1. Petitioner challenges the requirement of depositing a mandatory percentage of penalty for filing a statutory appeal against a customs order under the Customs Act, 1962. (Para 2 , 3 , 4 )
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2025 Supreme(Telangana) 2233
IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD
P.SAM KOSHY, NARSING RAO NANDIKONDA, JJ.
Shiva Prasad Chennuri - Appellant
Versus
Union of India and others – Respondent
WP No.9095 of 2025
Decided On : 26-03-2025
Important Points
Under the amended Section 129E of the Customs Act, 1962, pre-deposit of the specified percentage of duty or penalty is mandatory for filing an appeal. The previous discretionary power to waive this deposit was removed and cannot be restored by a writ court.
Subject
Taxation - Customs Law
Act Referred
Headnote
(A) Customs Act, 1962 - Sections 128 and 129E - Mandatory pre-deposit for filing appeal - Power to dispense with deposit - Substituted provision effective from 06.08.2014 - Removal of discretionary power to waive pre-deposit - Writ Court cannot grant waiver when substantive law prohibits it (Paras 7, 8).
(B) Constitutional Law - Article 226 - Scope of interference in statutory mandates - Where substantive law does not permit waiver of a mandatory deposit, the writ court lacks the authority to grant such waiver or reduction. (Para 8).
Facts of the case:
The petitioner was found carrying gold bars during travel from a foreign city to an airport, leading to an order of confiscation and the imposition of a penalty. The petitioner preferred an appeal against this order but sought the dispensing of the mandatory 7.5% pre-deposit of the penalty amount required under the relevant statute as a pre-condition for the appeal to be entertained.
Findings of Court:
The court found that the substituted provision of Section 129E, which came into force on 06.08.2014, removed the power previously available to appellate authorities to dispense with the pre-deposit in cases of hardship. The current statute mandates a fixed percentage of the duty or penalty to be deposited before an appeal can be accepted.
Issues: Whether the mandatory pre-deposit of a percentage of the penalty under the substituted Section 129E of the Customs Act, 1962, can be waived or dispensed with by the appellate authority or the writ court.
Ratio Decidendi: The legislative intention behind the amended provision was to remove the discretionary power to scale down or waive the pre-deposit. In the absence of a statutory provision permitting such a waiver, the writ court, invoking Article 226 of the Constitution of India, cannot grant a waiver or reduction of the pre-deposit amount as it would contravene the substantive law.
Result: The writ petition fails and is, accordingly, dismissed.
(B) Constitutional Law - Article 226 - Scope of interference in statutory mandates - Where substantive law does not permit waiver of a mandatory deposit, the writ court lacks the authority to grant such waiver or reduction. (Para 8).
Facts of the case:
The petitioner was found carrying gold bars during travel from a foreign city to an airport, leading to an order of confiscation and the imposition of a penalty. The petitioner preferred an appeal against this order but sought the dispensing of the mandatory 7.5% pre-deposit of the penalty amount required under the relevant statute as a pre-condition for the appeal to be entertained.
Findings of Court:
The court found that the substituted provision of Section 129E, which came into force on 06.08.2014, removed the power previously available to appellate authorities to dispense with the pre-deposit in cases of hardship. The current statute mandates a fixed percentage of the duty or penalty to be deposited before an appeal can be accepted.
Issues: Whether the mandatory pre-deposit of a percentage of the penalty under the substituted Section 129E of the Customs Act, 1962, can be waived or dispensed with by the appellate authority or the writ court.
Ratio Decidendi: The legislative intention behind the amended provision was to remove the discretionary power to scale down or waive the pre-deposit. In the absence of a statutory provision permitting such a waiver, the writ court, invoking Article 226 of the Constitution of India, cannot grant a waiver or reduction of the pre-deposit amount as it would contravene the substantive law.
Result: The writ petition fails and is, accordingly, dismissed.
