A Bench comprising Justices K.M. Joseph and Hrishikesh Roy in the case of Chander Sekhar Jha v. Union of India and Anr. (Civil Appeal No. 1566 of 2022), dismissed an appeal assailing the order of the Calcutta High Court, which endorsed the decision of the Customs, Excise and Service Tax Appellate Tribunal, Kolkata to dismiss the appeal emanating from the penalty imposed by the Commissioner of Customs (Preventive) West Bengal, Kolkata, for not making the pre-deposit as per the present Section 129E of the Customs Act, 1962.

The allegation against the Appellant is that, the Appellant smuggled gold into India from Bangladesh. The Commissioner of Customs (Preventive) West Bengal, Kolkata passed an order imposing a penalty of Rs. 75 lakhs.

An appeal was preferred before the Customs, Excise and Service Tax Appellate Tribunal, Kolkata, which was dismissed in 2017 on the ground that the pre-deposit was not made by the appellant. The High Court upheld the order of the Appellate Tribunal.

The Court noted that under the old regime the appellant was to deposit the full amount of the penalty levied, which has been scaled down and only 7.5% of the amount needs to be deposited now. However, in the earlier regime the Appellate Tribunal had the power to dispense with the deposit subject to imposing conditions as it deemed fit to safeguard interest of the revenue. It further observed that as per second proviso to the present Section 129E, the mandate of the pre-deposit would not be applicable to the stay applications and appeal which were pending before the Appellate Tribunal prior to 06.08.2014, when the provision came into effect. In the present case, the Court noted, the Commissioner passed the order on 23.11.2015 and the appeal was filed in 2017 - both after the new provision came into effect, in essence, repealing the older Section 129E.

In view of the same, the Court was of the opinion that the benefit of the proviso in the old provision could not be extended to the appellant who had filed the appeal after the new regime came into effect. Moreover, the amount asked to be deposited was 7.5% of the entire penalty imposed, which goes on to show that the intention was to treat the appellant's case under the new Section 129E as opposed to the older version which required depositing the entire amount.

The Supreme Court has therefore, held that the benefit of the first proviso to Section 129E of the Customs Act, 1962 before substitution, whereby the Appellate Tribunal was vested with the power to dispense with the deposit of the penalty amount to be made during the pendency of appeal, could not be extended to the appellants who had filed appeal after the provision was substituted by the new Section 129E that came into effect on 06.08.2014. The Apex Court stated that the substitution of a provision results in repeal of the older provision and replacement by the new provision.

By - C. George Thomas