2023 (12) TMI 449 - HC - Customs

Change in classification - suppression of facts - Import of parts of mobile phones - Section 28(1) of the Customs Act, 1962 - HELD THAT - As would be manifest from the report of the Expert, the parts imported constituted an incomplete mobile handset. It also noted that various other steps would be required to be completed including addition of essential components before the imported article could function as a mobile phone. We also bear in mind the stand of the petitioner which had consistently taken the position that it was importing parts of mobile handsets. Presently, the respondents have failed to draw our attention to any material which may prima facie sustain an allegation of suppression or misdeclaration so as to justify invocation of Section 28(4). The matter requires consideration. Till the next date of listing, the respondents shall stand restrained from taking further steps pursuant to the impugned SCN dated 01 September 2023. This order however, shall not preclude the respondents from proceeding further in terms of the SCN dated 25 July 2023.

Summary

Issues Involved:
1. Challenge to Show Cause Notice dated 01 September 2023 regarding alleged misclassification and evasion of customs duty.
2. Allegations of suppression and misdeclaration leading to short payment of duty, confiscation of goods, and imposition of penalties under the Customs Act, 1962.

Summary:

Issue 1: Challenge to Show Cause Notice dated 01 September 2023
The petitioner claimed to be importing parts of mobile phones, leading to the issuance of a Show Cause Notice (SCN) dated 25 July 2023 under Section 28(1) of the Customs Act, 1962. The SCN alleged that the petitioner had misclassified goods, suppressed facts, and evaded customs duty, resulting in short payment of duty. The petitioner was called upon to show cause regarding various demands, including differential duty, penalties, and confiscation of goods. The respondents later issued another SCN on 01 September 2023 invoking Section 28(4) of the Act based on an expert opinion stating that the imported parts constituted an incomplete mobile handset.

Issue 2: Allegations of Suppression and Misdeclaration
The respondents alleged that the importer had wrongly classified goods by suppressing the fact that they were complete mobile sets in CKD condition. The SCN detailed the alleged contraventions of the Customs Act, 1962, including failure to furnish correct particulars, misdeclaration of goods' value, and wilful suppression of facts. The expert opinion highlighted the need for further steps to make the imported parts functional as mobile phones. The court noted the petitioner's consistent claim of importing only parts of mobile handsets and found that the respondents had not provided sufficient material to support the allegations of suppression or misdeclaration justifying the invocation of Section 28(4).

In conclusion, the court restrained the respondents from taking further steps based on the SCN dated 01 September 2023 until the next listing date, allowing them to proceed under the earlier SCN dated 25 July 2023. The matter was deemed to require further consideration based on the facts presented and arguments made by both parties.