The Delhi High Court held that the deposit of pre-deposit is mandatory for filing an appeal before the CESTAT and the decision shall be taken by CESTAT only after deposit of the pre-deposit as required under Section 129E of the Customs Act, 1962 within the timeframe given by the law.
The petitioner is an importer of satellite/viewing cards and other parts of set up boxes. A show-cause notice was issued, based upon the allegation by the department that there was a misclassification by the petitioner.
The classification claimed by the petitioner is CH85235290 whereas the say of the department is that this is not the correct classification. As per the department, the correct classification is CH85299090.
With a view to avoid multiplicity of proceedings repeatedly in the Courts, Section 129E of the Act was amended by the Finance Act No.2 of 2014, with effect from 6th August 2014, to provide for mandatory pre-deposit of a fixed percentage of the duty demanded as a pre-condition to the CESTAT entertaining an appeal.
For an appeal against the order passed by an officer of the rank of the Commissioner of Customs and below, the deposit amount has been fixed at 7.5% and for an appeal against the order of the Commissioner (Appeals), it is 10%.
The first proviso to Section 129E states that the pre-deposit made thereunder would not exceed Rs.10 crores.
The second proviso to Section 129E of the Act clarifies that the said provision would not apply to the stay applications and appeals pending before any appellate authority prior to the commencement of the Finance (No. 2) Act, 2014.
The division bench headed by the Chief Justice, D.N. Patel held that the amount to be deposited by the petitioner before CESTAT, New Delhi in their statutory appeal under the Customs Act, 1962 comes to Rs.4.23 Crores for one appeal, which is 0.0705% of the total turnover.
“In view of the amendment in the Act, especially Section 129E thereof, there is no question whatsoever of the waiver of pre-deposit. As stated hereinabove, the statute 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,” the bench said
“We are not at all inclined to observe anything on the merits of the case. Suffice it to say that the statutory appeals preferred by the petitioner shall be decided on their own merits, in accordance with law, rules, and regulations, and on the basis of the evidence on record. The decision shall be taken by CESTAT only after deposit of the pre-deposit as required under Section 129E of the Customs Act, 1962 within the timeframe given by the law,” the court said.
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