Custom, Excise & Service Tax Tribunal
Prem Kumar Ojha Raju Sharma vs Commissioner, Customs-Jaipur I on 4 July, 2022
Author: Dilip Gupta
Bench: Dilip Gupta
CUSTOMS EXCISE & SERVICE TAX APPLELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH - COURT NO. I
Customs Miscellaneous Application No. 50245 of 2022
IN
Defect Diary No. 50016 of 2022
(Arising out of Order-in-Original No. 02/2021 dated 05.02.2021 passed by the
Commissioner of Customs, Jodhpur (H.Q.) Jaipur, NCR Building, Jaipur)
M/s Prem Kumar Ojha ......... Appellant
@ Raju Sharma, House No. A-2891,
Ground Floor (Back side)
Green Field Colony, Faridabad, Haryana-121003
Versus
Commissioner of Customs-Jaipur I ......... Respondent
Jodhpur (HORS), Jaipur, NCR, Building, Statue Circle, C-Shceme, Jaipur Appearance None for the Appellant Shri Nagendra Yadav, Authorised Representative of the Department CORAM : HON'BLE MR. JUSTICE DILIP GUPTA, PRESIDENT HON'BLE MR. P. V. SUBBA RAO, MEMBER (TECHNICAL) DATE OF HEARING/DECISION: JULY 04, 2022 DEFECT MISC. ORDER NO.__116/2022_ JUSTICE DILIP GUPTA :
The appeal was filed in the office on December 27, 2021 without making the mandatory pre-deposit contemplated under section 129E of the Customs Act, 19621.
2. The office sent a communication dated March 03, 2022 to the appellant requiring the appellant to make the pre-deposit failing
1. the Act 2 C/Misc/50245/2022 Defect Dy. No. 50016/2022 which the appeal would be listed before the Bench on April 5, 2022. When the matter was listed before the Bench on the said date no one appeared on behalf of the appellant nor the pre-deposit was made. The Bench, however, granted six weeks‟ time to the appellant to make the pre-deposit and further directed that the matter would be listed on May 24, 2022. Even on May 24, 2022, the appellant did not appear nor was the pre-deposit made. However, in the interest of justice, the Bench granted four weeks‟ further time to the appellant to make the pre-deposit and the matter was directed to be listed on July 04, 2022.
3. Today, when the matter has been called out no one has appeared on behalf of the appellant. The office note also does not indicate that the pre-deposit has been made.
4. On record, however, is an application filed by the appellant seeking waiver of the pre-deposit. The reason stated is that the appellant has a good case on merits in view of the judgment of the Supreme Court in Canon India Pvt. Ltd. v/s Commissioner of Customs2. The appellant has further stated that he is not in a position to make the pre-deposit because the appellant is not doing any business; the father of the appellant is ill and the appellant has taken a house on loan for which he has to make regular monthly installments.
5. To examine whether the Tribunal can waive the pre-deposit, it would be appropriate to reproduce section 129E of the Customs Act as amended on 06.08.2014 and it is as follows :
"SECTION 129E. Deposit of certain percentage of duty demanded or penalty imposed before filing appeal.
2. 2021 3 TMI 384 SC 3 C/Misc/50245/2022 Defect Dy. No. 50016/2022 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 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;
(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. "
6. It would be seen from a bare perusal of section 129E of the Customs Act that after 6.8.2014 neither the Tribunal nor the Commissioner (Appeals) have the power to waive the requirement of pre-deposit, unlike the situation which existed prior to the amendment made in section 129E on 06.08.204 when the Tribunal, if it was of the opinion that the deposit of duty and interest demanded or penalty levied would cause undue hardship, could dispense the said deposit on such conditions as it deemed fit to impose so as to safeguard the interest of the Revenue.
