Waive Pre-Deposit

The Delhi High Court while providing partial relief to an importer of LED TVs and brass ceramic cartridges, in a high-stakes customs dispute involving alleged undervaluation of imports and a demand exceeding Rs. 7 crore held that CESTAT does not have the power to admit appeal without the pre-deposit, however, high court in exercise of writ jurisdiction may waive the same in rare circumstances. A Division Bench of Justice Prathiba M. Singh and Justice Shail Jain, while dismissing Tecmax’s plea for a complete waiver of pre-deposit, granted the company six months’ time to make the mandatory payment required for pursuing its appeal before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT). Between 2017 and 2018, Tecmax filed multiple Bills of Entry for imports, including LED televisions and brass cartridges. While most consignments were cleared, a 2018 import of LED TVs was allegedly misclassified as spare parts. This triggered a customs investigation into undervaluation and under-declaration. Subsequently, on September 29, 2023, the Customs Department issued an Order-in-Original rejecting Tecmax’s declared value of ₹3.80 crore and reassessing it at ₹10.85 crore. The order raised a differential duty of ₹3.18 crore and imposed equal penalty under Section 114A, along with an additional ₹70 lakh penalty under Section 114AA of the Customs Act. In total, demands and penalties amounted to Rs. 7.06 crore. Tecmax approached CESTAT in May 2024 but failed to comply with the statutory requirement of depositing 7.5% of the disputed demand under Section 129E of the Customs Act, 1962. Despite multiple extensions, the company did not deposit the amount, citing severe financial distress. On January 7, 2025, CESTAT dismissed the appeal for non-compliance with the pre-deposit mandate. Tecmax’s Counsel argued that the company was financially incapacitated, burdened by loans, and unable to pay the mandatory pre-deposit. They urged the Court to waive the requirement in light of exceptional hardship. The Customs Department, represented by the Principal Commissioner of Customs (Import), countered that the law on pre-deposit is settled and mandatory, with no scope for waiver by CESTAT. Several judgments were cited to reinforce the principle that tribunals cannot entertain appeals without pre-deposit. The Court reaffirmed that after the 2014 amendment, pre-deposit requirements under Section 129E are binding, and appeals cannot be entertained without compliance. Though Article 226 of the Constitution empowers High Courts to waive pre-deposit in “rare and deserving cases,” such relief must be reserved for extraordinary circumstances where penalties are imposed without legal basis or where businesses face imminent collapse. In Tecmax’s case, the Court found no exceptional grounds warranting a complete waiver. However, acknowledging the company’s financial hardship, it allowed an extended timeline. The Bench ordered that Tecmax must deposit ₹23,88,667 (7.5% of the demand) within six months. If deposited within this period, the appeal before CESTAT would be restored to its original position. Case Details Case Title: M/S Tecmax Electronics Versus The Principal Commissioner Of Customs (Import) Case No.: CUSAA 121/2025 & CM APPL. 53805/2025 Date: 28th August, 2025 Counsel For Petitioner: Vidushi Shubham Counsel For Respondent: Shubham Tyagi Click Here To Read Order Read More: Centre Allows MRP Revision on Unsold Stock Following GST Rate Changes

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