CUSAA/121/2025 of M/S TECMAX ELECTRONICS Vs THE PRINCIPAL COMMISSIONER OF CUSTOMS (IMPORT)

$~50*IN THE HIGH COURT OF DELHI AT NEW DELHI

Date of Decision: 28[th]August, 2025

+CUSAA 121/2025 & CM APPL. 53805/2025

M/S TECMAX ELECTRONICS.....AppellantThrough:Ms. Vidushi Shubham & Mr. MayankSharma, Advs. ([REDACTED])versus

THE PRINCIPAL COMMISSIONER OF CUSTOMS

(IMPORT).....RespondentThrough:Mr. Shubham Tyagi, SSC, CBIC withMs.NavrutiOjha,Mr.RishabhChauhan & Mr. Harish Saini, Advs.([REDACTED])

CORAM:JUSTICE PRATHIBA M. SINGHJUSTICE SHAIL JAIN

Prathiba M. Singh J.

JUDGMENT

1.This hearing has been done through hybrid mode.

2.This is an appeal under Section 130 of the Customs Act, 1962, interalia, challenging the impugned order dated 7th January, 2025 passed by theCentral Excise and Service Tax Appellate Tribunal (hereinafter “CESTAT”)by which the appeal of the Appellant has been rejected on the ground that thepre-deposit has not been made by the Appellant.Factual Background

3.The brief facts of the case are that during the relevant period between2017 and 2018 the Petitioner had filed seven Bills of Entry for import of LEDTVs and three Bills of Entry for import of brass ceramic cartridges. It is stated

that the said Bills of Entry were assessed and cleared by the CustomsDepartment. However, in respect of another Bill of Entry 3rd May, 2018importing LED TV, the Petitioner is stated to have inadvertently classified thesame as spare parts. The same were reassessed and pursuant to the sameinvestigation was conducted on the ground of under-valuation and under-declaration of the imported goods.

4.In respect of the said investigation Show Cause Notice dated 4thOctober, 2022 was issued to the Petitioner and pursuant to the same the Order-in-Original came to be passed on 29th September, 2023. Vide the said orderthe Department has rejected the declared value of the imported goods, raiseddifferential duty and imposed penalty on the Petitioner. The relevant portionof the said order reads as under:

“ORDER

(i)I reject the declared Value of Rs.3,80,57,935/-(Rupees Three Crore Eighty Lakh Fifty SevenThousand Nine Hundred and Thirty Five only) in thesaid 10 (7+3) Bills of Entry, as mentioned inAnnexure-A and to the SCN, under Rule 12(1) ofthe CVR, 2007 and re-determined the assessablevalue as Rs.10,85,27,483/- (Rupees Ten Lakh EightyFiveThousandTwentySevenThousandFourHundred and Eighty Three only) under Rule 5 ofCVR, 2007 read with Section 14 of the Act;

(ii)I determine the differential duty amountingto Rs.3,18,48,890/- (Rupees Three Crores EighteenLakhs Forty Eight Thousand Eight Hundred andNinetyonly),asdetailedinAnnexure-AandAnnexure-B of the SCN, under Section 28(8) of theCustoms Act, 1962 and the same is recoverable fromM/s Tecmax Electronic along with applicable interestthereon under Section 28AA of the Customs Act,

(iii)IimposedPenaltyofRs.3,18,48,890/-(Rupees Three Crores Eighteen Lakhs Forty EightThousand Eight Hundred and Ninety only), upon M/sTecmax Electronic under Sections 114A of theCustoms Act. 1962 as explained in para 5.9.4 above.The Noticee will be entitled to get the benefit ofreduced penalty as provided in Section 114A ofCustoms Act, 1962;

(iv)IimposedPenaltyofRs,70,00,000/-(Rupees Seventy Lakhs only), upon M/s TecmaxElectronic under Sections 114AA of the Customs Act.1962 as explained in paras 5.9.5 to 5.9.7 above.”

