- 1 - HC-KAR NC: 2025:KHC:30224-DB CSTA No. 7 of 2018 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 5TH DAY OF AUGUST, 2025 PRESENT THE HON'BLE MR. JUSTICE S.G.PANDIT AND THE HON'BLE MR. JUSTICE K. V. ARAVIND CUSTOMS APPEAL No. 7 OF 2018 BETWEEN: 1. SHRI EDWARD GEORGE, AGED 42 YEARS, GOPURATHINKAL HOUSE, KODER LINE, ALUVA - 683101. …APPELLANT (BY SRI CHANDRASHEKARA K., ADVOCATE) AND: 1. COMMISSIONER OF CUSTOMS, NEW CUSTOMS HOUSE, PANAMBUR, MANGALORE - 575010. …RESPONDENT (BY SRI MADHU N. RAO, ADVOCATE) THIS CUSTOMS APPEAL (CSTA) IS FILED UNDER SECTION 130 OF THE CUSTOMS ACT,1962 PRAYING TO HEAR THE APPEAL OR ANY OTHER SUBSTANTIAL QUESTION OF LAW NOT FORMULATED, IF IT IS SATISFIED THAT THE CASE INVOLVES SUCH QUESTIONS OF LAW REFERRED TO IN PARAGRAPH (8) ABOVE AND SET ASIDE THE FINAL ORDER NO. 20484/2018 DATED 07.02.2018 PASSED BY THE HON'BLE Digitally signed by VALLI MARIMUTHU Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2025:KHC:30224-DB CSTA No. 7 of 2018 CUSTOMS, EXCISE AND SERV23133/2014 IN C.APPEAL No.22707/2014-SM. THIS APPEAL COMING ON FOR ADMISSION THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE S.G.PANDIT and HON'BLE MR. JUSTICE K. V. ARAVIND ORAL JUDGMENT (PER: HON'BLE MR. JUSTICE S.G.PANDIT) This appeal filed under Section 130 of the Customs Act, 1962 is directed against the order dated 07.02.2018 passed by the Customs, Excise & Service Tax Appellate Tribunal (for short 'CESTAT') in Final Order No.20484/2018 rejecting the appeal filed by the appellant on his failure to deposit 7.5% of penalty as a condition precedent to prefer the appeal. 2. Heard Sri. K. Chandrashekara, learned counsel for the appellant and Sri. Madhu N. Rao, learned counsel for respondent. Perused the entire appeal papers. 3. Learned counsel for the appellant would submit that a search was conducted on 23.10.2012 and - 3 - HC-KAR NC: 2025:KHC:30224-DB CSTA No. 7 of 2018 in-pursuance of the search, show-cause notice dated 09.04.2013 was issued. Thereafter, the adjudicating authority passed order on 31.01.2014 confiscating the goods and also imposing penalty, against which, the appellant is said to have filed an appeal before the CESTAT. 4. The said appeal was filed on 07.08.2014 and in terms of Section 129E of the Customs Act, 1962 (for short '1962 Act'), the appellant was required to deposit 7.5% of the duty or penalty imposed or both. However, it is a fact that the appellant without pre-deposit preferred the appeal. The CESTAT under the impugned order dismissed the appeal for the failure of the appellant to make pre- deposit in terms of Section 129E of 1962 Act. Aggrieved by the order of the CESTAT, the appellant is in appeal. 5. Learned counsel for the appellant would contend that Section 129E of 1962 Act was amended by - 4 - HC-KAR NC: 2025:KHC:30224-DB CSTA No. 7 of 2018 Finance Act (25 of 2014) i.e., by Notification dated 06.08.2014. The appeal was filed on 07.08.2014. 6. It is the specific contention of the appellant that proceedings against the appellant was commenced as on the date of show-cause notice dated 09.04.2013. It is submitted that the law as stood on the date of commencement of the proceedings would be applicable to the appeal filed by the appellant. It is submitted that as on the date of commencement of the proceedings, the appellate authority had the power to waive the pre-deposit on an application filed by the appellant. It is his submission that amended provision of Section 129E would have no application to the facts of the present case and in particular to the appellant since the proceedings had commenced prior to the amendment. 7. Per contra, Sri. Madhu N. Rao, learned counsel for the respondent would support the order passed by the CESTAT and further contends that Section 129E was - 5 - HC-KAR NC: 2025:KHC:30224-DB CSTA No. 7 of 2018 amended and the same had come into effect prior to the appeal filed by the appellant. Therefore, he submits that the law as on the date of exercise of right to appeal would apply to the appellant and as such, the appellant was required to make pre-deposit in-terms of amended Section 129E of 1962 Act. 8. Learned counsel Sri. Madhu N. Rao also places reliance on the decision of the Hon'ble Apex Court in Civil Appeal No.1566/2022, decided on 28.02.2022, wherein the amended provision of Section 129E was considered and similar contention was rejected. Thus, learned counsel would pray for dismissal of the appeal. 9. The above appeal was admitted for hearing to consider the following substantial questions of law; "(a) Whether the Tribunal was right in Law to have directed pre-deposit of 7.5% or 10% as per the provisions of Section 129E of the Customs Act, which is a new provisions has come into existence from 6.8.2014. (b) Whether the Hon'ble Tribunal was right in Law to dismiss the Appeal when the lis was already in existence prior thereto. - 6 - HC-KAR NC: 2025:KHC:30224-DB CSTA No. 7 of 2018 (c) Whether the Hon'ble Tribunal was right in rejecting the Appeal when the Appellant has got a good case on merits and the right of Appeal is a substantial right which cannot be denied on mere procedural matters." 