7. The Supreme Court in Narayan Chandra Ghosh vs. UCO Bank and Others3, examined the provisions contained in
3. (2011) 4 SCC 548 4 C/Misc/50245/2022 Defect Dy. No. 50016/2022 section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 relating to pre deposit in order to avail the remedy of appeal. The provisions are similar to the provisions of section 129E of the Customs Act. The Supreme Court emphasised that when a Statue confers a right to appeal, conditions can be imposed for exercising of such a right and unless the condition precedent for filing appeal is fulfilled, the appeal cannot be entertained. The Supreme Court, therefore, held that deposit under the second proviso to section 18(1) of the Act, being a condition precedent for preferring an appeal, the Appellate Tribunal erred in law in entertaining the appeal. The Supreme Court also held that the Appellate Tribunal could not have granted waiver of pre-deposit beyond the provisions of the Act. The relevant portion of the judgment of the Supreme Court is reproduced below:
"7. Section 18(1) of the Act confers a statutory right on a person aggrieved by any order made by the by the Debts Recovery Tribunal under Section 17 of the Act to prefer an appeal to the Appellate Tribunal. However, the right conferred under Section 18(1) is subject to the condition laid down in the second proviso thereto. The second proviso postulates that no appeal shall be entertained unless the borrower has deposited with the Appellate Tribunal fifty per cent of the amount of debt due from him, as claimed by the secured creditors or determined by the Debts Recovery Tribunal, whichever is less. However, under the third proviso to the sub section, the Appellate Tribunal has the power to reduce the amount, for the reasons to be recorded in writing, to not less than twenty-five per cent of the debt, referred to in the second proviso. Thus, there is an absolute bar to entertainment of an appeal under Section 18 of the Act unless the condition precedent, as stipulated, is fulfilled. Unless the borrower makes, with the Appellate Tribunal, a pre- deposit of fifty per cent of the debt due from him or determined, an appeal under the said provision cannot be 5 C/Misc/50245/2022 Defect Dy. No. 50016/2022 entertained by the Appellate Tribunal. The language of the said proviso is clear and admits of no ambiguity.
8. It is well-settled that when a Statute confers a right of appeal, while granting the right, the Legislature can 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. Bearing in mind the object of the Act, the conditions hedged in the said proviso cannot be said to be onerous. Thus, we hold that the requirement of pre-deposit under sub- section (1) of Section 18 of the Act is mandatory and there is no reason whatsoever for not giving full effect to the provisions contained in Section 18 of the Act. In that view of the matter, no court, much less the Appellate Tribunal, a creature of the Act itself, can refuse to give full effect to the provisions of the Statute. We have no hesitation in holding that deposit under the second proviso to Section 18(1) of the Act being a condition precedent for preferring an appeal under the said Section, the Appellate Tribunal had erred in law in entertaining the appeal without directing the appellant to comply with the said mandatory requirement.
9. The argument of learned counsel for the appellant that as the amount of debt due had not been determined by the Debts Recovery Tribunal, appeal could be entertained by the Appellate Tribunal without insisting on pre- deposit, is equally fallacious. Under the second proviso to sub- section (1) of Section 18 of the Act the amount of fifty per cent, which is required to be deposited by the borrower, is computed either with reference to the debt due from him as claimed by the secured creditors or as determined by the Debts Recovery Tribunal, whichever is less. Obviously, where the amount of debt is yet to be determined by the Debts Recovery Tribunal, the borrower, while preferring appeal, would be liable to deposit fifty per cent of the debt due from him as claimed by the secured creditors. Therefore, the condition of pre-deposit being mandatory, a complete waiver of deposit by the appellant with the Appellate Tribunal, was beyond the provisions of the Act, as is evident from the second and third provisos to the said Section. At best, the Appellate Tribunal could have, after recording the reasons, reduced the amount of deposit of fifty per cent to an amount not less than twenty-five per cent of the debt referred to in the second proviso. We are convinced that the order of the Appellate Tribunal, entertaining appellant's appeal without insisting on predeposit was clearly unsustainable and, therefore, the decision of the High Court in setting aside the same cannot be flawed."6
C/Misc/50245/2022 Defect Dy. No. 50016/2022 (emphasis supplied)
8. The principles laid down in the aforesaid decision of the Supreme Court in Narayan Chandra Ghosh were reiterated by the Supreme Court in Kotak Mahindra Bank Pvt. Limited vs. Ambuj A.Kasiwal & Ors4.
