CUSTA/12/2026 of M/S ENTIRE LOGISTICS PVT. LTD. Vs COMMISSIONER OF CUSTOMS on 21 July 2026

1. Assailed herein is an order dated 24.02.2026 passed by the learned Customs, Excise & Service Tax Appellate Tribunal (CESTAT), New Delhi, whereby appellant's application seeking waiver/relaxation of the mandatory pre-deposit of 7.5% of the impugned demandunder Section 129E of the Customs Act, 1962, was rejected. Resultantly, the statutory appeal filed against the Order-in-Original dated 28.06.2024 was dismissed without adverting to the merits thereof. The impugned Order-in-Original had imposed penalties aggregating to Rs.15,69,50,000/-, and accordingly, 7.5% of the same comes to Rs. 1,17,71,250/-.

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2. Given the nature of the order we propose to pass, it is unnecessary to traverse the detailed factual narrative assailing the Order-in-Original or the merits of the Tribunal's order.

3. The solitary contention pressed before us is that the appellant- Company, having shut down its business and being in financial distress, ought to be exempted from the statutory requirement of pre-deposit. For the reasons that follow, we find no merit in this contention.

4. At the threshold, the plea of financial hardship rests on bare pleadings and oral assertions alone. No balance sheets, audited accounts, bank statements, or any other material demonstrating the appellant's financial incapacity has been placed on record. We cannot act on an unverified, bald assertion of hardship. On this ground alone, the prayer for exemption must fail.

5. Even assuming hardship were established, the law affords no relief. Section 129E, as substituted by the Finance (No. 2) Act, 2014 (with effect from 06.08.2014), effected a deliberate and sweeping legislative change:

5.1. Under the unamended provision, an appellant was required to deposit the entire duty, interest, or penalty in dispute; however, the first proviso vested the Commissioner (Appeals) or the Tribunal with discretion to dispense with the deposit in cases of "undue hardship", subject to conditions safeguarding the revenue.

5.2. Under the substituted provision, the legislature struck a new balance: the quantum of pre-deposit was scaled down from 100% to a modest 7.5% (or 10%, as the case may be), capped at Rs. 10 crores by the first proviso; but, correspondingly, the discretion of the appellate authority to waive or reduce the deposit was consciously taken away.

(3of 4) [CUSTA-12/2026] The second proviso confines the new regime to appeals and stay applications filed after 06.08.2014.

6. The Hon'ble Supreme Court in Chandra Sekhar Jha v. Union of India & Anr.1 has authoritatively construed the substituted provision. It held that the legislative intent is plainly to deny an appellant the benefit of the discretionary waiver that existed under the earlier regime; since the appellant is no longer called upon to deposit the full disputed amount but only a fixed, reduced percentage, no grievance of hardship survives. The trade-off is built into the statute itself: a lighter, certain burden in exchange for the removal of discretion.

7. It follows that neither the Tribunal nor the Commissioner (Appeals) retains any power to entertain an appeal without the pre- deposit. The peremptory words "shall not entertain any appeal" in Section 129E enact an absolute bar, and the two provisos relax its rigour only to the limited extent noticed above. Even genuine hardship furnishes no statutory ground for waiver. As held in Benara Valves Ltd. v. CCE2, hardship must in any event be "undue", i.e., out of proportion to the requirement; a fortiori, a bald plea of hardship cannot displace a mandatory statutory condition from which the element of discretion has been legislatively excised.

8. Tested on this anvil, the present case does not qualify for any indulgance. There is no material impugning the very foundation of the demand or valuation; no demonstrated and documented financial ruin; nothing beyond an unsupported assertion of hardship. This is not a "rare and deserving" case warranting the exercise of our extraordinary jurisdiction to dispense with a pre condition that Parliament has made 1 2022 SCC Online SC 269 2 (2006) 13 SCC 347

(4of 4) [CUSTA-12/2026] mandatory under Section 129E is mandatory. The discretion to waive it since stands legislatively withdrawn.

9. Before parting, we note an inadvertent error in the penultimate paragraph of the impugned order: the learned CESTAT described itself as bound by a passage which it attributed to the Delhi High Court, whereas the passage is, in fact, from a decision of a Co-ordinate Bench of the CESTAT itself.

10. Learned counsel for the appellant seized upon this error to contend that the Tribunal misdirected itself and its order should be set aside on that ground alone. We are unable to agree. The legal proposition applied by the Tribunal, that the pre-deposit under Section 129E is mandatory and cannot be waived by it, is unimpeachable and independently flows from the binding pronouncement of the Supreme Court in Chandra Sekhar Jha (supra). An erroneous citation of the source of a correct proposition of law neither vitiates the order nor advances the appellant's case. The contention is noted only to be rejected.

11. For the foregoing reasons:

(a) The plea for exemption from the mandatory pre-deposit under Section 129E of the Customs Act, 1962 is rejected, being both unsubstantiated on facts and untenable in law; (b) No ground for interference with the order of the learned CESTAT is made out; and

(c) The appeal stands dismissed. No order as to costs.

12. All pending application(s) also stand disposed of. (ASHUTOSH KUMAR),J (ARUN MONGA),J 1/PARSHANT