5.The said order was challenged by the Petitioner before CESTAT on 3rdMay, 2024 and vide the impugned order the appeal of the Petitioner has beendismissed as under:

“On 11.09.2024, the learned counsel has sought twomonths time to make the pre deposit which was grantedand the matter i was listed on 12.11.2024, further, onceagain, request was made to grant two months time andthe matter was directed to be listed on 07.01.2025. Inthe order dated 12.11.2024, it was mentioned that inthe event the deposit is not made the Bench may passthe I appropriate order. Today, the learned counselsubmits that they have approached the High Court bye-filing. However, as on today, there is no order by theHigh Court in favour of the appellant.

2.Weareconstrainedtopasstheorder,dismissing the present appeal for not making the predeposit. The appeal, is. accordingly I dismissed.”

6.Aggrieved by the impugned order of CESTAT the Petitioner haspreferred the present appeal.Submissions of the Parties

7.Ld. Counsel for the Appellant submits that the total demand raisedagainst the Appellant i.e., Rs. 7,06,96,980/- vide the Order-in-Original dated29th September, 2022 is substantial amount and the Appellant does not havethe financial capacity to pay the 7.5% of the said demand and penalty as pre-deposit. It is stated that the Petitioner’s business is facing severe financialhardships and is burdened with several loans which were taken when thebusiness was in good health. Hence, it is prayed that the condition for pre-deposit be waived by this Court.

8.It is submitted by the ld. Counsel for the Department that it is now asettled position in law that the requirement of pre-deposit under Section 129Eof the Customs Act is mandatory requirement and the prayer for waiver ofthe same cannot be entertained by this Court. In support of this position theld. Counsel has relied upon the following decisions:

(i)Kantilal Bhaguji Mohite v. Commissioner, 2019 SCC OnLineBom 5547;

(ii)NK Sharma v. Assistant Commissioner, W.P. (C) 10353/2025[decided on 21st July, 2025];

(iii)Mark Splendour Nonwovens (P) Ltd. v. CCE, 2019 SCCOnLine Del 12502;

(iv)Diamond Entertainment Technologies (P) Ltd. v. Commr.(CGST), 2019 SCC OnLine Del 12414

9.It is noted that the aforesaid decisions have been passed in respect ofSection 35F of the Central Excise Act, 1944, which also has the mandatory

requirement of pre-deposit pari materia to the requirement under Section129E of the Customs Act.

10.On the other hand, ld. Counsel for the Petitioner relies upon Mohd.Akmam Uddin Ahmed v. Commr., 2023 SCC OnLIne (Del) 2450, whereinthe Co-ordinate Bench of this Court has held that the Court has the power toexercise discretion to waive the pre-deposit in rare and deserving cases whereclear justification is made out for interference.Analysis and Findings

11.The Court has heard the parties and perused the various decisions reliedupon by the parties. This issue of whether this Court has the discretion towaive of the mandatory pre-deposit under Section 129E of the Customs Act,1962 is no longer res integra in view of the consistent decisions passed by theSupreme Court and this Court.

12.In various judgments it has now been held that after the amendment ofSection 129E of the Customs Act, 1962 (hereinafter “the Act”) in 2014, thepre-deposit in terms of the said provision would have to be paid mandatorily.The said section as amended reads as under:

“129-E.Depositofcertainpercentageofdutydemanded or penalty imposed before filing appeal.—The Tribunal or the Commissioner (Appeals), as thecase may be,shall not entertain any appeal,—(i) under sub-section (1) of Section 128, unless theappellant has deposited seven and half per cent of theduty, in case where duty or duty and penalty are indispute, or penalty, where such penalty is in dispute, inpursuance of decision or an order passed by anofficer of customs lower in rank than the PrincipalCommissionerofCustomsorCommissionerofCustoms;

(ii)against the decision or order referred to in clause--(a) of subsection (1) of Section 129A, unless theappellant has deposited seven and half per cent ofthe duty, in case where duty or duty and penalty arein dispute, or penalty, where such penalty is indispute, in pursuance of the decision or orderappealed against;

(iii) against the decision or order referred to in clause(b) of sub-section (1) of Section 129-A, unless theappellant has deposited ten per cent of the duty, in casewhere duty or duty and penalty are in dispute, orpenalty, where such penalty is in dispute, in pursuanceof the decision or order appealed against:

Provided that the amount required to be depositedunder this section shall not exceed Rupees Ten crores:

Provided further that the provisions of this sectionshall not apply to the stay applications and appealspending before any appellate authority prior to thecommencement of the Finance (No. 2) Act, 2014 (25 of2014).”

