Unlocking and activating export mobile phones is configuration, not use, so confiscation and penalties could not stand.

Unlocking and activating mobile phones for export was treated as configuration to make the goods usable in the destination territory, not as "taking into use" under the drawback framework. On that legal basis, the contrary clarificatory circular could not sustain allegations of mis-declaration, suppression, or ineligibility for drawback. As the foundation for confiscation failed, the connected redemption fine and penalties under the customs provisions were held unsustainable and were set aside.

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Issues: Whether the confiscation of the exported mobile phones and the consequential redemption fine and penalties were legally sustainable when the alleged unlocking and activation of the phones before export was treated as constituting use of the goods and as a mis-declaration.

Analysis: The Tribunal applied the binding view that unlocking and activating mobile phones for use in a particular geographical territory is only configuration to make the product usable and does not amount to the goods being "taken into use" for the purposes of the drawback framework. Once that legal position was affirmed and the contrary clarificatory circular was quashed, the foundation for alleging mis-declaration, suppression, and ineligibility for drawback ceased to survive. On that basis, the confiscation under the customs provisions and the connected penalties imposed on the appellants could not be sustained.

Conclusion: The confiscation and the penalties were held to be unsustainable and were set aside in favour of the appellants.

Ratio Decidendi: Unlocking or activating mobile phones for export purposes is configuration and not "taking into use", and when the contrary circular is invalidated, confiscation and penalty based on that premise cannot stand.

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