10. Having heard the learned counsel for the parties and on perusal of the entire appeal papers, we are of the considered view that the contention and the substantial questions of law raised by the appellant is answered by the Hon'ble Apex Court in the case of Chandra Shekar Jha Vs. Union of India and Another reported in Civil Appeal No.1566/2022 decided on 28.02.2022. The Hon'ble Apex Court has considered an identical fact situation and also amended Section 129E of 1962 Act. Paragraph Nos.5 to 10 of the above decision reads as follows: "5. The specific argument of the learned counsel for the appellant is that in the case of the appellant in view of the fact that the act relates to the year 2013 (namely, on 28-2-2013), the appellant must be governed by Section 129-E prior to the substitution. This is for the reason that the substitution of Section 129-E was effected on 6-8-2014 which is after the date of the incident (28-2-2013). On the basis of the same, it is contended that under Section 129-E, as it stood, prior to the substitution there was a power available with the appellate authority in the matter of demand of pre- - 7 - HC-KAR NC: 2025:KHC:30224-DB CSTA No. 7 of 2018 deposit. He would point out that the amount for pre- deposit in his case is harsh and onerous. 6. On a conspectus of the provisions of Section 129-E before and after the substitution, it becomes clear that the lawgiver has intended to bring about a sweeping change from the previous regime and usher in a new era, under which the amount to be deposited was scaled down and pegged at a certain percentage of the amount in dispute. In other words, while under Section 129-E, as it stood prior to the substitution, the appellant was to deposit the duty and the interest demanded or the penalty levied, in the present regime, the appeal is maintainable upon the appellant depositing seven-and- a-half per cent of the amount. Under the earlier regime, in other words the entire amount which was in dispute had to be deposited. Under the earlier avatar of Section 129-E, the lawgiver also clothed the appellate body with power as contained in the first proviso. The first proviso provided the Commissioner (Appeals) or as the case may be, Appellate Tribunal the power to dispense with such deposit, subject to conditions as he deemed fit to impose to safeguard the interest of the Revenue. 7. The question whether it is undue hardship has been the subject-matter of the judgment of this Court in Benara Valves Ltd. v. CCE [Benara Valves Ltd. v. CCE, (2006) 13 SCC 347] , wherein it, inter alia, held as follow : (SCC p. 352, para 13) “13. 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.” 8. It is in sharp departure from the previous regime that the new provision has been enacted. Under the new regime, on the one hand, the amount to be deposited to maintain the appeal has been reduced from 100% to 7.5% but the discretion which was made available to - 8 - HC-KAR NC: 2025:KHC:30224-DB CSTA No. 7 of 2018 the appellate body to scale down the pre-deposit has been taken away. 9. The first proviso of Section 129-E of the present section enacts a limitation on the total amount which can be demanded by way of pre-deposit. The first proviso provides that the amount required to be deposited should not exceed Rs 10 crores. In this regard, the lawgiver has purported to grant relief to an appellant. The second proviso contemplates that Section 129-E as substituted would not apply to stay applications and appeals which are pending before the appellate authority prior to the commencement of the Finance Act (No. 2) of 2014. The amended provision, as we have already noticed has come into force from 6-8- 2014. Therefore, in regard to stay applications and appeals which were pending before any appellate authority prior to commencement of the Finance Act (No. 2) of 2014, Section 129-E as substituted would not apply. Substitution of a provision results in repeal of the earlier provision and its replacement by the new provision. [See in this regard, a discussion in Justice G.P. Singh, Principles on Statutory Interpretation (12th Edn.) p. 676.] 10. As far as the argument of the appellant that for the reason that the incident which triggered the appeal filed by the appellant took place in the year 2013, the appellant must be given the benefit of the power available under the substituted provision, it does not appeal to us. The substitution has effected a repeal and it has re-enacted the provision as it is contained in Section 129-E. In fact, the acceptance of the argument would involve a dichotomy in law. On the one hand, what the appellant is called upon to pay is not the full amount as is contemplated in Section 129-E before the substitution. The order passed by the Commissioner is dated 23-11-2015 which is after the substitution of Section 129-E. The appellant filed the appeal in 2017. What the appellant is called upon to pay is the amount in terms of Section 129-E after the substitution, namely, the far lesser amount in terms of the fixed percentage - 9 - HC-KAR NC: 2025:KHC:30224-DB CSTA No. 7 of 2018 as provided in Section 129-E. The appellant, however, would wish to have the benefit of the proviso which, in fact, appropriately would apply only to a case where the appellant is maintaining the appeal and he is called upon to pay the full amount under Section 129-E under the earlier avtar." 11. The Hon'ble Apex Court has rejected similar contention that the law as applicable prior to the amended provision would be applicable to the proceedings which has already commenced prior to the amended provision of Section 129E of 1962 Act. 12. To the Court query as to whether the appellant is ready to deposit the amount as required under Section 129E of 1962 Act so as to direct the Tribunal to consider the appeal filed by the appellant, the counsel for the appellant, on instruction, submits that the appellant is not in a position to make the pre-deposit. 13. In the above circumstances, as the appellant is not ready to pre-deposit the amount even today, the question of directing the CESTAT to consider the appeal on merit would not arise. - 10 - HC-KAR NC: 2025:KHC:30224-DB CSTA No. 7 of 2018 14. Thus, we do not find any merit in the appeal and accordingly, appeal stands rejected. Sd/- (S.G.PANDIT) JUDGE Sd/- (K. V. ARAVIND) JUDGE VBS List No.: 1 Sl No.: 35