- 1 - HC-KAR NC: 2026:KHC:8136-DB WA No. 1987 of 2025 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 9TH DAY OF FEBRUARY, 2026 PRESENT THE HON'BLE MR. JUSTICE S.G.PANDIT AND THE HON'BLE MR. JUSTICE K. V. ARAVIND WRIT APPEAL No. 1987 OF 2025 (T-CUS) BETWEEN: 1. M/S PARISONS FOODS PRIVATE LIMITED, INCORPORATION UNDER SECTION 16(2) OF COMPANIES ACT, 1956, 6/1183, KINHIPARI BUILDING, CHEROOTTY ROAD, KOZHIKODE, KERALA 673032. REPTD. BY ITS DIRECTOR MR. N.K. KHALID. …APPELLANT (BY SRI PRABHULING NAVADAGI, SENIOR ADVOCATE FOR SMT. SANJEEVINI PRABHULING NAVADGI, ADVOCATE) AND: 1. THE COMMISSIONER OF CUSTOMS, OFFICE OF THE COMMISSIONER OF CUSTOMS, NEW CUSTOMS HOUSE, PANAMBUR, MANGALURU 575 010. 2. THE CUSTOMS EXCISE AND SERVICE TAX APPELLATE TRIBUNAL (CETSAT), WTC, 1ST FLOOR, FKCCI COMPLEX, K.G. ROAD,BANGALORE 560 009. …RESPONDENTS (BY SRI. ARAVIND V CHAVAN, SENIOR STANDING COUNSEL) Digitally signed by VINUTHA B S Location: High Court of Karnataka - 2 - HC-KAR NC: 2026:KHC:8136-DB WA No. 1987 of 2025 THIS WRIT APPEAL IS FILED UNDER SECTION 4 OF THE KARNATAKA HIGH COURT ACT PRAYING TO ALLOW THE WRIT APPEAL AND SET ASIDE THE ORDER DATED 07/11/2025 PASSED BY THE LEARNED SINGLE JUDGE IN WP No.13082/2025 DISMISSING THE WRIT PETITION. THIS APPEAL, COMING ON FOR PRELIMINARY HEARING, 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 K. V. ARAVIND) Heard Sri Prabhuling Navadgi, learned Senior Counsel for Smt. Sanjeevini Prabhuling Navadgi, learned counsel for the appellant-Assessee and Sri Aravind V. Chavan, learned Senior Standing Counsel for the respondents-Revenue. 2. The writ petitioner has preferred this intra-Court appeal under Section 4 of the High Court Act, assailing the judgment dated 07.11.2025 passed in W.P. No. 13082/2025. 3. The brief facts, as pleaded, are that the appellant is engaged in the business of refining edible oils. Respondent No.1, by order dated 27.01.2025, determined the customs duty, interest and penalty under various provisions of the - 3 - HC-KAR NC: 2026:KHC:8136-DB WA No. 1987 of 2025 Customs Act, 1962 (for short, “the Act”). Aggrieved by the said order, the appellant preferred statutory appeal before the Customs, Excise and Service Tax Appellate Tribunal, Bengaluru (for short, “the CESTAT”). Section 129E(ii) of the Act mandates a pre-deposit of 7.5% of the duty demanded or the duty and penalty in dispute, subject to a maximum of rupees ten Crore. 3.1 The appellant raised various contentions questioning the correctness of the determination of liability and sought a direction to the CESTAT not to insist upon the statutory pre- deposit for entertaining and deciding the appeal. The learned Single Judge rejected the said prayer. 4. Sri Prabhuling Navadgi, learned Senior Counsel appearing for Smt. Sanjeevini Prabhuling Navadgi, learned counsel for the appellant–assessee, submits that the demand has been determined on an erroneous interpretation of the exemption notification granting exemption from customs duty. 4.1 It is further submitted that the appellant’s business has suffered adverse market conditions and, on account of a substantial downturn, the appellant is presently facing financial - 4 - HC-KAR NC: 2026:KHC:8136-DB WA No. 1987 of 2025 constraints. In the aforesaid circumstances, it is contended that the requirement of pre-deposit of 7.5% of the duty demanded, subject to a ceiling of rupees ten Crore, deserves to be waived and that CESTAT be directed to adjudicate the appeal on merits without insisting upon such pre-deposit. 4.2 It is also urged that, if the CESTAT is permitted to consider the appeal on merits, the appellant has a prima facie case to demonstrate that the entire transaction is exempt from customs duty, thereby nullifying the demand raised against it. 4.3 Without prejudice to the aforesaid contentions, the learned Senior Counsel submits that, having regard to the prevailing market conditions affecting the product in which the appellant is engaged and the present financial constraints faced by the appellant, this Court may grant reasonable installments for making the requisite pre-deposit, so as to enable the appellant to pursue the statutory appeal before CESTAT. 5. Per contra, Sri Aravind V. Chavan, learned Senior Standing Counsel appearing for the respondents, submits that the pre-deposit contemplated under Section 129E of the Act, as - 5 - HC-KAR NC: 2026:KHC:8136-DB WA No. 1987 of 2025 a condition precedent for entertaining an appeal before CESTAT, is mandatory in nature. It is contended that the Tribunal is not vested with any discretion to waive or relax the said requirement. 5.1 It is further submitted that, prior to the amendment, the requirement was to deposit the entire amount of duty demanded. Having regard to the hardship likely to be caused to assessees, the legislature has reduced the pre-deposit to 7.5% of the disputed duty or penalty, subject to a ceiling of rupees Ten Crore. 