HC Can't Bypass Customs Statutory Appeal Merely Due To Financial Hardship In Making Pre-Deposit: Delhi High Court

The Delhi High Court has held that a taxpayer cannot bypass the statutory appellate mechanism under the Customs Act merely by citing financial hardship in complying with the mandatory pre-deposit requirement.

The Division Bench of Justices Anil Kshetarpal and Shail Jain made the observation while dismissing a writ petition challenging ₹3 crore penalty imposed on a man in connection with an alleged attempt to export red sanders wood concealed beneath carpets.

"However, once the legislature has prescribed a statutory condition for the entertainment of an appeal, the same cannot ordinarily be bypassed merely by invoking the extraordinary jurisdiction of this Court.", the court held

Petitioner initially challenged the penalty before the Commissioner (Appeals), but the same was rejected without examination on merits because he had not made the mandatory 7.5% pre-deposit prescribed under Section 129E of the Act.

Consequently, the present writ petition was filed.

The High Court noted that the Customs Act provides a complete statutory mechanism for adjudication of disputes and appellate remedies, including an appeal before the Commissioner (Appeals) and a further remedy before the Appellate Tribunal.

It observed that the issues raised by Petitioner, including the alleged denial of cross-examination, evidentiary value of statements, effect of the alleged retraction, independent evidence of his involvement, and legality of the confiscation, would require examination of the material relied upon in the Show Cause Notice and the findings of the adjudicating authority.

It held that these were precisely the matters falling within the domain of the statutory appellate forum.

Though Petitioner argued that he was unable to make the 7.5% pre-deposit because of financial hardship, the Court however held that once the legislature has prescribed a statutory condition for entertaining an appeal, the requirement cannot ordinarily be bypassed merely by invoking the High Court's extraordinary jurisdiction under Article 226.

It further held that whether the Petitioner was entitled to cross-examine the persons whose statements had been relied upon, and what consequences flowed from the alleged denial were matters intrinsically connected with the merits of the adjudication and had to be considered by the competent statutory forum.

As such, the writ petition was dismissed.

For Petitioner: Advocates Akhil Krishan Maggu, Vikas Sareen, Oshin Maggu, Aryan Nagpal, Palak Sarna.

For Respondents: Advocates Harpreet Singh, SSC with Iqbal Singh Bedi, Suhani Mathur and Jatin Kumar Gaur