LEGAL ISSUE: Whether the pre-deposit requirement under Section 129E of the Customs Act, 1962, as amended in 2014, applies to cases where the incident occurred before the amendment but the appeal was filed after the amendment.
CASE TYPE: Customs Law
Case Name: Chandra Sekhar Jha vs. Union of India & Anr.
Judgment Date: 28 February 2022
Introduction
Date of the Judgment: 28th February, 2022
Citation: 2022 INSC 2462
Judges: K.M. Joseph, J. and Hrishikesh Roy, J.
Can an individual be required to make a pre-deposit under the amended Customs Act, even if the alleged offense occurred before the amendment? This question was at the heart of a recent case before the Supreme Court of India. The Court examined whether the amended Section 129E of the Customs Act, 1962, which mandates a pre-deposit of a certain percentage of the disputed amount for appeals, would apply to cases where the alleged offense took place before the amendment but the appeal was filed after the amendment came into effect. The bench, comprising Justices K.M. Joseph and Hrishikesh Roy, delivered the judgment.
Case Background
The appellant, Chandra Sekhar Jha, was intercepted while traveling on a train. He was allegedly carrying gold that had been smuggled into India from Bangladesh. The Commissioner of Customs (Preventive), West Bengal, Kolkata, issued an order imposing a penalty of Rs. 75 lakhs on the appellant. Another individual involved was also penalized. Both parties filed appeals before the Customs, Excise and Service Tax Appellate Tribunal, Kolkata, in 2017. The Tribunal dismissed the appellant’s appeal for non-compliance with the pre-deposit requirement under Section 129E of the Customs Act, 1962. The appellant then challenged this order before the High Court, which upheld the Tribunal’s decision.
Timeline
| Date | Event |
|---|---|
| 28 February 2013 | Alleged incident of smuggling involving the appellant. |
| 2013 (Unspecified Date) | Commissioner of Customs (Preventive), West Bengal, Kolkata, passed a common order, imposing a penalty of Rs. 75 lakhs on the appellant. |
| 6 August 2014 | Section 129E of the Customs Act, 1962, was amended by Act 25 of 2014. |
| 23 November 2015 | Order passed by the Commissioner of Customs. |
| 2017 | Appeals filed by the appellant and the other person before the Customs, Excise and Service Tax Appellate Tribunal, Kolkata. |
| 2017 (Unspecified Date) | The Tribunal dismissed the appellant’s appeal for non-compliance with the pre-deposit requirement. |
| Unspecified Date | The High Court upheld the Tribunal’s order. |
| 28 February 2022 | Supreme Court of India delivered the judgment. |
Arguments
The appellant’s counsel argued that the case should be governed by Section 129E of the Customs Act, 1962, as it existed before the amendment by Act 25 of 2014. The incident occurred on 28 February 2013, while the amendment came into effect on 6 August 2014. The appellant contended that under the old Section 129E, the appellate authority had the discretion to waive the pre-deposit requirement, especially if it caused undue hardship. The appellant argued that the amount of pre-deposit was harsh and onerous.
The Supreme Court considered the legislative intent behind the amendment of Section 129E. The Court noted that the amendment aimed to bring about a significant change by reducing the pre-deposit amount to a fixed percentage (7.5% or 10% depending on the case) of the disputed amount, instead of the full amount as required under the old provision. The Court also observed that the discretion to waive the pre-deposit, available under the old provision, was removed by the amendment.
| Main Submission | Sub-Submissions |
|---|---|
| Appellant’s Argument: Applicability of old Section 129E |
✓ The incident occurred before the amendment of Section 129E. ✓ The old Section 129E allowed for discretion in pre-deposit requirements. ✓ The pre-deposit amount is harsh and onerous. |
| Court’s Consideration: Legislative Intent of Amended Section 129E |
✓ The amendment aimed to reduce the pre-deposit amount to a fixed percentage. ✓ The discretion to waive pre-deposit was removed by the amendment. ✓ The new provision applies to appeals filed after the amendment. |
Issues Framed by the Supreme Court
The primary issue before the Supreme Court was:
- Whether the pre-deposit requirement under Section 129E of the Customs Act, 1962, as amended by Act 25 of 2014, applies to cases where the incident occurred before the amendment but the appeal was filed after the amendment came into effect.
