cannot impose conditions for the
exercise of such right so long as the conditions are not
so onerous as 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 State of Haryana
around a paltry amount of Rs 8 per acre annually; fourthly,
the deposit to be made or bank guarantee to be furnished is
confined to the landholdings tax payable in respect of the
disputed area i.e. the area or part thereof which is declared
surplus after leaving the permissible area to the appellant or
petitioner. Having regard to those aspects, particularly the
meagre rate of the annual land-tax payable, the fetter
imposed on the right of appea1/revision, even in the absence
of a provision conferring discretion on the
appellate/revisional authority to relax or waive the condition,
1980 Supp SCC 574
cannot be regarded as onerous or unreasonable. The
challenge to Section 18(7) must, therefore, fail."
(Emphasis supplied)
The Apex Court holds that the conditions imposed for exercising the
statutory remedy of appeal cannot render the remedy of appeal
illusory.
9.2. Learned senior counsel places reliance upon the
judgment of the High Court of Delhi, rendered in the case of
PIONEER CORPORATION V. UNION OF INDIA2, wherein it is
held as follows:
"5. In the present case, the adjudication order has
confirmed the demand against the petitioner in the sum of Rs.
2,82,49,444/- and a penalty of the equal amount. Further the
case of the petitioner is that in view of the financial hardship of
the petitioner, this Court should in exercise of its powers under
Article 226 of the Constitution waive the requirement of pre-
deposit. Mr. Sachin Datta drew the attention of the Court
to the following lines in Para 9 of the decision of the
Allahabad High Court in Ganesh Yadav in support of the
above plea:
"9. Parliament while amending the
provisions of Section 35F of the Act has required
the payment of 7.5 per cent. of the duty in case
the duty and penalty are in dispute or the penalty
where such penalty is in dispute. In the case of an
appeal to the Tribunal against an order passed by
the Commissioner (Appeals), the requirement of
2016 SCC OnLine Del 6758
deposit is 10% of the duty or as the case may be,
the duty or penalty or of the penalty where the
penalty is in dispute. The first proviso restricts the
amount to be deposited to a maximum of Rs. 10
crores. Prior to the amendment, the Commissioner
(Appeals) or the Appellate Tribunal were
permitted to dispense with such deposit in a case
of undue hardship subject to such conditions as
may be imposed so as 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 that recourse to the writ jurisdiction
would not be ousted in an appropriate case.
Whether the writ jurisdiction under Article 226
should be exercised, having due regard to the
discipline which has been laid down under Section
35F of the Act, is a separate matter altogether but
it is important to note that the power under Article
226 has not been, as it cannot be, abridged."
*** *** ***
9. Under Section 35F of the CE Act as it stood prior
to 6th August, 2014, a discretion was available to the
CESTAT to consider the financial hardship and accordingly
determine the pre-deposit amount. That discretion has
been consciously sought to be curtailed and thus an
amendment was made to Section 35F of CE Act requiring
making of a pre-deposit of 7.5% in all cases subject to an
upper cap of Rs. 10 crores. A direction, therefore, to the
CESTAT that it should waive the pre-deposit would be
contrary to the express legislative intent expressed in the
amended Section 35F with effect from 6th August, 2014.
While, the jurisdiction of the High Court under
Article 226 of the Constitution to grant relief
notwithstanding the amended Section 35F cannot
possibly be taken away, the Court is of the view that the
said power should be used in rare and deserving cases
where a clear justification is made out for such
interference. Having heard the submissions of Mr. Datta and
having perused the adjudication order, the Court is not
persuaded to exercise its powers under Article 226 to direct that
there should be a complete waiver of the pre-deposit as far as
the petitioner's appeal before the CESTAT is concerned."
(Emphasis supplied)
The High Court of Delhi considers the issue regarding whether pre-
deposit can be waived and holds that allowing such waiver would be
contrary to the mandate of the legislation. Waiver of pre-deposit
may be allowed in rare and deserving cases, where clear
justification is made out. The purport of the statute cannot be
diluted by a stroke of pen by this Court, on the specious plea of the
senior counsel for the petitioner that in appropriate cases discretion
must be exercised by this Court to waive the deposit amount. This
Court shall not exercise its jurisdiction unless a rare and deserving
case is demonstrated. The said submission, as observed, would
become unacceptable, in the light of the fact of subsequent
judgments of the Apex Court which considers the very issue.