13.In Diamond Entertainment Technologies (supra) the Court wasconsidering whether in cases where the show cause notice and the period ofdispute was prior to the date of amendment to Section 35F of the CentralExcise Act, 1944, the requirement of mandatory pre-deposit would beapplicable. The Court while relying on the decision of this Court in AnjaniTechnoplast Ltd. v. Commissioner of Customs, (2015) 326 ELT 472 (Del.)has held that in view of the words “shall not” used in amended Section 35Fof the Central Excise Act, 1944, there is an absolute bar on CESTAT fromentertaining the appeals without the pre-deposit. The relevant portion of the

said decision reads as under:

“12. In view of the above decisions, it can no longerlie in the mouth of any assessee, filing an appeal,before the CESTAT, after 6th August, 2014, to contendthat, merely because the period of dispute, in its case,or the date when show cause notice was issued to it,was prior, in point of time to the amendment of Section35F of the Central Excise Act/Section 129E of theCustoms Act, it would not be required to makemandatory pre-deposit, or that it was entitled to seekwaiver thereof, either in whole or in part.

13.Thought it may be argued that, this writ Court,in exercise of the inherent powers conferred on it byArticle 226 of the Constitution of India in appropriatecases, may allow the appellant to prosecute its appealbefore the CESTAT, without requiring to pay themandatory pre-deposit.

14. In Pioneer Corporation v. Union of India,(2016) 340 ELT 63, Shubh Impex v. Union of India,(2018) 361 ELT 199(Del) and Manoj Kumar Jha v.DRI, (2019) 365 ELT 166 (Del), this Court, even whiledealing with cases in which the appeal had been filedbeforetheCESTATafter6thAugust,2014,nevertheless, allowed the appeal to be prosecuted onpayment of partial pre-deposit, given the financialstringency in which the respective appellants, before it,were placed; reading of these decisions would reveal,that the attention of this Court had not been invited toits earlier judgment in Anjani Technoplast (supra)which set out, in clear and unambiguous terms, thatevery appeal, before the CESTAT, filed after theamendmentofSection35F/129Ewouldbemaintainable only if mandatory pre-deposit weremade.

15. The Civil Appeal, preferred against the saiddecision, also stood dismissed by the Supreme Court,as reported in Anjani Technoplast Ltd. v. CCE, (2017)348 ELT A132 (SC).

17. In view of the aforesaid merger, of the judgmentof the Division Bench of this Court in AnjaniTechnoplast (supra) with the order passed by theSupreme Court in appeal thereagainst, we are bound,by Article141of theConstitution of India, to follow thelaw laid down in Anjani Technoplast (supra), inpreference to that laid down in Pioneer Corporation(supra), Manoj Kumar Jha (supra) and Shubh Impex(supra).

18. In the opinion of this Court, once the judgmentin Anjani Technoplast (supra) stood merged with thedismissal of the Civil Appeal, preferred thereagainst,by the Supreme Court, there could be no question ofthis Court, in subsequent case, adopting view thatan appeal, preferred before the CESTAT after 6thAugust, 2014, could be maintained without pre-depositof the entire amount of duty confirmed against theconcerned appellant by the authority below.

20. reading of Section 35F of the Central ExciseAct reveals, by the usage of the peremptory words“shall not” therein, that there is an absolute bar onthe CESTAT entertaining any appeal, under Section35 of the said Act, unless the appellant has deposited7.5 % of the duty confirmed against it by the authoritybelow.

21. The two provisos in Section 35F relax the rigourof this command only in two respects, the first beingthat the amount to be deposited would not exceed Rs.

