Amount Deposited Under Protest During Customs Probe Can Be Adjusted Towards Pre-Deposit In Appeal: Delhi High Court
The Delhi High Court has held that an amount deposited with the Customs under protest, during investigation by the Department, can be adjusted towards pre-deposit to be made when filing appeal against its order.For context, Section 129E of the Customs Act, 1962 requires deposit of 7.5% of the amounts which are in dispute, when filing an appeal before Commissioner (Appeals) or CESTAT.In the...
The Delhi High Court has held that an amount deposited with the Customs under protest, during investigation by the Department, can be adjusted towards pre-deposit to be made when filing appeal against its order.
For context, Section 129E of the Customs Act, 1962 requires deposit of 7.5% of the amounts which are in dispute, when filing an appeal before Commissioner (Appeals) or CESTAT.
In the case at hand, the Petitioner contended that the amount required for pre-deposit is already fully satisfied inasmuch as, he had already deposited ₹2 crore with the Department during investigation for alleged undervaluation of goods.
Moreover, ₹34 lakh cash had been confiscated by the Department.
While the Petitioner sought that pre-deposit be adjusted towards the amount already lying with the Department, the latter contended that the sum of ₹34 lakh, confiscated under Section 121 of the Customs Act, was sales proceeds of smuggled goods and could not be adjusted towards a pre-deposit.
The Department further submitted that Section 129E of the Customs Act requires a specific deposit to be made when filing an appeal.
A division bench of Justices Prathiba M. Singh and Shail Jain were however of the view that the above amounts, including the amount deposited under protest, cannot be completely ignored and a fresh deposit cannot be called, “only to deprive the Petitioners of their legal appellate remedy.”
Reliance was placed on VVF (India) Limited v. State of Maharashtra and Ors. (2022) where the Supreme Court, while dealing with Maharashtra Value Added Tax Act 2002, held that there is no reason why amount paid under protest should not be taken into consideration for the predeposit.
The High Court added that contrary to what the Department argued, Section 129E does not incorporate any language to exclude amounts paid under protest or amount collected during investigation or confiscated during investigation. It observed,
“It would be contrary to law as also inequitable to hold that when such a substantial amount already stands deposited with the Customs Department, further pre-deposits have to be paid, only for the purpose of hearing of the appeal. This cannot be the Scheme of the Act.”
As such, the Court directed CESTAT to hear Petitioner's appeal on merits, considering the deposits already lying with the Customs Department.
Appearance: Mr. Chinmaya Seth, Mr. A.K. Seth, Ms. Palak Mathur, Advs. for Petitioner; Ms. Anushree Narain, SSC with Mr. Naman Chouls& Mr. Yamit Jetley, Advs. for Respondent
Case title: Anoop Kumar Garg v. The Commissioner Of Customs (Imports)
Citation: 2025 LiveLaw (Del) 1556
Case no.: W.P.(C) 15945/2025