9. In Chandra Sekhar Jha vs Union of India and Another5, the Supreme Court noted that the Tribunal had rejected the appeal filed under section 129A of the Customs Act for the reason that the appellant had not complied with the requirement of pre-deposit under section 129E of the Customs Act. Though the contention of the appellant that the provisions of section 129E of the Customs Act as it stood prior to 06.08.2014 should be applied, was rejected by the Supreme Court for the reason that the order was passed by the Commissioner on 23.11.2015 and the appeal was filed in 2017, but the Supreme Court also observed:-
"8. It is in sharp departure from the previous regime that the new provisions has been enacted. Under the new regime, on the one hand, the amount to be deposited to maintain the appeal has been reduced from 100% to 7.5% but the discretion which was made available to the appellate body to scale down the pre- deposit has been taken away.
11. We would think that the legislative intention would clearly be to not to allow the appellant to avail the benefit of the discretionary power available under the proviso to the substituted provisions under section 129E. When the appellant is not being called upon to pay the full amount but is only asked to pay the amount which is fixed under the substituted provisions, we do not find any merit in the contention of the appellant. "
10. In this connection, it will also be appropriate to refer to a
4. Civil Appeal No. 539 of 2021 decided on 16.02.2021
5. Civil Appeal No. 1566 of 2022 decided on February 28, 2022 7 C/Misc/50245/2022 Defect Dy. No. 50016/2022 decision of the Delhi High Court in Dish TV India Limited vs. Union of India & Ors.6, wherein the requirement of pre-deposit under section 129E of the Customs Act, came up for consideration. The High Court held that when the Statue itself provided wavier of pre-deposit to the extent of 90% or 92.5% of the duty amount and made it mandatory to deposit 7.5% or 10% of duty amount, the Courts cannot waive this requirement of deposit. The observations of the Delhi High Court are as follows:
"7. Previously, prior to amendments of the statue, applications for wavier of the pre-deposit were being preferred. Several litigations have travelled up to the Hon‟ble Supreme Court upon such applications for waiver of pre-deposit.
10. In view of the aforesaid statutory provisions of the Act, it appears that the statue has now effected wavier of pre-deposit to the extent of 90% or 92.5% of the duty amount and has made it mandatory to deposit 7.5% or 10% of the duty amount, as the case may be. It ought to be kept in mind that the relief is granted by the law itself. Courts cannot be more charitable than the law. When the provisions of the law are explicitly clear or where the provisions of law are absolutely unambiguous, such type of pre-deposits cannot be waived by the courts.
13. In view of the amendment in the Act, especially Section 129E thereof, there is no question whatsoever of the waiver of predeposit. As stated hereinabove, the statue itself has waived 90% or 92.5% of the duty amount, as the case may be, assessed by the authorities under the Customs Act, 1962. The petitioner- assessee has to deposit only 7.5% or 10% (as the case may be) of the duty assessed. Thus, there is no question of further waiver of the amount which is required to be deposited under Section 129E of the Customs Act, 1962."
(emphasis supplied)
11. A Division Bench of Delhi High Court in M/s Vish Wind Infrastructure LLP v/s Additional Director General (Adjudication), New Delhi7 examined the provisions of section
6. W.P. (C) 4960 of 2020 decided on 06.08.2020
7. Writ Petition (C)2178/2019 decided on August 28,2019 8 C/Misc/50245/2022 Defect Dy. No. 50016/2022 35F of the Central Excise Act, 1944 which are pari materia to section 129E of the Customs Act and held that every appeal filed before the Tribunal after the amendment made in section 35F of the Excise Act and section 129E of the Customs Act on 06.08.2014 would be maintainable only if the mandatory pre-deposit was made. In coming to this conclusion, the Division Bench relied upon the judgment of the Delhi High Court in Anjani Technoplast Ltd. v/s Commissioner of Customs8 and also observed that in view of the peremptory words „shall not‟, there is an absolute bar on the Tribunal to entertain any appeal unless the requirement of pre- deposit is satisfied. The Division Bench further observed as follows:-
"28. Equally, it is trite that no court can issue a direction to any authority, to act in violation of the law. A reading of section 35F of the Central Excise Act reveals, by the usage of the peremptory words "shall not" therein, that there is an absolute bar on the CESTAT entertaining any appeal, under Section 35 of the said Act, unless the appellant has deposited 7.5 % of the duty confirmed against it by the authority below.