10.1. The Apex Court in the case of CHANDRA SEKHAR JHA
V. UNION OF INDIA3, 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 impose to safeguard the interest
of the Revenue.
8. The question whether it is undue hardship has been
the subject-matter of the judgment of this Court in Benara
Valves Ltd. v. CCE [Benara Valves Ltd. v. CCE, (2006) 13 SCC
347] , wherein it, inter alia, held as follow : (SCC p. 352, para
13)
(2022)14 SCC 152
"13. For a hardship to be "undue" it must be shown
that the particular burden to observe or perform the
requirement is out of proportion to the nature of the
requirement itself, and the benefit which the applicant
would derive from compliance with it."
9. It is in sharp departure from the previous regime
that the new provision has been enacted. Under the new
regime, on the one hand, the amount to be deposited to
maintain the appeal has been reduced from 100% to
7.5% but the discretion which was made available to the
appellate body to scale down the pre-deposit has been
taken away.
10. The first proviso of Section 129-E 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 Rs 10
crores. In this regard, the lawgiver 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 (No. 2) of 2014. The
amended provision, as we have already noticed has come into
force from 6-8-2014. Therefore, in regard to stay applications
and appeals which were pending before any appellate authority
prior to commencement of the Finance Act (No. 2) of 2014,
Section 129-E as substituted would not apply. Substitution of a
provision results in repeal of the earlier provision and its
replacement by the new provision. [See in this regard, a
discussion in Justice G.P. Singh, Principles on Statutory
Interpretation (12th Edn.) p. 676.]
11. As far as the argument of the appellant that for the
reason that the incident which triggered the appeal filed by the
appellant took place in the year 2013, the appellant must be
given the benefit of the power available under the substituted
provision, it does not appeal to us. The substitution has effected
a repeal and it has re-enacted the provision as it is contained in
Section 129-E. 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 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 under the substituted
provision, we do not find any merit in the contention of
the appellant. However, in the interest of justice we extend
the period for complying with Section 129-E by a period of two
months from today. Subject to the same, the appeal will stand
dismissed."
(Emphasis supplied)
10.2. The Apex Court, in the case of KOTAK MAHINDRA
BANK PRIVATE LIMITED V. AMBUJ A KASLIWAL4, while
adjudicating with regard to the pre-deposit before the Debt
Recovery Appellate Tribunal, has held as follows:
"16. Thus, when prima facie it was taken note of by the
DRAT that further amount was due and the pre-deposit was
ordered, without finding fault with such conclusion the High
(2021)3 SCC 549
Court was not justified in setting aside the orders passed by the
DRAT. As noted from the extracted portion of the order passed
by the High Court, all that the High Court has concluded is that
the benefit of the receipt of Rs 152,81,07,159 (Rupees one
hundred fifty-two crores, eighty-one lakhs, seven thousand, one
hundred and fifty-nine) as against the decretal amount cannot
be denied though it was received before passing of the final
judgment. Such conclusion in any event could not have tilted
the balance in favour of Respondents 1 and 2 to waive the
entire pre-deposit, unless the High Court had rendered a
categorical finding that the entire decretal amount stands
satisfied from such receipt and there was no debt due which in
any event was beyond the scope of consideration in a petition of
the present nature. On the other hand, as stated, the DRAT
having taken note of the decretal amount, the receipt of the
amount credited as compensation and, having further noted the
debt is still due, has directed the pre-deposit limited to that
extent.
17. Therefore, in the facts and circumstances
arising herein, when further amount is due and payable
in discharge of the decree/recovery certificate issued by
the DRT in favour of the appellant Bank, the High Court
does not have the power to waive the pre-deposit in its
entirety, nor can it exercise discretion which is against
the mandatory requirement of the statutory provision as
contained in Section 21, which is extracted above. In all
cases fifty per cent of the decretal amount i.e. the debt
due is to be deposited before the DRAT as a mandatory
requirement, but in appropriate cases for reasons to be
recorded the deposit 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).
*** *** ***
21. As already noted, a total waiver would be
against the statutory provisions. However, in the instant
case, taking note that though the issue relating to the actual
amount due is to be considered by the DRAT, keeping in view
the fact that the DRT has taken into consideration the earlier
settlement and has accordingly decreed the claim to that extent
and towards such decree since payment of a major portion is
made, though by appropriation of the compensation amount and
admittedly since the remaining properties belonging to
Respondent 3 are available by way of mortgage and
Respondents 1 and 2 are the personal guarantors, we deem it
appropriate that in the peculiar facts and circumstances of this
case to permit the pre-deposit of twenty-five per cent of the
amount as taken note of by the DRAT i.e. twenty-five per cent
of Rs 68,18,92,841 (Rupees sixty-eight crores, eighteen lakhs,
ninety-two thousand, eight hundred and forty-one). To the said
extent, the order dated 27-2-2019 passed by the DRAT on IA
No. 511 of 2018 is liable to be modified."
