Delhi High Court Upholds ₹9.73 Crore Duty On Import Of IPL Broadcast Equipment, Reduces Penalty For Misdeclaration
The Delhi High Court recently upheld the import duty imposed by the Customs, Central Excise & Service Tax Settlement Commission on a company authorised by BCCI to provide broadcast equipment and associated services for covering the Indian Premier League in 2012.A division bench of Justices Prathiba M. Singh and Shail Jain observed that under normal circumstances, this duty would have...
The Delhi High Court recently upheld the import duty imposed by the Customs, Central Excise & Service Tax Settlement Commission on a company authorised by BCCI to provide broadcast equipment and associated services for covering the Indian Premier League in 2012.
A division bench of Justices Prathiba M. Singh and Shail Jain observed that under normal circumstances, this duty would have been liable to be refunded to the Petitioner as the import was merely temporary in nature.
However, since there was an “intentional misdeclaration” on part of the company, the order of the Settlement Commission cannot be faulted with.
For context, Petitioner imported a substantial amount of broadcasting equipment into India between December, 2012 and March, 2013 to the Free Trade & Warehousing Zone and then declared the same as 'DEMO'.
As per the Customs, the actual purpose for the import of the equipment was Commercial, not DEMO. Thus, a show cause notice was issued to the Petitioner, which then approached the Settlement Commission.
The Commission returned a specific finding of deliberate attempt to evade customs duty. Thus, applicable customs duty was settled at Rs. 9,73,78,685/- and a total penalty to the tune of Rs. 2 crores was imposed upon the Petitioner. Penalty was also imposed on its Directors to the tune of Rs. 10,00,000/- each.
Petitioner then approached the High Court, arguing that since the equipment was to be re-exported, no duty was payable. Moreover, declaration of the purpose of the subject imports as 'DEMO' was nothing but a bonafide mistake.
Customs on the other hand argued that Petitioner was fully aware of the customs duty that would be imposed and in order to avoid payment of the duty, this modus operandi of declaring the goods as 'DEMO' was adopted by the Petitioner.
The High Court concurred that Petitioner's import was temporary in nature and it was not being sold or disposed of in India. Thus, under normal circumstances, no duty would have been liable to be paid if the declaration was properly made.
“EBSPL (Petitioner) would have been entitled to claim duty drawback on the subject imports, as per applicable norms,” it said.
However, for whatever reasons, the Court added, “EBSPL resorted to import the subject equipment through the Free Trade & Warehousing Zone by wrongly declaring the same to be DEMO equipment… a benefit was sought to be gained by the Petitioner.”
As such, it upheld the customs duty. The Court however restricted the penalty to Rs. 50,00,000/-. Further, the Court said,
“penalty upon the individual Directors deserves to be quashed, as the benefit was sought to be obtained by the Company and not the Directors in their individual capacity.”
The matter was accordingly disposed of.
Appearance: Mr. Kamal Sawhney, Ms. Akansha Wadhwani & Mr. Rishab Mishra, Mr. Deepak Thackur,Advs. For Petitioners; Mr. AkshayAmritanshu, Senior Standing Counsel, Ms. Drishti Rawal, Mr. Abhay Nair, Mr. Mayur Goyal, Mr. Sarthak Srivastava, Adv. Mr. Harpreet Singh, SSC with Mr. Jatin Gaur, Ms. Suhani Mathur, Ms. Shivani Saxena, Adv. Ms. AnushreeNarain, SSC with Mr. YamitJetley, Advs. for R-2.
Case title: Eastern Broadcast Solutions Pvt. Ltd & Ors. v. The Commissioner Of Customs (Import) & Ors.
Case no.: W.P.(C) 3434/2017