Import of mobile phones with Original Equipment Manufacturers’ IMEI number is not prohibited under Foreign Trade Policy

Navshiv Retails Pvt. Ltd. (the Assessee) imported branded mobile phones (impugned goods) for which Customs clearance was sought. During examination, it was found by the Department that International Mobile Equipment Identification (IMEI) number of impugned goods was allocated to other brands like Nokia and Samsung and did not pertain to the declared brand, Mobiado. The Department contended that the impugned goods did not have requisite IMEI number and hence import of impugned goods was illegal and a threat to national security. Therefore, Adjudicating Authority directed re-export of impugned goods on payment of redemption fine and penalty.

On appeal being filed before the Commissioner (Appeals), the Commissioner (Appeal) upheld the Order of the Adjudicating Authority except that redemption fine and penalty were reduced. The Commissioner (Appeal) interalia observed that in terms of the Foreign Trade Policy 2009-2014, import of mobile handsets without IMEI number is prohibited and in the instant case IMEI number allocated on impugned goods were of brand name other than Mobiado.

Aggrieved by the order of the Commissioner (Appeal), the Assessee preferred an appeal before the Hon’ble Tribunal wherein the redemption fine and penalty were set aside relying upon the Notification No. 14/2009-2014 dated October 14, 2009 in terms of which the only requirement under the law is that mobile handsets should be carrying the IMEI numbers which exist in the instant case. Being aggrieved, the Department preferred an appeal before the Hon’ble High Court of Delhi.

The Hon’ble High Court of Delhi relying upon the findings of the Hon’ble Tribunal, dismissed the appeal with the following observations:

• Once IMEI number is mentioned on the mobile handset and duly declared at the time of import, then there is no possibility or chance of misuse and accordingly no threat to national security;
• Mobiado brand belongs to Bonac Innovation Corporation, a Company incorporated under the laws of Canada, for the distributorship and retail of mobile handsets. Bonac Innovation Corporation purchases mobile handsets manufactured by Original Equipment Manufacturers (OEM) and only re-design and embellishes them by replacing the casing of the existing mobile handsets by using their cutting edge engineering technology. The aforesaid facts and the fact that impugned goods did have IMEI number were not in dispute;
• OEM of the mobile phone is not a matter of security concern, but IMEI number code identification is a necessity and mandatory which was satisfied in the instant case as IMEI number embedded in the mobile phone becomes the identification code for the said mobile handset and further the IMEI number was not tampered.

Accordingly, the Hon’ble High Court decided the matter in favour of the Assessee.

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