10 crores, and the second being that the requirement ofpre-deposit would not apply to stay applications orappeals pending before any authority before thecommencement of theFinance (No. 2) Act, 2014, i.e.before 6th August, 2014.

22.Allowing the CESTAT to entertain an appeal,preferred by an assessee after 6th August, 2014,would, therefore, amount to allowing the CESTAT toact in violation, not only of the main body of Section35F but also of the second proviso thereto, and wouldreduce the command of the legislature to dead letter.

23.InasmuchasthejudgmentinPioneerCorporation (supra), Shubh Impex (supra) and ManojKumar Jha (supra) are contrary to the law laid downin Anjani Technoplast (supra) as well as to the law laiddown in Vice-Chancellor, University of Allahabad v.Dr. Anand Prakash Mishra (supra), A.B. BhaskaraRao v. C.B.I. (supra), Manish Goel v. Rohini Goel(supra) and State of Bihar v. Arvind Kumar (supra),none of which have been noticed in the said decisions,it is not possible for us to follow the decisions inPioneer Corporation (supra), Shubh Impex (supra)and Manoj Kumar Jha(supra), on which learnedcounsel places reliance.”

14.Thus, in view of the above legal position, the pre-deposit under Section129E of the Act would also be mandatory and the CESTAT cannot entertainthe appeal without the pre-deposit.

15.It would be relevant to note that the Co-ordinate Bench of this Court inthe above decision has held that in exercise of the jurisdiction under Article226 of the Constitution of India, in appropriate cases the mandatory pre-deposit may be condoned. This position has also been noted by this Court in

Mohd. Akmam Uddin Ahmed (supra) wherein the Court was considering amatter where the valuation of the seized goods itself was held to be unjustifiedand no proper calculation was provided in support of the same. Further, afterconsidering the various judgements on the issue under considerationsincluding Diamond Entertainment Technologies (supra) and AnjaniTechnoplast Ltd. (supra), it was held that the Court has the power to exercisediscretion to waive of the mandatory pre-deposit in “rare and deservingcases”. The relevant position of the said decision reads as under:

“37. The decision of the Coordinate Bench of thisCourt in Diamond Entertainment case [DiamondEntertainment Technologies (P) Ltd. v. Commr.,CGST, 2019 SCC OnLine Del 12414 : (2019) 368ELT 579] , while refusing to permit the petitioner toprosecute its appeal before CESTAT without complying-with the conditions of the mandatory predeposit didnot, in fact, rule out that in exercise of its inherentpowers under Article 226 of the Constitution of India.It was held that the appellant may be allowed to-prosecute its appeal without the payment of the predeposit amount. Reliance is placed on para 11 of thisjudgment which reads as follows:

“11. Thought it may be argued that, this writ court,in exercise of the inherent powers conferred on it byArticle 226 of the Constitution of India in appropriatecases, may allow the appellant to prosecute its appealbefore the CESTAT, without requiring to pay themandatory pre-deposit….”

39. The judgments in Dish TV India Ltd. case [DishTV India Ltd. v. Union of India, 2020 SCC OnLine Del2580] , Diamond Entertainment case [DiamondEntertainment Technologies (P) Ltd. v. Commr.,

CGST, 2019 SCC OnLine Del 12414 : (2019) 368 ELT579] , Anjani Technoplast case [Anjani TechnoplastLtd. v. Commr. of Customs, 2015 SCC OnLine Del13070:(2015)326ELT472]andNimbusCommunications Ltd. case [Nimbus CommunicationsLtd. v. Commr. of Service Tax, 2016 SCC OnLine Bom6792] are distinguishable on facts as these judgmentswereprimarilyadjudicatingthefollowingtwoquestions of law:

(i) the issue of challenge to the constitutionalvalidity of Section 129-E of the Act and Section 35-F ofthe CE Act; and

(ii) whether the law as applicable pre-amendment(on or before 6-8-2014) in (i) above, would beapplicable in the circumstances where the infringingact or the lis occurred prior to the amendment.

