2023 (3) TMI 1290 - HC - Customs

Court sets aside Rs.3.9 crore duty demand against telecom provider for misclassification. Circular compliance emphasized.

M/s. Ericsson India Private Limited, Represented by its Head of Tax Versus Deputy Commissioner of Customs, Joint Commissioner of Customs, The Principal Commissioner of Customs, Union of India

M/s. Ericsson India Private Limited, Represented by its Head of Tax Versus Deputy Commissioner of Customs, Joint Commissioner of Customs, The Principal ... Issues involved: The issues involved in the judgment are related to the finalization of provisional assessments, misclassification of imported goods, demand for differential duty, non-generation of Document Identification Number (DIN) in official communications, and the binding nature of Circulars issued by the Central Board of Indirect Tax of Customs.Finalization of Provisional Assessments: The petitioner, a Telecommunications Solutions provider, imported Blade Server Platforms (BSP) from a related overseas party, Ericson AB, Sweden. The Directorate of Revenue Intelligence (DRI) investigated the imports and changed the basis of the enquiry to the classification of the BSP platform. The DRI forwarded an investigation report to the Customs Assessing Officer, leading to the finalization of provisional assessments on certain bills of entry without providing the report to the petitioner.Demand for Differential Duty: The DRI concluded that the petitioner misclassified the imported goods, resulting in a differential duty of Rs.3,91,60,068. A communication was issued demanding this amount along with interest under the Customs Act, 1962. However, the demand lacked a show cause notice or order revising the bills of entry, rendering it baseless in law and subsequently set aside by the Court.Non-Generation of DIN in Official Communications: The impugned communication dated 04.08.2020 lacked a Document Identification Number (DIN) as mandated by Circulars issued by the Central Board of Indirect Tax of Customs. The absence of a DIN was considered fatal to the communication itself, as it did not comply with the guidelines aimed at ensuring authenticity and accountability in official proceedings.Binding Nature of Circulars: The Court emphasized that Circulars issued by the Board are binding on Customs officers for administrative duties, except in situations concerning judicial functions. The respondents' argument that leniency should be granted due to the pandemic was rejected, highlighting the necessity of compliance with Circulars to maintain transparency and accountability in official communications.Judicial Precedents and Conclusion: The Court referred to various judgments to establish that Circulars do not bind the Court but are mandatory for Customs officers in administrative functions. The judgment set aside the impugned communication due to the absence of a DIN, emphasizing the importance of transparency and accountability in official communications as mandated by Circulars. The writ petition was allowed, with no costs awarded.Judge's Separate Judgement: No separate judgment was delivered by the Judge in this case.