Registration Of Customs Appeal Cannot Be Refused For Non-Payment Of Pre-Deposit: Allahabad High Court

The Allahabad High Court has held that an appellate authority cannot refuse to register an appeal merely because the appellant has not made the mandatory pre-deposit under Section 129E of the Customs Act, holding that the statutory requirement applies only at the stage of "entertaining" the appeal and not at the stage of its filing or registration.

A Division Bench of Justices Saumitra Dayal Singh and Swarupama Chaturvedi disposed of a writ petition filed by Runway Impex, directing the Commissioner (Appeals) to register the appeal without insisting on pre-deposit at the registration stage and thereafter decide whether to entertain it. The judges held:

"It affirms that 'entertainment' of an appeal, cannot be equated with its mere filing or registration. At that stage, the act performed may be ministerial but not quasi-judicial. A proceeding, howsoever defective, may be registered by a quasi-judicial authority. Subject to removal/curing of those defects, it may be registered as a regular proceeding."

Section 129E of the Customs Act provides that an appeal shall not be "entertained" unless the appellant deposits 7.5% of the duty and/or penalty.

Runway Impex entered into an agreement with Margo Impex Private Limited for the storage and warehousing of betel nuts. The customs authorities issued a show cause notice proposing confiscation of imported goods. After considering the company's reply, they imposed a penalty of Rs. 3,91,82,273 under Sections 112(a) and 114AA of the Customs Act.

The company was required to deposit 7.5% of the penalty to pursue its appeal. It alleged that the appellate authority refused to accept and register its appeal because it had not produced proof of the pre-deposit. It therefore approached the High Court, seeking waiver of the pre-deposit requirement for filing the appeal and a direction to the appellate authority to consider its waiver application.

The Bench observed that Section 129E does not empower the statutory appellate authorities to waive the mandatory pre-deposit. However, it held that the High Court may exercise its extraordinary jurisdiction to waive the requirement in appropriate cases.

Further, the held that the appellate authority had prevented the matter from reaching the stage at which it could consider waiver by refusing to register the appeal. It clarified that the authority must first register the appeal before applying its judicial mind to the question whether it should be entertained. It observed:

"At that stage, the quasi-judicial authority may first exercise and apply its judicial mind-whether such proceeding (brought before it), is worthy of being 'entertained' as an appeal. Till that stage (of application of mind by the quasi-judicial authority), has been crossed, it cannot be said if the appeal has been 'entertained' by that quasi-judicial authority."

The Bench directed the Commissioner (Appeals) to accept and register the petitioner's appeal as a defective proceeding without insisting on pre-deposit at the registration stage. It held that the Commissioner (Appeals) should then decide, in exercise of quasi-judicial powers, whether the appeal could be entertained. It observed:

"Such proceeding may be registered as a defective proceeding-for reason of pre-deposit not made or proof of pre-deposit not produced, at that stage. The issue, whether that appeal is to be 'entertained', may be considered by the Commissioner (Appeals), on the quasi-judicial side, where that proceeding is listed/placed before it, first."

Accordingly, the High Court disposed of the writ petition.