The Delhi High Court held that the application for Waiver of Predeposit under section 129 E of the Customs Act, 1962 was rejected as the assessee failed to deposit the amount. It was viewed that admittedly, appellants did not comply with pre-deposit order even thereafter and therefore Tribunal was constrained to dismiss the appeals.
G & S International, the appellant challenged the order passed by the Customs, Excise & Service Tax Appellate Tribunal, New Delhi [“CESTAT”] titled AS Raj International Vs. Commissioner of Customs, New Delhi.
The Appellants were engaged in exports which were made under the Duty Entitlement Pass Book Scheme [“DEPB”] and Drawback Scheme. Based on information that the appellants were engaged in fraudulent exports of Shawls and Readymade garments to Commonwealth of Independent States countries (CIS) via UAE, the investigation was conducted by the Directorate of Revenue Intelligence. On the conclusion of the investigation, Show Cause Notices [hereinafter referred to as “SCNs”] were issued to the appellants. SCNs were adjudicated vide Order-in-Original (OIO).
The appellants/exporters preferred an appeal along with the application for waiver of pre-deposit under Section 129-E of the Customs Act, 1962 and stay of operation of the impugned order dated 30.09.2008 before the CESTAT. The CESTAT vide order dated 17.06.2009, dismissed the stay applications, directing the appellant M/s. G.S. International to deposit Rs. 67,56,033/- and appellant M/s. A’s Raj International to deposit an amount of Rs. 1,00,05,250/- within four weeks from the date of the order.
The appellant argued that the right of appeal provided under Section 129E is a statutory right and failure to make a pre-deposit provides a limited right to the respondents to recover the amount of penalty and drawback from the appellants but the appeals ought to have been heard by the learned CESTAT on merits and could not have been dismissed in a summary manner merely on account of non-deposit of the pre-deposit amount.
It was submitted that the condition of the pre-deposit was bad as it whittled down the appellant’s right to appeal. Per contra, the counsel appearing on behalf of respondents has argued that the Tribunal could not have heard the appeal without pre-deposit, and therefore, the appeals have been rightly rejected.
Section 129 E has been amended by the Finance Act, of 2014. However, since the SCNs and Order-in-Original were issued and passed before the amendment came into force, the unamended provision would apply.
No doubt, Section 129E does not expressly provide for the rejection of an appeal for non-compliance with the requirements regarding the deposit of penalty or duty but the provision makes it obligatory on the appellants to deposit the duty or penalty pending the appeal and if a party does not comply either with the main Section or with any order that may be passed under the proviso, the Appellate Authority is fully competent to reject the appeal for non-compliance with the provisions of Section 129E. Unless Section 129E is complied with, the Appellate Authority cannot proceed to hear the appeal on merits. Therefore, the logical consequence of failure to comply with Section 129E is the rejection of appeal on that ground.
If the statute gives a right to appeal upon certain conditions, it is upon fulfilment of those conditions that the right becomes vested and exercisable to the appellant. The proviso to Section 129E of the Act gives discretion to the Tribunal in cases of undue hardships to dispense the obligation to deposit the duty/interest or penalty.
A division bench of Justice Sanjeev Sachdeva and Justice Ravinder Dudeja viewed that admittedly, appellants did not comply with pre-deposit order even thereafter and therefore Tribunal was constrained to dismiss the appeals.
The Court observed that there is no error in the orders passed by CESTAT, thereby, dismissing the appeal for non-compliance of the deposit order dated 17.06.2009, as per the provisions of Section 129 read with proviso of Section 129-E of the Customs Act, 1962 and dismissed the order.
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