(Emphasis supplied)
10.3 The High Courts of Delhi, Bombay and Gujarat, have in
subsequent judgments, considered the issue of waiving pre-deposit.
The Delhi High Court in the case of MOHAMMED AKMAM UDDIN
AHMED V. COMMISSIONER APPEALS CUSTOMS AND CENTRAL
EXCISE & OTHERS5 has held as follows:
"65. The respondents have not placed on record any
document in support of the value/price of the agarwood chips
and agarwood oil which was "provisionally" valued at Rs
5,00,000 per kg and Rs 8,00,000 per kg respectively, to levy
the penalty on the petitioners. The OIO arrives at this
valuation without any discussion on the price. The OIO
also relies on the report of the Wildlife Inspector which
also does not mention any price, but clearly mentions
that there were different grades in the agarwood chips
seized. No final report on the value/price of the variety of
agarwood chips and agarwood oil seized is placed on
record or even relied upon by respondents.
66. The valuation of the goods seized, is also not in
terms of the prices as set forth in the Government of
Assam's agarwood policy. No proper calculation has been
made for the penalty levied. The penalty imposed on the
petitioners has been imposed based on a provisional
valuation. The penalty imposed is therefore without any
legal 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,
2023 SCC OnLine Del 2450
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 financial
breakdown and irreparable harm. In Manoj Jha case [Manoj
Kumar Jha v. DRI, (2019) 365 ELT 166] it is held that since the
petitioner has very limited means to deposit any amounts, the
relief to him is warranted.
68. Admittedly, the petitioners are poor daily wage
earners who are unable to make a challenge to the
seizure and confiscation on account of the penalty
imposed on them. The aforegoing discussion on the
prices and valuation of agarwood chips and agarwood oil
suggest, albeit, prima facie, that no proper valuation of
the goods seized was carried out by the respondents.
69. The Allahabad High Court in Ganesh Yadav
case [Ganesh Yadav v. Union of India, 2015 SCC OnLine All
9174] while upholding the constitutional validity of Section 35-F
of the CE Act has enunciated that the statute may, at times,
impose conditions as a requirement of filing an appeal.
However, a condition which is unduly onerous will render the
right to appeal as a nought. It was held that:
"3. ... As a first principle of law, a right of appeal is a
statutory right and it is open to the legislature which confers
a remedy of an appeal to condition the appeal subject to
compliance with conditions. A fiscal legislation can stipulate
a requirement of pre-deposit as a condition precedent to an
appeal to be entertained. The restraint on the power of the
legislature to do so, is that the condition which is prescribed
should not be so onerous so as to restrict or abrogate the
right of appeal altogether. A condition which is unduly
onerous will render the right of appeal illusory and would
hence, run the risk of being held to be arbitrary and of
being violative of the fundamental right conferred by Article
14 of Constitution."
(emphasis supplied)
70. Therefore, given the financial position and the
wherewithal of the petitioners, an opportunity needs to
be given to them to contest the valuation so imposed by
the respondents, which, otherwise cannot be contested
by them. Thus, we consider the case of the petitioners to
be an appropriate case to exercise our discretion in the
matter concerning waiver of pre-deposit of penalty."
(Emphasis supplied)
10.4. The High Court of Bombay in the case of LALIT
KULTHIA v. COMMISSIONER OF CUSTOMS (APPEALS)
MUMBAI III6, holds that pre-deposit before the CESTAT cannot be
dispensed 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
2024 SCC OnLine Bom 3757
of waiver of the minimum pre-deposit of 7.5% of the
penalty under Section 129E of the Customs Act was
declined. This decision considers all the contentions
raised in this Petition and discusses earlier precedents on
the subject.
8. Therefore, based on the decision of the Hon'ble
Supreme Court and this Court, no case is made to grant
any relief to the Petitioners.