5.2 It is pointed out that the total demand raised against the appellant exceeds Rs.425.00 Crore. In such circumstances, it is contended that an assessee having such substantial turnover cannot be heard to plead financial hardship. It is also submitted that, in the event the appellant succeeds in the appeal, the pre- deposit made would be liable to be refunded in accordance with law. 6. We have considered the submissions made on either side and perused the appeal papers. - 6 - HC-KAR NC: 2026:KHC:8136-DB WA No. 1987 of 2025 7. The appellant is aggrieved by the order dated 27.01.2025 determining the customs duty, penalty and interest. Section 129 of the Act provides for an appeal to CESTAT. Section 129E(ii) of the Act mandates a pre-deposit of 7.5% of the duty and penalty demanded as a condition precedent for filing the appeal, and requires that proof of such deposit, in the form of the relevant challan, be produced along with the appeal memorandum. "129E. Deposit of certain percentage of duty demanded or penalty imposed before filing appeal.—The Tribunal or the Commissioner (Appeals), as the case may be, shall not entertain any appeal,— (i) under sub-section (1) of section 128, unless the appellant has deposited seven and a half per cent. of the duty in case where duty or duty and penalty are in dispute, or penalty, where such penalty is in dispute, in pursuance of a decision or an order passed by an officer of customs lower in rank than the Commissioner of Customs; (ii) against the decision or order referred to in clause (a) of sub-section (1) of section 129A, unless the appellant has deposited seven and a half per - 7 - HC-KAR NC: 2026:KHC:8136-DB WA No. 1987 of 2025 cent. of the duty, in case where duty or duty and penalty are in dispute, or penalty, where such penalty is in dispute, in pursuance of the decision or order appealed against; (iii) against the decision or order referred to in clause (b) of sub-section (1) of section 129A, unless the appellant has deposited ten per cent. of the duty, in case where duty or duty and penalty are in dispute, or penalty, where such penalty is in dispute, in pursuance of the decision or order appealed against: Provided that the amount required to be deposited under this section shall not exceed rupees ten Crore: Provided further that the provisions of this section shall not apply to the stay applications and appeals pending before any appellate authority prior to the commencement of the Finance (No.2) Act, 2014." 7.1 On a plain reading of the aforesaid provisions, it can be found that the requirement of pre-deposit is mandatory in nature. The CESTAT would assume jurisdiction to entertain the appeal only upon compliance with the condition of such deposit. The right of appeal is a creature of statute and is subject to - 8 - HC-KAR NC: 2026:KHC:8136-DB WA No. 1987 of 2025 compliance with the conditions prescribed therein, including the requirement of pre-deposit of the disputed amount. 7.2 When the appellant–assessee pleads financial hardship in complying with the statutory pre-condition for availing the right of appeal, such right cannot be rendered nugatory solely on account of inability to make immediate compliance. At the same time, the statutory mandate cannot be lightly ignored. This Court, in exercise of its jurisdiction under Article 226 of the Constitution of India, may, in appropriate cases, interfere to strike a balance by permitting the assessee to avail the statutory remedy of appeal while ensuring substantial compliance with the requisite condition. If such balance is not maintained, the statutory right of appeal would become illusory. 8. In the course of hearing, the learned Senior Counsel has filed a memo dated 09.02.2026, proposing to deposit the requisite pre-deposit in installments. Having regard to the statutory right of appeal available to the appellant and, at the same time, bearing in mind the need to safeguard the interests of the Revenue, we are inclined to accede to the request for - 9 - HC-KAR NC: 2026:KHC:8136-DB WA No. 1987 of 2025 permitting payment of the pre-deposit of Rs.10.00 Crore in installments before the CESTAT. 9. Accordingly, we pass the following: Order (i) The appeal is disposed of. (ii) The order dated 07.11.2025 in WP No.13082/2025 is set aside. (iii) CESTAT is directed to entertain the appeal upon the appellant depositing a sum of Rs.2.00 Crore on or before 26.02.2026, which is the next date fixed by the CESTAT in the appellant’s appeal. (iv) A further sum of Rs.3.00 Crore shall be deposited within three months thereafter. (v) The remaining sum of Rs.5.00 Crore shall be deposited within a further period of three months thereafter. (vi) Pending payment of the entire sum of Rs.10.00 Crore, as indicated hereinabove, the CESTAT shall proceed with the appeal in accordance with law. - 10 - HC-KAR NC: 2026:KHC:8136-DB WA No. 1987 of 2025 (vii) It is made clear that the CESTAT shall pronounce the final order in the appeal only upon deposit of the entire sum of Rs.10.00 Crore, as indicated above. Save as aforesaid, this Court has not expressed any opinion on the merits of the case. Pending I.As., if any, stand disposed of. Sd/- (S.G.PANDIT) JUDGE Sd/- (K. V. ARAVIND) JUDGE MV List No.: 1 Sl No.: 35