Legal Category Hierarchy
Advocates Appeared:
For the Appellant : Kongala Mohan Goud
For the Respondent: Gadi Praveen Kumar (Deputy Solicitor General of India); Dominic Fernandes (SC for CBIC)
For the Appellant : Kongala Mohan Goud
For the Respondent: Gadi Praveen Kumar (Deputy Solicitor General of India); Dominic Fernandes (SC for CBIC)
Table of Contents
2. Petitioner seeks waiver of the pre-deposit requirement for an appeal, while authorities assert strict adherence to statutory mandatory deposit requirements under the Customs Act. (Para 4 )
3. The court noted that the current statutory regime under Section 129E removes the discretionary power earlier available to waive or dispense with pre-deposit requirements for appeals. (Para 5 , 6 , 7 , 8 )
4. The amended Section 129E of the Customs Act mandates a fixed pre-deposit for appeals and denies any discretionary power to authorities or writ courts to waive this requirement. (Para 7 , 8 )
5. The writ petition seeking waiver of the pre-deposit requirement is dismissed. (Para 9 , 10 )
6. Does an appellate authority under the Customs Act, 1962 retain discretion to waive the pre-deposit for filing an appeal?
No, the substituted Section 129E, effective from August 6, 2014, has removed the discretionary power of appellate authorities to waive or dispense with the mandatory pre-deposit of duty or penalty for filing an appeal. (Para 6 , 7 , 8 )
7. Can a writ court under Article 226 waive the mandatory pre-deposit required for a statutory appeal under the Customs Act?
No, when the substantive law governing the appeal does not permit any waiver or dispensing with the pre-deposit, the writ court cannot invoke its jurisdiction to grant such a waiver or reduction. (Para 8 )
ORDER :
P.Sam Koshy, J.
Heard Mr. Kongala Mohan Goud, learned counsel for the petitioner and Mr. Dominic Fernandes, learned Senior Standing Counsel for the CBIC for respondent Nos.2 and 3. Perused the record.
2. The petitioner is aggrieved by the requirement of deposit of 7.5% of the duty imposed on the penalty amount as a pre-condition for filing of an appeal under Section 128 of the Customs Act, 1962 (for short ‘the Act’).
3. In the instant case, on 21.03.2024, the petitioner was said to be found carrying two gold bars in his pocket weighing 233.200 gms, the value of which was Rs.15,50,780/- while travelling from Dubai to Rajiv Gandhi International Airport, Hyderabad. The petitioner was subjected to proceedings in accordance with the Customs Act and an order in original was passed on 10.12.2024 whereby an order of confiscation was ordered and also an amount of Rs.14,00,000/- under Section 112(a) and 112(b) of the Act was imposed as penalty upon the petitioner.
4. Against the order in original dated 10.12.2024 passed by the Joint Commissioner, the petitioner had preferred an appeal before the Commissioner (Appeals) under Section 128 of the Act. However, it appears because of the pre-condition that is stipulated in law under Section 129E and for non-deposit of the amount required under Section 129E, the appeal has not been accepted. The instant writ petition has been filed only seeking for dispensing with the payment of 7.5% on the penalty amount.
5. For ready reference, it would be relevant at this juncture to refer to the unamended provision of Section 129E of the Act as stood before substitution of Act 25 of 2014 was made, as under:
“129-E. Deposit, pending appeal, of duty and interest, demanded or penalty levied.- Where in any appeal under this Chapter, the decision or order appealed against relates to any duty any interest demanded in respect of goods which are not under the control of the customs authorities or any penalty levied of goods which are not under the control of the customs authorities or any penalty levied under this Act, the person desirous of appealing against such decision or order shall, pending levied under this Act, the person desirous of appealing against such 3 decision or order shall, pending the appeal, deposit with the proper officer duty and interest demanded or the penalty levied: Provided that where in any particular case, the Commissioner (Appeals) or the Appellate Tribunal is of the opinion that the deposit of duty and interest demanded or penalty levied would cause under hardship to such person, the Commissioner (Appeals) or, as the case may be, the Appellate Tribunal may dispense with such deposit subject to such conditions as he or it may deem fit to impose so as to safeguard the interests of revenue: Provided further that where an application is filed before the Commissioner (Appeals) for dispensing with the deposit of duty and interest demanded or penalty levied under the first proviso, the Commissioner (Appeals) shall, where it is possible to do so, decide such application within thirty days from the date of its filing.”
6. The said clause subsequently stood substituted by way of amendment and the substituted version for ready reference is as follows:
“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 du
