| Sep-12-2022

Waiver of pre-deposit is not tenable on account of financial inability

The CESTAT, New Delhi in the matter of M/s Prem Kumar Ojha v. Commissioner of Customs-Jaipur I [Customs Miscellaneous Application No. 50245 of 2022 dated July 04, 2022] held that, in view of the afore-mentioned decisions by the Hon’ble Supreme Court and High Courts, condonation of pre-deposit is not feasible.

Facts:

The Miscellaneous Application is being filed against the Order-in-Original No. 02/2021 dated February 05, 2021 passed by Commissioner of Customs-Jaipur I (“the Respondent”) wherein the Hon’ble CESTAT (“the Office”) sent repeated communications to M/s Prem Kumar Ojha (“the Appellant”), for personal hearing along with intimation for payment of pre-deposit, failing which the appeal would be dismissed. The Appellant did not turn up on any dates provided by the office, neither deposited the said pre-deposit amount.

However, on record the Appellant had sought waiver of the pre-deposit based on the judgement of the Supreme Court in Canon India Pvt. Ltd. v/s Commissioner of Customs [Civil Appeal No.1827 of 2018 dated March 09, 2021]. Further, the Appellant sighted financial inability and personal problems as the reason for non-payment of pre-deposit.

Issue:

Whether wavering of pre-deposit on the grounds of Section 129E of the Customs Act, 1962 (“the Customs Act”) existing prior to August 06, 2014 is feasible?

Held:

The CESTAT, New Delhi in Customs Miscellaneous Application No. 50245 of 2022 dated July 04, 2022 held as under:

• Noted that, on bare perusal of Section 129E of the Customs Act, the appellate bodies don’t have the power to waive the requirement of pre-deposit, unlike in the pre-existing situation prior to August 06, 2014, wherein the Tribunal had the power to waive the deposit of duty, interest and penalty levied, if the same was likely to cause undue hardship to the Appellant.
• Observed that the Supreme Court in Chandra Sekhar Jha vs Union of India and Another [Civil Appeal No. 1566 of 2022 dated February 28, 2022], rejected the appeal filed under Section 129A of the Customs Act wherein the Appellant contended for the implementation of Section 129E of the Customs Act standing prior to August 06, 2014. The Hon’ble Supreme Court rejected the contention of the Appellant on the following grounds: -
  • Sharp departure from the previous regime against which the new provisions has been enacted which gave discretionary power to the appellate body to scale down the pre-deposit amount from 100% to 7.5%.
  • The legislative intention was not to allow discretionary power to the appellate body under the proviso, which was accordingly done away with, by substituting the provisions under section 129E and in view of the same, going against the legislative intent would not be feasible.
• Further observed that Hon’ble Delhi Court in Dish TV India Limited v. Union of India & Ors. [Writ Petition (C)2178/2019 dated August 28, 2019] held that when the statue itself provided wavier of pre-deposit to the extent of 90% or 92.5% of the duty amount and made it mandatory to deposit 7.5% or 10% of duty amount, the Courts cannot waive the requirement of pre-deposit.
• Relied on the decision of Hon’ble Delhi High Court in [Diamond Entertainment Techno. P. Ltd. v. Commissioner of CGST, Dehradun [2019 (368) E.L.T. 579 (Del.) dated December 02, 2019] and Hon’ble Madhya Pradesh High Court in Ankit Mehta v. Commissioner, CGST Indore [W.P. No. 4557/2019 dated August 02, 2019] wherein similar views were taken by the respective bench.
• Dismissed the appeal on account of failure to pay the pre-deposit amount.
• Held that, in view of the aforesaid decisions of the Hon’ble Supreme Court and the High Court, it is not justiciable to grant waiver of the pre-deposit amount.

(Author can be reached at info@a2ztaxcorp.com)

DISCLAIMER: The views expressed are strictly of the author and A2Z Taxcorp LLP. The contents of this article are solely for informational purpose and for the reader’s personal non-commercial use. It does not constitute professional advice or recommendation of firm. Neither the author nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon. Further, no portion of our article or newsletter should be used for any purpose(s) unless authorized in writing and we reserve a legal right for any infringement on usage of our article or newsletter without prior permission.