Court directs issuance of show cause notice within four weeks while setting aside previous demand communications for differential duty payment.
In a significant ruling, the Delhi High Court has quashed the impugned communications issued by the Customs Department to Vivo Mobile India Pvt Ltd that demanded differential customs duty payments. The court found that the communications did not comply with the statutory requirements under Section 28 of the Customs Act, 1962, and thus cannot be treated as formal demand notices.
The judgment, delivered by Justices Nitin Wasudeo Sambre and Ajay Digpaul, addressed the writ petition filed by Vivo Mobile challenging two communications dated 12th December 2025 and 14th January 2026. These communications indicated a differential duty liability amounting to Rs. 3,20,87,688 and Rs. 3,57,95,501, respectively, for different periods.
The court observed that the communications were issued as a result of the petitioner's representative's statement expressing willingness to pay the differential duty and requesting a letter to that extent. Hence, they were not formal demand notices but rather suggestive of a differential duty liability.
The petitioner argued that the Assistant Commissioner who issued the notices lacked the pecuniary jurisdiction to do so, and the communications amounted to a direct imposition of demand without a show cause notice, as required under the Customs Act. They further contended that the payment of Rs. 3,20,87,688 was made under protest and should not be appropriated without proper adjudication.
However, the court upheld that the payment was made voluntarily after the petitioner recalculated the duty based on its own calculations. The court emphasized that while the petitioner admitted to an error in duty calculation, this did not negate its right to a statutory adjudication process.
The Delhi High Court directed that a show cause notice be issued within four weeks to properly adjudicate the petitioner's liability. It also ordered that the amount paid by the petitioner would be appropriated towards any demand eventually raised in the adjudicatory order. In the interim, no further demands or recovery actions shall be taken against Vivo Mobile.
The court's decision does not address the merits of the petitioner's alleged liability, leaving it open for future adjudication. The judgment allows the petition partly by setting aside the impugned communication dated 12th December 2025 and refrains from making any findings on the communication dated 14th January 2026, in light of the respondent's undertaking not to enforce it.
Bottom line:-
Customs Act, 1962 - Communication issued during investigation regarding differential duty cannot be construed as a formal demand notice unless it complies with the statutory requirements under Section 28 of the Act.
Statutory provision(s): Customs Act, 1962, Section 28
Vivo Mobile India Pvt Ltd v. Assistant Commissioner, (Delhi)(DB) : Law Finder Doc id # 2907609
