Delhi High Court Clarifies Pre-deposit Requirements for Customs Appeals

Court Orders Appeals to be Heard on Merits, Recognizes Deposits Made Under Protest as Pre-deposit

In a significant ruling, the Delhi High Court has provided clarity on the interpretation of pre-deposit requirements under the Customs Act, 1962, allowing appeals to be heard on their merits. The case involved Anoop Kumar Garg and others, who had challenged the Customs, Excise & Service Tax Appellate Tribunal's (CESTAT) refusal to entertain their appeals due to the alleged non-compliance with pre-deposit stipulations.

The matter dates back to a Show Cause Notice issued in October 2022, accusing three entities, including M/s Gravity Bath Pvt. Ltd., M/s Vinayak Traders, and M/s Aditya Industries, of evading customs duty through undervaluation of imports. During the investigation, the Directorate of Revenue Intelligence seized cash and amounts were deposited under protest by the petitioners.

The crux of the legal debate centered around Section 129E of the Customs Act, which mandates a pre-deposit for filing appeals. The petitioners argued that substantial amounts already deposited with the Customs Department should suffice as the pre-deposit. The Delhi High Court, led by Justices Prathiba M. Singh and Shail Jain, agreed, stating that the amounts deposited under protest should be considered for the purpose of pre-deposit, drawing parallels with the Supreme Court's interpretation in similar cases under different taxing statutes.

The judgment emphasizes that denying the recognition of these deposits would be inequitable and contrary to the statutory scheme, effectively blocking the petitioners' right to appeal. Consequently, the court set aside CESTAT's order and directed that the appeals be heard on merits, acknowledging the deposits made during the investigation.

This ruling underscores the judiciary's role in ensuring equitable access to legal remedies and clarifies how pre-deposit requirements should be interpreted when substantial amounts have been deposited under protest or during investigations.

Bottom Line:

Amounts deposited under protest or confiscated during investigation by Customs Department must be considered as pre-deposit for appeal purposes under Section 129E of the Customs Act, 1962.

Statutory provision(s): Customs Act, 1962 - Section 129E, Section 129A

Anoop Kumar Garg v. Commissioner of Customs (Imports), (Delhi)(DB) : Law Finder Doc Id # 2810160