9. Incidentally, the Petitioners had instituted Writ Petition
No. 2884 of 2017 in this Court to challenge the Order-In-
Original without resorting to the appellate remedy. The said
Petition was disposed of by order dated 6 June 2019. In
paragraph 8 of our order, we clarified that the Petitioners would
have to satisfy other requirements for filing an appeal, including
the statutory requirement of pre-deposit in terms of Section
129E of the Customs Act. The Petitioners never challenged our
order dated 6 June 2019 but chose to institute an appeal
without the pre-deposit. After such appeal was not entertained,
this Petition was filed, and the relief contrary to the statutory
provisions was sought from this Court. Such relief cannot be
granted in exercising our discretionary jurisdiction under
Article 226 of the Constitution of India.
10. The decisions of the Delhi High Court, which
were relied upon by Ms. Soni, have not considered the
decision of the Hon'ble Supreme Court in the case
of Kotak Mahindra (supra). That apart, in Mohammed
Akmam (supra), the Delhi High Court was dealing with a
case of poor daily wage earners. The Petitioners, who are
dealing with gold and diamond jewellery, cannot compare
themselves with poor daily earners.
11. Even if in the Pioneer Corporation (supra), the
Delhi High Court rejected the Petitioner's contentions
that upon the Petitioner ceasing its business operations,
it ceased to exist as a legal entity for the purpose of its
liability under the Central Excise Law. The Court held only
in rare and deserving cases where a clear justification is
made out for such interference can a waiver be granted.
Apart from the fact that Pioneer Corporation does not
consider the Hon'ble Supreme Court's decision in Kotak
Mahindra, we are satisfied that this is not some rare and
deserving case where waiver could be granted, assuming
we could, in the exercise of our extraordinary jurisdiction
grant such waiver."
(Emphasis supplied)
The High Court of Bombay follows the judgment of the Apex 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 INDIA7 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
Special Civil Application No.17850 of 2021 disposed on
28.10.2024
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 authority that, in
extreme cases, the assessee is not remedy-less and that it can
prefer a writ petition. The Hon'ble Delhi High Court, while
considering the aspect of wrong valuation has directed waiver of
the amount of penalty in the case of Mohammed Akmam Uddin
Ahmed (supra) to grant an opportunity to the assessee to prefer
an appeal. Whereas, the Hon'ble Allahabad High Court, in the
case of Shukla & Brothers (supra) has observed that the phrase
"undue hardship" would also cover a case where the appellant
has a strong prima facie case.
18. Considering the aforesaid dictum of law, it
appears that the petitioner, therefore, must satisfy this
Court that he has a good prima facie case to the effect
that he is likely to succeed in the appeal. In order to
come to the conclusion that the petitioner would succeed
in the appeal, having a good prima facie case, so as to
grant waiver of the pre-condition of pre-deposit for filing
the appeal, the petitioner is required to disclose a
situation where he may be either subjected to gross
injustice and / or misfortune or he is liable to excessive
demand, contrary to the facts and evidence on record or
the impugned orders are perverse, coupled with the fact
that the conduct of the petitioner is blotless.
19. Considering the facts of the case and the three
tests which may be considered to arrive at a prima facie
conclusion as to whether the petitioner has a prima facie
case for waiver of the pre-deposit or not, we are required
to examine the facts, which are recorded in the order-in-
original.
20. A glaring aspect of the case is that the petitioner was
manufacturing "Gutkha" in a clandestine manner, without
having any Registration. None of the FFS machines were
registered under Rules 7 and 8 of the Rules, 2008. Moreover,
the case involves disputed questions of facts relating to the
period of operation, the number of machines and the retail price
of the product vis-a-vis the applicability of Rules 12 and 17(2) of
the Rules, 2008. Therefore, we refrain from analysing the
submissions made by learned advocate for the petitioner on
merits and it would be open to the petitioner to raise all
contentions, which are raised in this petition, before the
CESTAT."
(Emphasis supplied)
The High Court of Gujarat holds that there must be a strong prima
facie case to waive the pre-deposit requirement before 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 CUSTOMS8 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
CUSAA 121/2025 & CM APPL.53805/2025 disposed on 28.08.2025
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 reads as under:
"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 129-A, 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 the decision or order
appealed against;
(iii) against the decision or order referred to in clause (b) of
sub-section (1) of Section 129-A, unless the appellant has
deposited ten 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 the decision or order
appealed against:
Provided that the amount required to be deposited under
this section shall not exceed Rupees Ten crores:
Provided further that the provisions of this section shall not
apply to the stay applications and appeals pending before
any appellate authority prior to the commencement of the
Finance (No. 2) Act, 2014 (25 of 2014)."
