CHANDRA SEKHAR JHA versus UNION OF INDIA & ANR. on 28 February 2022

1. By the impugned order, the High Court has rejected the appealcarried by the appellant against the order passed by the Tribunal underDSection 129E of the Customs Act, 1962 (hereinafter referred to as the‘Act’). This is for the reason that the appellant has not complied withthe requirement under Section 129E of the Act, as regards, the pre-deposit of the amount in terms of the said provision.

2. The appellant while traveling in a train was intercepted. TheEcase against him appears to be that he was carrying Gold smuggled intoIndia from Bangladesh,and was accompanied with another person also.On conclusion of the proceedings, the Commissioner of Customs(Preventive) West Bengal, Kolkata passed a common order, whereinthe appellant came to be visited with penalty in a sum of Rs.75 lakhs. Itappears that the other person was also asked to pay penalty. TheyFpreferred appeals before the Customs, Excise and Service Tax AppellateTribunal, Kolkata in the year 2017. The Tribunal finding that the appellanthas not made pre-deposit dismissed the appeal. It is this order whichwas put in issue before the High Court and the High Court has upheldthe order.G

3. We heard Mr. GalibKabir, learned counsel for the appellant.Learned counsel for the appellant would point out that demand for pre-deposit is not warranted in law. His argument is premised on the factthat the appellant is entitled to have this case dealt with, under the provisionof 129E of the Act, which was in the statute book prior to the presentHavatar, substituting it by Act 25 of 2014.

4. Section 129E of the Customs Act, 1962, as it stood beforesubstitution by Act 25 of 2014, reads as follows:- “129E. Deposit,pending appeal, of duty and interest, demanded orpenalty levied.- Where in any appeal under this Chapter, thedecision or order appealed against relates to any duty any interestdemanded in respect of goods which are not under the control ofthe customs authorities or any penalty levied of goods which arenot under the control of the customs authorities or any penaltylevied under this Act, the person desirous of appealing againstsuch decision or order shall, pending levied under this Act, theperson desirous of appealing against such decision or order shall,pending the appeal, deposit with the proper officer duty and interestdemanded or the penalty levied:

Provided that where in any particular case, the Commissioner(Appeals) or the Appellate Tribunal is of the opinion that the depositof duty and interest demanded or penalty levied would cause underhardship to such person, the Commissioner (Appeals) or, as thecase may be, the Appellate Tribunal may dispense with such depositsubject to such conditions as he or it may deem fit to impose so asto safeguard the interests of revenue:

Provided further that where an application is filed beforethe Commissioner (Appeals) for dispensing with the deposit ofduty 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 itsfiling.”

It is thereafter that the present version was inserted with effectfrom dated 06.08.2014, which reads as follow:- “129-E. Deposit of certain percentage of duty demanded or penaltyimposed 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 appellanthas deposited seven and a half per cent of the duty, in casewhere duty or duty and penalty are in dispute, or penalty,where such penalty is in dispute, in pursuance of a decisionor an order passed by an officer of customs lower in rankthan the Principal Commissioner of Customs orCommissioner of Customs; ABC

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A(ii)against the decision or order referred to in clause (a) ofsub-section (1) of Section 129-A, unless the appellant hasdeposited seven and a half per cent of the duty, in casewhere duty or duty and penalty are in dispute, or penalty,where such penalty is in dispute, in pursuance of the decisionor order appealed against; B

(iii) against the decision or order referred to in clause (b) ofsub-section (1) of Section 129-A, unless the appellant hasdeposited ten per cent of the duty, in case where duty orduty and penalty are in dispute, or penalty, where suchpenalty is in dispute, in pursuance of the decision or orderCappealed against:

Provided that the amount required to be depositedunder this section shall not exceed Rupees Ten crores:

Provided further that the provisions of this sectionDshall not apply to the stay applications and appeals pendingbefore any appellate authority prior to the commencementof the Finance (No. 2) Act, 2014.]”

5. The specific argument of the learned counsel for the appellantis that in the case of the appellant in view of the fact that the act relatesEto the year 2013 (namely on 28.2.2013),the appellant must be governedby Section 129E prior to the substitution. This is for the reason that thesubstitution of Section 129A was effected on 06.08.2014 which is afterthe date of the incident (28.02.2013). On the basis of the same, it iscontended that under Section 129E, as it stood, prior to the substitutionFthere was a power available with the Appellate Authority in the matterof demand of pre-deposit. He would point out that the amount for pre-deposit in his case is harsh and onerous.

