9911796707
TMI Blog2025 (3) TMI 1406X X X X Extracts X X X X X X X X Extracts X X X X ..... India, seeking issuance of an appropriate writ quashing of the impugned Order-in-Original bearing no. 43/TA/ADC/ACE/2025 dated 11th February, 2025. 3. The short case of the Petitioner is that it is entitled to duty drawbacks when exporting mobile phones, which have been unlocked and accordingly they had availed of the drawbacks. 4. A show cause notice bearing no. 86/RG/JC/ACE/SIIB/2023 was issued by the Respondent on 30th August, 2023 under Section 124 of the Customs Act, 1962, calling upon the Petitioner to appear before the Office of the Commissioner of Customs, Air Cargo Complex (Export) and explain as to why the goods exported are not liable for confiscation and why the drawbacks availed ought not to be repaid. Penalty is also sought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etition would be clearly covered by the decision of this Court in AIMS Retail Services Private Limited (supra), the show cause notice would be liable to be set aside. The operative portion of the said judgment is set out below: "72. An analysis of all the decisions discussed above, would show that in each of the cases, the product-in-question has been utilized - either for demonstration, research, exhibition, etc., in a manner so as to diminish its value. The same had utilized the capabilities of the product and did not add any additional feature or value to the product. Thus, the said decisions are in sharp contrast to the facts of the present case wherein the unlocking/activation of a mobile phone makes the product more accessible and m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mer the process of unlocking/activation of mobile phones would result in value addition over a locked/non-activated mobile phone. Thereby, allowing the unrestricted use of the said mobile phones. The process of unlocking/activation of the mobile phones, by any method, would not result in depreciation in the value of the said phones. 75. A manufacturer, in order to test the mobile phone before finally packing the product may have checked the same by activating it in a particular network in the same country of manufacture. If the phone is used in the same country where it has been manufactured, then there would be no difficulty. Whenever the customer travels abroad on a different carrier or network, international charges are collected and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lace and the mere fact that the said products are configured for use in foreign countries cannot deprive the Petitioners from duty drawbacks under the prevalent law discussed hereinabove. Drawbacks are benefits which are given to exporters and in the case of any ambiguity such benefits should go in favour of the exporters and not the other way round. The unlocking/activation of the mobile phone merely makes the mobile phone more usable in the destination country and the same would therefore not constitute "taken into use" under proviso to Rule 3 of Duty Drawback Rules. 77. In the present batch of petitions in some of the cases, the Petitioners have challenged the respective SCNs. In some cases Order-in-Original which have been passed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rawbacks in accordance with law." 11. As per the above judgement, this Court has held that duty drawback may be claimed in respect of unlocked mobile phones being exported, as the mere act of unlocking does not constitute the phones being "taken into use" within the meaning of the applicable provisions. Given that a mobile phone is capable of being utilized in several ways, the mere unlocking thereof cannot be deemed as the Petitioners having "taken it into use." 12. Furthermore, this Court has observed that with the expansion of mobile phone manufacturing and assembly in India, the volume of exports is expected to increase. The mere fact that the said products are configured for use in foreign jurisdictions cannot operate as a ground to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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