13. In Diamond Entertainment Technologies (supra)
the Court was considering whether in cases where the
show cause notice and the period of dispute was prior to
the date of amendment to Section 35F of the Central
Excise Act, 1944, the requirement of mandatory pre-
deposit would be applicable. The Court while relying on
the decision of this Court in Anjani Technoplast Ltd. v.
Commissioner of Customs, (2015) 326 ELT 472 (Del.) has
held that in view of the words "shall not" used in
amended Section 35F of the Central Excise Act, 1944,
there is an absolute bar on CESTAT from entertaining the
appeals without the pre-deposit. The relevant portion of the
said decision reads as under:
"12. In view of the above decisions, it can no longer
lie in the mouth of any assessee, filing 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 placed; a reading of these decisions would reveal, that
the attention of this Court had not been invited to its earlier
judgment in Anjani Technoplast (supra) which set out, in
clear and unambiguous terms, that every appeal, before the
CESTAT, filed after the amendment of Section 35F/129E
would be maintainable only if mandatory pre-deposit were
made.
15. The Civil Appeal, preferred against the said
decision, also stood dismissed by the Supreme Court, as
reported in Anjani Technoplast Ltd. v. CCE, (2017) 348 ELT
A132 (SC).
[...]
17. In view of the aforesaid merger, of the judgment
of the Division Bench of this Court in Anjani Technoplast
(supra) with the order passed by the Supreme Court in
appeal thereagainst, we are bound, by Article 141 of the
Constitution of India, to follow the law laid down in Anjani
Technoplast (supra), in preference to that laid down in
Pioneer Corporation (supra), Manoj Kumar Jha (supra) and
Shubh Impex (supra).
18. In the opinion of this Court, once the judgment
in Anjani Technoplast (supra) stood merged with the
dismissal of the Civil Appeal, preferred thereagainst, by the
Supreme Court, there could be no question of this Court, in
a subsequent case, adopting a view that an appeal,
preferred before the CESTAT after 6th August, 2014, could
be maintained without pre-deposit of the entire amount of
duty confirmed against the concerned appellant by the
authority below.
20. A reading of Section 35F of the Central
Excise Act reveals, by the usage of the peremptory
words "shall not" therein, that there is an absolute
bar on the CESTAT entertaining any appeal, under
Section 35 of the said Act, unless the appellant has
deposited 7.5 % of the duty confirmed against it by
the authority below.
21. The two provisos in Section 35F relax the rigour
of this command only in two respects, the first being that
the amount to be deposited would not exceed Rs. 10 crores,
and the second being that the requirement of pre-deposit
would not apply to stay applications or appeals pending
before any authority before the commencement of the
Finance (No. 2) Act, 2014, i.e. before 6th August, 2014.
22. Allowing the CESTAT to entertain an appeal,
preferred by an assessee after 6th August, 2014,
would, therefore, amount to allowing the CESTAT to
act in violation, not only of the main body of Section
35F but 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. This position
has also been noted by this Court in Mohd. Akmam Uddin
Ahmed (supra) wherein the Court was considering a
matter where the valuation of the seized goods itself was
held to be unjustified and no proper calculation was
provided in support of the same. Further, after
considering the various judgements on the issue under
considerations including Diamond Entertainment
Technologies (supra) and Anjani Technoplast Ltd.
(supra), it was held that the Court has the power to
exercise discretion to waive of the mandatory pre-deposit
in "rare and deserving cases". The relevant position of the
said decision reads as under:
"37. The decision of the Coordinate Bench of
this Court in Diamond Entertainment case [Diamond
Entertainment Technologies (P) Ltd. v. Commr., CGST,
2019 SCC OnLine Del 12414 : (2019) 368 ELT 579] ,
while refusing to permit the petitioner to prosecute
its appeal before CESTAT without complying with the
conditions of the mandatory pre-deposit did not, in
fact, rule out that in exercise of its inherent powers
under Article 226 of the Constitution of India. It was
held that the appellant may be allowed to prosecute
its appeal without the payment of the pre-deposit
amount. Reliance is placed on para 11 of this
judgment which reads as follows:
"11. 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...."
[...]
