Mandatory Pre-Deposit For Customs Appeal Cannot Be Waived For Financially Sound Appellant: Karnataka High Court

The Karnataka High Court has held that the mandatory pre-deposit required to pursue a customs appeal cannot be waived for a financially sound appellant/importer.

In a recently uploaded order pronounced on November 7, 2025, Justice M. Nagaprasanna said the pre-deposit under Section 129-E of the Customs Act does not deny access to justice. 

“It is a statutory discipline that applies uniformly to all appellants. The statute's mandate endures, subsists and is unyielding, until constitutional courts deem fit to restrain its march,” the court observed.

The single judge-bench rejected the importer's plea that the pre-deposit caused financial hardship. It said a commercial enterprise of considerable means cannot complain of such a requirement. Granting a waiver in such cases would amount to holding out a premium to the petitioner, the court said.

Section 129-E requires an appellant to deposit 7.5% of the duty demanded or penalty imposed before an appeal is entertained. The deposit is subject to a statutory cap of Rs 10 crore.

In the case at hand, the assessee/petitioner was engaged in the business of refining edible oils which involved regular imports of crude oil from Indonesia and Malaysia through the Mangalore Port. From the month of June 2022, the export of crude palm oil was banned in Indonesia. However, the assessee imported 7 consignments of crude palmolein between the periods June 2022 and January 2023.

Invoking the India-ASEAN Preferential Tariff Agreement/Free Trade Agreement, the assessee claimed exemption from basic customs duty on such imports under Sl. No.3 of the Notification No. 48/2021-Customs dated 13-10-2021 and paid Agriculture Infrastructure and Development Cess (AIDC) at 5% in terms of Sl. No.2 of the Notification No.49/2021-Customs for the said imports.

The Directorate of Revenue Intelligence (DRI) issued a show-cause notice alleging that the crude palmolein could not be exempted from basic customs duty in terms of the exemption notification because the notification covered crude palm oil, not crude palmolein

The demand for the differential basic customs duty was confirmed by the DRI through an Order, directing the assessee to pay the differential basic customs duty of over Rs. 416 crores under Section 28(1) of the Act, r/w Section 5(1) of the Integrated Goods and Services Tax Act, 2017, along with interest and penalty.

The assessee filed an appeal before the CESTAT challenging the Order under Section 129-E(ii) of the Act. They claimed that under this provision, the assessee is required to deposit 7.5% of the duty demanded, which will not exceed Rs.10 crores

The assessee then filed a writ petition at the High Court seeking waiver of the payment of the deposit stipulated under Section 129-E(ii) of the Customs Act so that the appeal could be admitted without payment of the mandatory pre-deposit amount.

The High Court Bench observed that the Company, having been incorporated as far back as 1997, has consistently engaged in import operations of substantial magnitude, running into several hundreds of crores on each occasion.

To liken such a petitioner to a daily wage employee, in whose favour the Court may have exercised discretion to waive the predeposit, would be wholly incongruous and misplaced. Extending such discretion to a financially robust operator, would be holding out a premium to the petitioner. The plea that the petitioner is in financial distress, and that the pre-deposit therefore deserves to be waived, is a contention that cannot be countenanced, stated the bench.

The Court disagreed with the assessee that crude palmolein is but a byproduct of crude palm oil, making the the two essentially the same, and therefore, the benefit of the exemption notification applicable to crude palm oil ought to extend to crude palmolein as well

The Bench opined that such an assertion treads into the realm of scientific and technical enquiry, an area best left to the domain of experts and statutory authorities competent to adjudicate such questions. This Court, under Article 226 of the Constitution of India, would be loathe to don the mantle of scientific expertise or engage in chemical taxonomy.

In view of the above, the Bench dismissed the plea.

Case Title: Parisons Foods Private Limited v. The Commissioner of Customs

Citation: 2026 LLBiz HC (KAR) 4

Case Number: Writ Petition No13082 OF 2025

 For Petitioner: Advocates Prabhuling K. Navadgi and Paramesh Kumar H.K.

For Respondent: Advocate Aravind V. Chavan

Click Here To Read/Download Order