41. Thus, an analysis of the conspectus of law asenunciated above gives clear understanding thatafter passing of the Amendment Act on 6-8-2014, theamended Section 129-E of the Act and also Section 35-F of the CE Act shall be applicable in those caseswhere the appeal has been filed after 6-8-2014.

42. However, as discussed above, the CoordinateBenches of this Court have exercised and, thus,preserved the power as available under Article 226 ofConstitution of India to either waive the pre-depositcondition or to grant the right to appeal subject to apart deposit or security. The power, albeit, has beenexercised only in rare and exceptional cases.

43. It was held by the Allahabad High Court, speakingthrough Dr D.Y. Chandrachud, Chief Justice (as HisLordship then was) in Ganesh Yadav case [GaneshYadav v. Union of India, 2015 SCC OnLine All 9174]

that:

“8. … Whether the writ jurisdiction under Article 226should be exercised, having due regard to thediscipline which has been laid down under Section 35-F of the Act, is separate matter altogether but it isimportant to note that the power under Section 226(sic: Article 226) has not been, as it cannot be,abridged.”

(emphasis supplied)”

66. The valuation of the goods seized, is also not interms of the prices as set forth in the Government ofAssam's agarwood policy. No proper calculation hasbeen made for the penalty levied. The penalty imposedon the petitioners has been imposed based on aprovisionalvaluation.Thepenaltyimposedistherefore without any legal basis and cannot besustained.

67. The principle enunciated in the judgments inPioneer Corpn. case [Pioneer Corpn. v. Union ofIndia, 2016 SCC OnLine Del 6758 : (2016) 340 ELT63] , Narender Yadav case [Narender Yadav v.Commr. of Customs, 2019 SCC OnLine Del 12415] ,Shubh Impex case [Shubh Impex v. Union of India,2018 SCC OnLine Del 8793] , Manoj Jha case [ManojKumar Jha v. DRI, (2019) 365 ELT 166] and GaneshYadav case [Ganesh Yadavv. Union of India, 2015SCC OnLine All 9174]is that the court has the power-to exercise discretion to waive requirement of predeposit of penalty in “rare and deserving cases”whereaclearjustificationismadeoutforinterference.In Narender Yadav case [NarenderYadav v. Commr. of Customs, 2019 SCC OnLine Del12415] , this Court had found that the order-in-original did not give any reasons for the penalty

imposedonthepetitionersandhence,wasunwarranted. In Shubh Impex case [Shubh Impex v.Union of India, 2018 SCC OnLine Del 8793] , the courtfoundthattheconditionofpre-depositwouldcompletely disable and paralyse the business of theappellant and given the financial condition andbackground of the appellant would suffer financialbreakdown and irreparable harm. In Manoj Jha case[Manoj Kumar Jha v. DRI, (2019) 365 ELT 166] it isheld that since the petitioner has very limited means todeposit any amounts, the relief to him is warranted.

68. Admittedly, the petitioners are poor daily wageearners who are unable to make challenge to theseizure and confiscation on account of the penaltyimposed on them. The aforegoing discussion on theprices and valuation of agarwood chips and agarwoodoil suggest, albeit, prima facie, that no propervaluation of the goods seized was carried out by therespondents.”

16.In view of the above, the law on this issue is now clear, that CESTATdoes not have the power to admit appeal without the pre-deposit, however,this Court in exercise of writ jurisdiction may waive the same in rarecircumstances, on case to case basis.

17.This Court is not inclined to grant waiver from pre-deposit in exerciseof writ jurisdiction since the present case, in the opinion of the Court, is not arare case necessitating interference.

18.However, since there is financial distress which is pleaded, theAppellant is permitted to pay the pre-deposit of Rs. 23,88,667/- within aperiod of six months with the CESTAT. If the said amount is deposited withinsix months, the appeal shall be restored to its original position.

19.The appeal is disposed of in the above terms. Pending applications, ifany, are also disposed of.

PRATHIBA M. SINGHJUDGE

AUGUST 28, 2025kk/msh

SHAIL JAINJUDGE