The Supreme Court last week held that the benefit of the first proviso to Section 129E of the Customs Act, 1962 before substitution, whereby the Appellate Tribunal was vested with the power to dispense with the deposit of the penalty amount to be made during the pendency of the appeal, could not be extended to the appellants who had filed an appeal after the provision was substituted by the new Section 129E that came into effect on 06.08.2014.
A two-judge bench comprising Justice KM Joseph and Justice Hrishikesh Roy, while dismissing an appeal filed against the order of the Calcutta High Court held that the substitution of a provision results in the repeal of the older provision and replacement by the new provision. According to the bench, the benefit of the proviso in the old provision could not be extended to the appellant who had filed the appeal after the new regime came into effect. Moreover, the amount asked to be deposited was 7.5% of the entire penalty imposed, which goes on to show that the intention was to treat the appellant’s case under the new Section 129E as opposed to the older version which required depositing the entire amount.
Earlier, the High Court upheld the decision of the Customs, Excise, and Service Tax Appellate Tribunal, Kolkata dismissing the appeal emanating from the penalty imposed by the Commissioner of Customs (Preventive) West Bengal, Kolkata, for not making the pre-deposit as per the present Section 129E of the Customs Act, 1962.
The appellant was alleged to have smuggled gold into India from Bangladesh. The Commissioner of Customs (Preventive) West Bengal, Kolkata passed an order imposing a penalty of Rs. 75 lakhs. An appeal was preferred before the Customs, Excise, and Service Tax Appellate Tribunal, Kolkata, which was dismissed in 2017 on the ground that the pre-deposit was not made by the appellant. The High Court upheld the order of the Appellate Tribunal.
The Court noted that under the old regime the appellant was to deposit the full amount of the penalty levied, which has been scaled down, and only 7.5% of the amount needs to be deposited now. However, in the earlier regime, the Appellate Tribunal had the power to dispense with the deposit subject to imposing conditions as it deemed fit to safeguard the interest of the revenue. It further observed that as per the second proviso to the present Section 129E, the mandate of the pre-deposit would not be applicable to the stay applications and appeal which were pending before the Appellate Tribunal prior to 06.08.2014, when the provision came into effect. In the present case, the Court noted, the Commission passed the order on 23.11.2015 and the appeal was filed in 2017 – both after the new provision came into effect, in essence, repealing the older Section 129E.
Subscribe Taxscan Premium to view the JudgmentChandra Sekhar Jha vs Union of India
Citation: 2022 TAXSCAN (SC) 101
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