39. The judgments in Dish TV India Ltd. case [Dish
TV India Ltd. v. Union of India, 2020 SCC OnLine Del 2580]
, Diamond Entertainment case [Diamond Entertainment
Technologies (P) Ltd. v. Commr., CGST, 2019 SCC OnLine
Del 12414 : (2019) 368 ELT 579] , Anjani Technoplast case
[Anjani Technoplast Ltd. v. Commr. of Customs, 2015 SCC
OnLine Del 13070 : (2015) 326 ELT 472] and Nimbus
Communications Ltd. case [Nimbus Communications Ltd. v.
Commr. of Service Tax, 2016 SCC OnLine Bom 6792] are
distinguishable on facts as these judgments were primarily
adjudicating the following two questions of law:
(i) the issue of challenge to the constitutional validity
of Section 129-E of the Act and Section 35-F of the CE Act;
and
(ii) whether the law as applicable pre-amendment
(on or before 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 under Section 35-F of the Act, is
a separate matter altogether but it is important to note that
the power under Section 226 (sic: Article 226) has not
been, as it cannot be, abridged."
(emphasis supplied)"
[...]
66. The valuation of the goods seized, is also
not in terms of the prices as set forth in the
Government of Assam's agarwood policy. No proper
calculation has been made for the penalty levied. The
penalty imposed on the petitioners has been imposed
based on a provisional valuation. The penalty imposed
is therefore without any legal 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 Yadavv. 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 financial breakdown and
irreparable harm. In Manoj Jha case [Manoj Kumar Jha v.
DRI, (2019) 365 ELT 166] it is held that since the petitioner
has very limited means to deposit any amounts, the relief to
him is warranted.
68. Admittedly, the petitioners are poor daily wage
earners who are unable to make a challenge to the seizure
and confiscation on account of the penalty imposed on
them. The aforegoing discussion on the prices and valuation
of agarwood chips and agarwood oil suggest, albeit, prima
facie, that no proper valuation of the goods seized was
carried out by the respondents."
16. In view of the above, 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 AHMED
were daily wage employees, and hence the High Court of Bombay in
LALIT KULTHIA rejected the claim of the petitioner since he was
in the business of gold and diamond. In the same way, the position
of the petitioner is required to be considered.
13. The petitioner, by no stretch of imagination, can be
portrayed to be a fly-by-night operator. He is an established
businessman, an importer of repute, whose commercial
presence in the field did not emerge overnight. The Company
having been incorporated as far back as 1997, has consistently
engaged in import operations of substantial magnitude, running into
several hundreds of crores on each occasion. To liken such a
petitioner to a daily wage employee, in whose favour the
Court may have exercised discretion to waive the pre-
deposit, would be wholly incongruous and misplaced.
Extending such discretion to a financially robust operator,
would be holding out a premium to the petitioner. The plea
that the petitioner is in financial distress, and that the pre-deposit
therefore deserves to be waived, is a contention that cannot be
countenanced.
14. The learned senior counsel has sought to paint the
controversy within the Constitutional canopy, invoking Articles
19(1)(g) and 21 of the Constitution of India, contending that the
insistence on pre-deposit imposes an unreasonable and oppressive
financial burden. This submission overlooks the settled
principle that the legislative mandate cannot be diluted to
suit the convenience or inconvenience of a few. The concept
of financial burden is inherently related. What may appear
onerous to one may be trifling to another. In the case at hand,
the petitioner, a commercial enterprise of considerable means,
cannot be heard to lament the requirement of a pre-deposit,
especially in the face of a penalty of close to Rs.417 crores. The
pre-deposit does not operate as a stonewall denying access
to justice, rather it represents a statutory discipline that
applies to all the appellants. The statutes mandate endures,
subsists and is unyielding, until the constitutional Courts
deem fit to restrain its march.
15. The learned senior counsel further contends that crude
palmolein is but, a byproduct of crude palm oil, two being
essentially the same and therefore, the benefit of exemption
notification applicable to crude palm oil, ought to extend to crude
palmolein as well. Such an assertion treads into the realm of
scientific and technical enquiry, an area best left to the
domain of experts and statutory authorities competent to
adjudicate such questions. This Court, under Article 226 of
the Constitution of India, would be loathe to don the mantle
of scientific expertise or engage in chemical taxonomy.
Accordingly, this Court declines to entertain such technical
contentions and leaves them for the appropriate authorities to
consider, in accordance with law, as it is trite that this Court would
not sit in the armchair of experts and decide the issue of the kind
that is brought before the Court.
Finding no merit in the petition, the inescapable conclusion is
its dismissal. It is accordingly, dismissed.
Sd/-
(M.NAGAPRASANNA)
JUDGE
bkp
CT:MJ