6. On a conspectus of the provisions of Section 129E before andafter the substitution, it becomes clear that the law giver has intended toGbring about a sweeping change from the previous regime and usher in anew era, under which the amount to be deposited was scaled down andpegged at a certain percentage of the amount in dispute. In other words,while under Section 129A, as it stood prior to the substitution, the appellantwas to deposit the duty and the interest demanded or the penalty levied,inthe present regime, the appeal is maintainable upon the appellant depositingHseven and the half percent of the amount. Under the earlier regime, in other words the entire amount which was in dispute had to be deposited.Under the earlier avatar of Section 129E, the law giver also clothed theappellate body with power as contained in the first proviso. The firstproviso provided the Commissioner (Appeals) or as the case may be,Appellate Tribunal the power to dispense with such deposit, subject toconditions as he deemed fit to impose to safeguard the interest of therevenue.

7. The question whether it is undue hardship has been the subjectmatter of the judgment of this Court in Benara Valves Ltd. and othersvs. Commissioner of Central Excise and another, reported in (2006)13 SCC 347, wherein it,inter alia, held as follow:- “13. For a hardship to be “undue” it must be shown that theparticular burden to observe or perform the requirement is out ofproportion to the nature of the requirement itself, and the benefitwhich the applicant would derive from compliance with it.”

8. It is in sharp departure from the previous regime that the newprovision has been enacted. Under the new regime, on the one hand, theamount to be deposited to maintain the appeal has been reduced from100% to 7.5% but the discretion which was made available to theappellate body to scale down the pre-deposit has been taken away.

9. The first proviso of Section 129E of the presentSection enactsa limitation on the total amount which can be demanded by way of pre-deposit. The first proviso provides that the amount required to be depositedshould not exceed Rs.10 Crores. In this regard, the law giver haspurported to grant relief to an appellant. The second proviso contemplatesthat Section 129(e) as substituted would not apply to stay applicationsand appeals which are pending before the Appellate Authority prior tothe commencement of the Finance Act (2) of 2014. The amendedprovision, as we have already noticed has come into force from06.08.2014. Therefore, in regard to stay applications and appeals whichwere pending before any Appellate Authority prior to commencementof The Finance (No.2) Act 2014, Section 129E as substituted would notapply. Substitution of a provision results in repeal of the earlier provisionand its replacement by the new provision.[1]

1 [See in this regard, a discussion in Justice G. P. Singh, Principles on StatutoryInterpretation (12[th]Edition) page No.676.

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A10. As far as the argument of the appellant that for the reasonthat the incident which triggered the appeal filed by the appellant tookplace in the year 2013,the appellant must be given the benefit of thepower available under the substituted provision, it does not appeal to us.The substitution has effected a repeal and it has re-enactedthe provisionas it is contained in Section 129E. In fact, the acceptance of the argumentBwould involve a dichotomy in law. On the one hand, what the appellant iscalled upon to pay is not the full amount as is contemplated in Section129(E) before the substitution. The order passed by the Commissioneris dated 23.11.2015 which is after the substitution of Section 129E. Theappellant filed the appeal in 2017.What the appellant is called upon toCpay is the amount in terms of Section 129E after the substitution, namely,the far lesser amount in terms of the fixed percentage as provided insection 129E. The appellant, however, would wish to have the benefit ofthe proviso which, in fact, appropriately would apply only to a case wherethe appellant is maintaining the appeal and he is called upon to pay thefull amount under Section 129E under the earlier avtar.D

11. We would think that the legislative intention would clearly beto not to allow the appellant to avail the benefit of the discretionarypower available under the proviso to the substituted provision underSection 129E. When the appellant is not being called upon to pay the fullamount but is only asked to pay the amount which is fixed under theEsubstituted provision, we do not find any merit in the contention of theappellant. However, in the interest of justice we extend the period forcomplying with Section 129E by a period of two months from today.Subject to the same, the appeal will stand dismissed.

There will be no order as to costs.FPending application(s), if any, stands disposed of.

Nidhi Jain

Appeal dismissed.

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