No Pre-Deposit Waiver In Crude Palmolein Imports Case Involving Penalty Of Nearly Rs. 417 Crore: Karnataka High Court

The Karnataka High Court has declined to grant relief to an edible oil importer seeking waiver of the mandatory pre-deposit required for filing an appeal before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) in a crude palmolein imports case involving penalty of nearly Rs. 417 crore. The bench of Justice M. Nagaprasanna has observed that the legislative mandate cannot be diluted to suit the convenience or inconvenience of a few. The concept of financial burden is inherently related. What may appear onerous to one may be trifling to another. “The pre-deposit does not operate as a stonewall denying access to justice, rather it represents a statutory discipline that applies to all the appellants. The statutes mandate endures, subsists and is unyielding, until the constitutional Courts deem fit to restrain its march,” the bench said. The petitioner is engaged in refining edible oils and regularly imports crude palm oil from Indonesia and Malaysia under the India–ASEAN Free Trade Agreement, claiming exemption from basic customs duty under Notification No. 48/2021-Customs while paying Agriculture Infrastructure and Development Cess (AIDC). Following Indonesia’s ban on crude palm oil exports in June 2022, the company began importing crude palmolein, claiming it to be a fraction or by-product of crude palm oil and eligible for the same duty exemption. Between June 2022 and January 2023, seven consignments of crude palmolein were imported through Mangaluru Port. The Directorate of Revenue Intelligence (DRI) conducted searches and investigations, taking the view that crude palmolein was distinct from crude palm oil and not covered under the exemption notification. Although test reports from the Food Safety and Standards Authority of India (FSSAI) confirmed the goods as crude palmolein “other than refined, bleached and deodorized,” customs authorities maintained that the exemption applied strictly to crude palm oil. A show cause notice was issued in January 2024 proposing a massive duty demand exceeding ₹488 crore. This culminated in an Order-in-Original dated January 27, 2025, confirming a differential customs duty demand of over ₹416 crore along with interest and penalties. The company filed an appeal before CESTAT against the adjudication order. However, under Section 129E(ii) of the Customs Act, an appellant is required to deposit 7.5% of the disputed duty, subject to a cap of ₹10 crore, as a pre-condition for hearing the appeal. Challenging this requirement, the company approached the High Court, arguing that the mandatory pre-deposit rendered the appellate remedy illusory, caused grave financial hardship, and violated constitutional rights under Articles 19(1)(g) and 21. Rejecting the plea, the High Court held that the right of appeal is a statutory right and can be subject to conditions imposed by the legislature. The court observed that after the 2014 amendment to Section 129E, the discretion earlier available to appellate authorities to waive pre-deposit on grounds of hardship has been consciously removed. The court also noted that while High Courts retain writ jurisdiction under Article 226, waiver of mandatory pre-deposit can be granted only in “rare and deserving cases” involving gross injustice or perversity—circumstances not made out in the present case. The High Court found that the dispute raised complex questions of classification and exemption eligibility, which are matters to be examined on merits by the appellate tribunal. The mere existence of a high duty demand or alleged financial hardship was held insufficient to justify interference with the statutory scheme. The court emphasized that allowing blanket waivers would undermine legislative intent and disturb the balance between protecting revenue and providing appellate remedies. Dismissing the writ petition, the Karnataka High Court upheld the mandatory nature of the pre-deposit under Section 129E and refused to direct CESTAT to hear the appeal without compliance. The importer must now deposit the prescribed amount to pursue its appeal before the tribunal. Case Details Case Title: M/S.Parisons Foods Private Limited Versus Customs Commissioner Case No.: Writ Petition No.13082 Of 2025 (T - Cus) Date: 07/11/2025 Counsel For Petitioner: Prabhuling K.Navadgi Sr.Advocate Counsel For Respondent: Aravind V.Chavan, Advocate Click Here To Read Order Read More: No Service Tax on Amusement Parks: Kerala High Court

No Pre-Deposit Waiver In Crude Palmolein Imports Case Involving Penalty Of Nearly Rs. 417 Crore: Karnataka High Court

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