Introduction:
In a significant ruling reinforcing fiscal discipline in tax adjudication, the Karnataka High Court, by an order pronounced on November 7, 2025, dismissed a writ petition filed by Parisons Foods Private Limited against The Commissioner of Customs, holding that the statutory pre-deposit mandated under Section 129-E of the Customs Act, 1962 cannot be waived for a financially robust appellant. The matter was heard and decided by Justice M. Nagaprasanna, who categorically ruled that the requirement of pre-deposit does not amount to denial of access to justice and is a uniform statutory condition applicable to all appellants without exception. The petitioner, a well-established commercial entity engaged in large-scale import and refining of edible oils, had approached the High Court under Article 226 of the Constitution seeking waiver of the mandatory pre-deposit of 7.5% of the duty demanded (subject to a cap of ₹10 crores) in order to pursue an appeal before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT). The Court not only rejected the plea for waiver but also declined to enter into technical and scientific questions regarding the nature of crude palm oil and crude palmolein, holding that such issues are best left to expert statutory authorities. The judgment thus reiterates the binding nature of statutory pre-conditions for appeals and underscores judicial reluctance to dilute legislative mandates in favour of commercially sound litigants.
Arguments on Behalf of the Petitioner:
The petitioner company contended that it was engaged in the business of refining edible oils and regularly imported crude oil, including crude palmolein, from Indonesia and Malaysia through the Mangalore Port. It was submitted that due to the ban imposed by Indonesia on the export of crude palm oil from June 2022 onwards, the petitioner imported seven consignments of crude palmolein between June 2022 and January 2023. Invoking the benefits under the India–ASEAN Preferential Tariff Agreement/Free Trade Agreement, the petitioner claimed exemption from basic customs duty under Sl. No. 3 of Notification No. 48/2021-Customs dated October 13, 2021, which exempted crude palm oil, and accordingly paid Agriculture Infrastructure and Development Cess (AIDC) at 5% in terms of Notification No. 49/2021-Customs.
The petitioner argued that crude palmolein is essentially derived from crude palm oil and is nothing but a byproduct thereof, and therefore should be treated as falling within the scope of the exemption notification applicable to crude palm oil. It was contended that the Directorate of Revenue Intelligence (DRI), by issuing a show-cause notice and subsequently confirming a massive demand of over ₹416 crores towards differential basic customs duty along with interest and penalty, had adopted an unduly narrow and technical interpretation of the notification.
After the adjudication order was passed, the petitioner filed an appeal before the CESTAT under Section 129-E(ii) of the Customs Act. However, the petitioner contended that the requirement of pre-deposit of 7.5% of the duty demanded—even though capped at ₹10 crores—caused severe financial hardship and adversely impacted its liquidity and business operations. The petitioner submitted that Section 129-E, though couched in mandatory terms, should be read in a manner that permits waiver in deserving cases, particularly where the demand itself is ex facie unsustainable or where insistence on pre-deposit would effectively stifle the right of appeal.
Relying on the constitutional guarantee of access to justice, the petitioner argued that the High Court, in exercise of its writ jurisdiction, has ample power to relax or waive statutory pre-conditions in appropriate cases. It was urged that the pre-deposit requirement, when applied mechanically to a case involving an exorbitant demand running into hundreds of crores, would operate harshly and unjustly. The petitioner sought parity with cases where courts have granted relief to appellants facing genuine financial distress, and contended that the merits of the case, including the arguable nature of the classification dispute between crude palm oil and crude palmolein, warranted indulgence by the Court.
Arguments on Behalf of the Respondents:
The respondents, represented by the Customs Department, strongly opposed the writ petition and contended that Section 129-E of the Customs Act leaves no discretion whatsoever to waive the mandatory pre-deposit. It was submitted that the provision was introduced by Parliament with a clear legislative intent to curb frivolous appeals and ensure expeditious recovery of revenue, while at the same time capping the deposit at ₹10 crores to balance competing interests. The respondents emphasized that the statute makes no distinction between small and large assessees and applies uniformly to all appellants.
It was further argued that the petitioner is a financially sound and well-established commercial enterprise, incorporated as far back as 1997, and has consistently undertaken import operations of substantial magnitude involving transactions worth several hundreds of crores. Such an entity, the respondents contended, cannot be permitted to plead financial hardship to avoid a statutory obligation that is modest in proportion to the demand and capped by law. Granting waiver in such circumstances would amount to extending an unwarranted premium to a large corporate entity and would defeat the very purpose of the statutory scheme.
On merits, the respondents submitted that the exemption notification clearly and unambiguously applies to crude palm oil and not crude palmolein, which is a distinct commodity. The DRI, after due investigation, found that the petitioner had wrongly availed exemption and accordingly confirmed the demand under Section 28(1) of the Customs Act read with Section 5(1) of the Integrated Goods and Services Tax Act, 2017. The respondents urged that the High Court, while exercising writ jurisdiction, ought not to adjudicate upon disputed questions of fact or technical classification issues, particularly when an efficacious alternative remedy by way of appeal before the CESTAT was available, subject only to compliance with the statutory pre-deposit.
Court’s Judgment:
After carefully considering the rival submissions, Justice M. Nagaprasanna dismissed the writ petition and upheld the mandatory nature of the pre-deposit under Section 129-E of the Customs Act. The Court observed that the provision does not, in any manner, deny access to justice, but merely prescribes a statutory discipline that applies uniformly to all appellants. Emphasizing the legislative intent behind the provision, the Court held that the mandate of Section 129-E “endures, subsists and is unyielding” unless restrained by constitutional courts on valid grounds, which were conspicuously absent in the present case.
The Court took note of the petitioner’s long-standing commercial operations and substantial financial capacity, observing that the company has consistently engaged in imports running into several hundreds of crores. In a pointed remark, the Court held that equating such a petitioner with a daily wage employee or a person in genuine financial distress would be wholly incongruous and misplaced. Justice Nagaprasanna categorically stated that extending discretionary relief to a financially robust operator would amount to “holding out a premium to the petitioner” and would undermine statutory discipline. The plea of financial hardship was therefore rejected as untenable.
On the petitioner’s contention that crude palmolein is essentially the same as crude palm oil, the Court declined to enter into the merits of the classification dispute. The Bench observed that such an assertion ventures into the realm of scientific and technical enquiry, involving questions of chemical taxonomy and expert evaluation. The Court held that it would be loathe, in exercise of its jurisdiction under Article 226, to don the mantle of scientific expertise or to supplant the role of statutory authorities and appellate forums specially constituted to decide such matters.
The Court reiterated that the appropriate course for the petitioner was to comply with the statutory requirement of pre-deposit and pursue the appeal before the CESTAT, where all questions of fact, law, and technical interpretation could be adequately examined. Finding no arbitrariness, unconstitutionality, or exceptional circumstance warranting interference, the High Court dismissed the writ petition in its entirety, thereby reaffirming the binding force of Section 129-E of the Customs Act.