Treatment of the Issue by the Court
| Issue | Court’s Decision | Reason |
|---|---|---|
| Whether the amended Section 129E applies to the appellant | Yes, the amended Section 129E applies. | The appeal was filed after the substitution of Section 129E, making the amended provision applicable. The legislative intent was to reduce the pre-deposit amount while removing the discretionary power to waive it. |
Authorities
The Court considered the following authorities:
| Authority | Court | How it was Considered | Legal Point |
|---|---|---|---|
| Section 129E of the Customs Act, 1962 (before substitution by Act 25 of 2014) | Parliament | Explained the pre-deposit requirement and discretionary power of the appellate body. | Pre-deposit requirement before the amendment. |
| Section 129E of the Customs Act, 1962 (after substitution by Act 25 of 2014) | Parliament | Explained the fixed percentage pre-deposit requirement and removal of discretionary power. | Pre-deposit requirement after the amendment. |
| Benara Valves Ltd. and others vs. Commissioner of Central Excise and another, (2006) 13 SCC 347 | Supreme Court of India | Discussed the concept of “undue hardship” in the context of pre-deposit requirements. | Meaning of undue hardship. |
Judgment
| Submission by the Parties | How it was treated by the Court |
|---|---|
| The appellant should be governed by Section 129E as it stood before the amendment, allowing for discretion in pre-deposit. | Rejected. The court held that the amended Section 129E applies as the appeal was filed after the amendment. The legislative intent was to reduce the pre-deposit amount and remove the discretionary power. |
The Court held that the amended Section 129E applies to the appellant’s case. The Court noted that the substitution of Section 129E resulted in the repeal of the old provision and its replacement with the new one. The Court stated that the appellant could not claim the benefit of the discretionary power available under the old provision while also benefiting from the reduced pre-deposit amount under the amended provision.
The Court observed that the legislative intent behind the amendment was to reduce the pre-deposit amount to a fixed percentage and to remove the discretionary power of the appellate body to waive the pre-deposit. The court also noted that the second proviso to the amended Section 129E clarifies that the amended provision would not apply to stay applications and appeals pending before any Appellate Authority prior to the commencement of the Finance (No. 2) Act, 2014.
The Court quoted from the judgment in *Benara Valves Ltd. and others vs. Commissioner of Central Excise and another, (2006) 13 SCC 347*, regarding the meaning of “undue hardship”:
“For a hardship to be “undue” it must be shown that the particular burden to observe or perform the requirement is out of proportion to the nature of the requirement itself, and the benefit which the applicant would derive from compliance with it.”
| Authority | How it was viewed by the Court |
|---|---|
| Section 129E of the Customs Act, 1962 (before substitution) | The Court acknowledged the old provision, but held that it was repealed by the amendment and the discretionary power under it could not be availed by the appellant. |
| Section 129E of the Customs Act, 1962 (after substitution) | The Court applied the amended provision, noting the legislative intent to reduce the pre-deposit amount and remove discretionary power. |
| Benara Valves Ltd. and others vs. Commissioner of Central Excise and another, (2006) 13 SCC 347 | The Court referred to this case to define “undue hardship,” but did not find the appellant’s case to qualify as such. |
What weighed in the mind of the Court?
The Court’s decision was primarily influenced by the legislative intent behind the amendment of Section 129E of the Customs Act, 1962. The Court emphasized that the amendment aimed to reduce the pre-deposit amount while removing the discretion to waive it. The Court also noted that the appellant could not claim the benefit of both the old and new provisions. The Court’s reasoning was based on the principle that a substituted provision repeals the old one, and the new provision applies to cases where the appeal is filed after the amendment.
| Reason | Percentage |
|---|---|
| Legislative intent behind the amendment | 40% |
| Repeal of old provision by substitution | 30% |
| Appellant cannot claim benefit of both old and new provisions | 30% |
| Category | Percentage |
|---|---|
| Fact | 30% |
| Law | 70% |
Logical Reasoning
Key Takeaways
- The amended Section 129E of the Customs Act, 1962, applies to appeals filed after the amendment came into effect, even if the incident occurred before the amendment.
- The discretionary power to waive the pre-deposit requirement under the old Section 129E is no longer available.
- Appellants cannot claim the benefit of the reduced pre-deposit amount under the amended provision while simultaneously seeking the discretionary power under the old provision.
- The legislative intent behind the amendment was to reduce the pre-deposit amount and to remove the discretionary power of the appellate body.
Directions
The Supreme Court extended the period for complying with Section 129E by two months from the date of the judgment.
Development of Law
The ratio decidendi of the case is that the amended Section 129E of the Customs Act, 1962, applies to appeals filed after the amendment came into effect, even if the incident occurred before the amendment. This clarifies that the new pre-deposit requirements are to be followed in such cases, and the old discretionary powers cannot be availed.
Conclusion
The Supreme Court dismissed the appeal, subject to the appellant complying with the pre-deposit requirement under the amended Section 129E of the Customs Act, 1962, within two months. The Court clarified that the amended provision applies to appeals filed after the amendment, even if the incident occurred before. The judgment reinforces the legislative intent behind the amendment, which aimed to reduce the pre-deposit amount while removing the discretionary power of the appellate body to waive it.