Mandatory 7.5% Customs Appeal Pre-Deposit Cannot Be Waived Or Reduced: Delhi High Court

The Delhi High Court has recently held that the mandatory pre-deposit required for filing an appeal before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) under Section 129E of the Customs Act, 1962 cannot be waived or reduced, as the Act contains no provision permitting such reduction.

A division bench of Justices Anil Kshetrapal and Shail Jain passed the order while disposing of four writ petitions filed by importers challenging orders passed by the customs authorities and seeking waiver or reduction of the mandatory pre-deposit for maintaining their appeals before the CESTAT.

Petitioners contended that although they had a statutory remedy of appeal before the CESTAT, they were unable to avail it because Section 129E mandates a pre-deposit of 7.5% of the disputed amount. They therefore sought waiver or reduction of the pre-deposit requirement from the High Court.

Rejecting the plea, the Court observed that a plain reading of Section 129E makes it evident that the requirement of a pre-deposit at the prescribed rate of 7.5% is mandatory and that the Customs Act contains no provision enabling its reduction.

It observed,

"A plain reading of Section 129E of the Customs Act, 1962 makes it evident that the requirement of pre-deposit at the prescribed rate of 7.5% is mandatory and that there is no provision under the Act for reducing the same. The language employed in Section 129E leaves no scope for any discretion in this regard."

Petitioners further argued that on the basis of the same investigation, they were being subjected to liability twice. The Court, however, held that such contentions could appropriately be examined by the CESTAT while deciding the statutory appeals.

Accordingly, the petitions were disposed of.

For Petitioner: Advocate Pradeep Singh Rawat.

For Respondent: Advocate Harpreet Singh, Sr. SC with Advocate Jatin Kumar Gaur