Case Note & Summary
The petitioner, an importer of edible oils, challenged the mandatory pre-deposit requirement under Section 129E(ii) of the Customs Act, 1962 before the High Court of Karnataka. The dispute originated when the Directorate of Revenue Intelligence conducted search proceedings and issued a show cause notice in 2024 alleging that the petitioner had wrongly availed exemption from basic customs duty on imports of crude palmolein under Notification No.48/2021-Customs, which the customs authorities contended applied only to crude palm oil, not crude palmolein. The order-in-original dated 27-01-2025 confirmed a demand of differential customs duty amounting to Rs.416,87,71,557 along with interest and penalty. The petitioner appealed to the Customs, Excise and Service Tax Appellate Tribunal but was required to deposit 7.5% of the demanded duty, capped at Rs.10 crores, as a precondition for entertaining the appeal under Section 129E. The petitioner then filed the instant writ petition seeking a direction to the Tribunal to waive the pre-deposit and admit the appeal. The petitioner argued that the mandatory pre-deposit condition rendered the appellate remedy illusory, treated all appellants alike without regard to financial capacity, and violated the fundamental rights under Articles 19(1)(g) and 21 of the Constitution. The respondents defended the provision as a legislative mandate intended to deter frivolous appeals and protect revenue, asserting that the 2014 amendment to Section 129E had removed any discretion to waive the deposit. The Court noted the rival contentions and, in its analysis, reproduced the language of Section 129E and referred to the Supreme Court's decision in Seth Nand Lal v. State of Haryana, where it was held that while the right to appeal is a creature of statute, conditions imposed must not be so onerous as to make the right almost illusory. The extract of the judgment provided ends mid-discussion, and the final decision of the Court on the waiver and constitutionality of the pre-deposit requirement is not included. Consequently, the outcome of the petition cannot be determined from the available text.
Headnote
A) Constitutional Law - Right to Appeal - Onerous Conditions - Section 129E, Customs Act, 1962 - The Court considered whether the mandatory pre-deposit of 7.5% of the duty demanded, capped at Rs.10 crores, renders the appellate remedy illusory and violates Articles 19(1)(g) and 21 of the Constitution of India. The Court examined the legislative intent and judicial precedents, notably Seth Nand Lal v. State of Haryana, which held that conditions on appeal are valid unless unreasonably onerous. The Court's final determination on the vires was not included in the provided judgment extract (Paras 7-9).
B) Customs Law - Exemption Notification - Classification - The dispute arose from denial of exemption for crude palmolein under Notification No.48/2021-Customs, which covers only crude palm oil. The assessee argued that crude palmolein is a fraction of crude palm oil and thus entitled to exemption. The Court noted the contention but the present writ was confined to waiver of pre-deposit (Paras 2.1-2.4).
Issue of Consideration
Whether the mandatory pre-deposit requirement under Section 129E(ii) of the Customs Act, 1962 can be waived or relaxed to enable the petitioner to pursue the statutory appeal without deposit, and whether the insistence on pre-deposit renders the right to appeal illusory and violates Articles 19(1)(g) and 21 of the Constitution
Law Points
- Mandatory pre-deposit of 7.5% of duty demanded under Section 129E of Customs Act is a precondition for appeal
- capped at Rs.10 crores
- the condition may be challenged as onerous and violative of fundamental rights if it renders the appeal remedy illusory
- the right to appeal can be subjected to reasonable conditions as long as they are not so onerous as to make the right almost illusory
Case Details
2025 LawText (KAR) (11) 34
WRIT PETITION No.13082 OF 2025 (T - CUS)
Prabhuling K. Navadgi, Paramesh Kumar H.K., Aravind V. Chavan
M/s. Parisons Foods Private Limited
The Commissioner of Customs, Mangaluru and The Customs, Excise and Service Tax Appellate Tribunal, Bengaluru
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Nature of Litigation
Writ petition under Articles 226 and 227 of the Constitution seeking a direction to CESTAT to not insist on pre-deposit under Section 129E(ii) of the Customs Act and to admit the appeal without deposit.
Remedy Sought
Petitioner sought a writ of certiorari or mandamus directing CESTAT to refrain from insisting on pre-deposit and to admit the appeal against the order-in-original dated 27-01-2025.
Filing Reason
The petitioner contended that the mandatory pre-deposit requirement under Section 129E(ii) renders the appellate remedy illusory, treats all appellants uniformly without considering financial capacity, and violates Articles 19(1)(g) and 21 of the Constitution. The petitioner also challenged the customs authorities' denial of exemption for crude palmolein.
Previous Decisions
Order-in-Original dated 27-01-2025 passed by the Commissioner of Customs, Mangaluru, confirming demand of differential customs duty of Rs.416,87,71,557.
Issues
Whether the mandatory pre-deposit requirement under Section 129E(ii) of the Customs Act, 1962 can be waived or relaxed to enable the petitioner to pursue the statutory appeal without deposit
Whether the insistence on pre-deposit for filing an appeal renders the right to appeal illusory and violates Articles 19(1)(g) and 21 of the Constitution of India
Whether the CESTAT can be directed to admit the appeal without the pre-deposit as mandated by Section 129E(ii)
Submissions/Arguments
Petitioner argued that crude palmolein is a byproduct of crude palm oil and should be exempt from basic customs duty under Notification No.48/2021-Customs; that the pre-deposit condition treats all appellants uniformly irrespective of financial capacity, rendering the remedy illusory; that reliance was placed on judgments of the Supreme Court and High Courts holding that such onerous conditions violate fundamental rights
Respondents argued that the pre-deposit requirement is a legislative mandate intended to prevent frivolous appeals and protect revenue; that the 2014 amendment to Section 129E removed discretion, making the deposit mandatory; that the assessee misinterpreted the exemption notification as it covers only crude palm oil, not crude palmolein; that the demand of differential duty is justified.
Judgment Excerpts
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.
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] ).
Procedural History
A show cause notice dated 16-01-2024 was issued by the Directorate of Revenue Intelligence proposing demand of differential customs duty. The petitioner replied. The order-in-original dated 27-01-2025 was passed by the Commissioner of Customs confirming the demand. The petitioner filed an appeal before CESTAT and simultaneously filed the present writ petition seeking waiver of the mandatory pre-deposit under Section 129E(ii) of the Customs Act, 1962 and a direction to admit the appeal without deposit.
Acts & Sections
- Customs Act, 1962: Section 129E(ii), Section 105, Section 28(4), Section 28(1), Section 129A, Section 128
- Integrated Goods and Services Tax Act, 2017: Section 5(1)
- Customs Tariff Act, 1975: First Schedule
- Constitution of India: Articles 226, 227, 19(1)(g), 21
- Companies Act, 1956: Section 16(2)