29. The two provisos in section 35F relax the rigour of this command only in two respects, the first being that the amount to be deposited would not exceed 10 crores, and the second being that the requirement of pre- deposit would not apply to stay applications or appeals pending before any authority before the commencement of the Finance (No.2) Act, 2014, i.e. before 6" August, 2014.
30. Allowing the CESTAT to entertain an appeal, preferred by an assessee after 6" August, 2014, would, therefore, amount to allowing the CESTAT to act in violation, not only of the main body of section 35F but also of the second proviso thereto, and would reduce the command of the legislature to a dead letter. 31.
31. That no court can direct an authority to act in violation of the law is settled in innumerable authorities, including, inter alia, Vice- Chancellor, University of Allahabad v. Dr. Anand Prakash Mishra9, A.B.Bhaskara Rao v. C.B.I10, , Manish Goel v. Rohini Goel11, and State of Bihar v. Arvind Kumar12.
8. 2015(326) ELT 472 (Del.)
9. (1997) 10 SCC 264
10.(2011) 10 SCC 259
11.(2010) 4 SCC 393 9 C/Misc/50245/2022 Defect Dy. No. 50016/2022
33. In view of the aforesaid facts, reasons and judicial pronouncements, the prayer of the petitioner for being permitted to prosecute its appeal before the CESTAT without complying with the condition of mandatory pre- deposit, cannot be granted. There is, therefore no substance in these writ petitions which are, consequently, dismissed. "
12. The same view was taken by the Division Bench of the Delhi High Court in Diamond Entertainment Techno. P. Ltd. v/s Commissioner of CGST, Dehradun13.
13. The Madhya Pradesh High Court in Ankit Mehta v/s Commissioner, CGST Indore14 also dismissed the Writ Petition that had been filed against the order of the Tribunal dismissing the appeal for the reason that the required pre-deposit was not made.
14. The contention that was advanced before the Tribunal and before the Madhya Pradesh High Court was that the appellant was not in a position to make the pre-deposit due to financial constraints. After examining the provisions of section 129E of the Customs Act, the Madhya Pradesh High Court observed as follows:-
"The aforesaid statutory provision of law makes it very clear that it is mandatory for an appellant to deposit seven and a half percent of the duty demanded or penalty imposed or both. The petitioner has not deposited a single rupee and in those circumstances, keeping in view the provisions of section 129E, the appeal itself has been dismissed.
This Court after careful consideration of the aforesaid judgments is of the opinion that section 129E does not empower the Tribunal or the Commissioner (Appeals) to waive the pre-deposit or to reduce the pre- deposit , this Court is also not inclined, keeping in view the aforesaid statutory provisions of law to waive or reduce the pre-deposit and, therefore, no case for interference is made out in the matter. Accordingly, the Writ Petition is dismissed."
12. (2012) 12 SCC 395.
13. 2019 (368) E.L.T. 579 (Del.) 14. W.P. No. 4557/2019 10 C/Misc/50245/2022 Defect Dy. No. 50016/2022
15. In view of the aforesaid decisions of the Supreme Court, the Delhi High Court and the Madhya Pradesh High Court, it is not possible to grant waiver of the pre-deposit amount. The application is accordingly, rejected.
16. As the appellant failed to make the pre-deposit, the appeal would have to be dismissed. The appeal, accordingly, stands dismissed.
[Dictated and pronounced in the open Court] (JUSTICE DILIP GUPTA) PRESIDENT (P.V. SUBBA RAO) MEMBER (TECHNICAL) Rekha