SOL Mobiles Private Limited Vs Commissioner of Customs (CESTAT Mumbai)
CESTAT Sets Aside Penalty Because Mobile Phone Activation Before Export Was Mere Configuration; Exported Mobile Phones Not “Taken Into Use” Because Activation Was Only for Regional Configuration; CESTAT Quashes Confiscation of Mobile Phones Because Unlocking Did Not Constitute Use; CESTAT Follows Supreme Court Ruling to Cancel Penalties on Export of Unlocked Mobile Phones.
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Mumbai, heard appeals filed by SOL Mobiles Private Limited and its Vice-President, Finance & Accounts challenging an Order-in-Original dated 30.09.2024 passed by the Commissioner of Customs (Export), Air Cargo Complex, Sahar, Mumbai.
The appellant company was engaged in trading and export of various mobile phone brands such as Samsung, Redmi, Oppo, Honor, and Motorola. The company procured mobile phones locally from authorized channel partners and exported them through the Air Cargo Complex, Mumbai. During 2018-2019, the company filed 112 shipping bills for export of mobile phones and claimed drawback benefits in respect of 46 shipping bills.
An investigation was initiated by the Special Investigation and Intelligence Branch (SIIB-X) based on a clarification issued by the Drawback Division of CBIC through letter dated 25.09.2020 regarding admissibility of duty drawback on export of “unlocked/tested” mobile phones by merchant exporters. Statements were recorded and documents were collected during investigation. SIIB-X observed that the appellant had unsealed original mobile phone packaging, activated handsets by placing calls, changing language settings, or flashing software, and thereafter repacked the devices after removing local SIM cards before export. It was also observed that Samsung devices required unlocking to function outside India.
