PER: M.M. PARTHIBAN

These appeals have been filed by M/s SOL Mobiles Private Limited, Mumbai (for short, referred to as “the appellant company”) along with Shri Manjit Jha, Vice-President, Finance & Accounts of the appellant company (herein after, referred together as “the appellants”, for short) assailing the Order-in-Original CAO No. CC/HB/04/2024-25 Adj.(X) ACC dated 30.09.2024 (herein after, referred to as “the impugned order”) passed by the Commissioner of Customs (Export), Air Cargo Complex, Sahar, Andheri (East), Mumbai – 400 099.

The brief facts of the case are that the appellant company is engaged in trading of various brands mobile phones viz., Samsung, Redmi, Oppo, Honor, Motorola etc. They procure mobile phones locally from authorized channel partners in India and thereafter export the same through Air Cargo Complex Customs Commissionerate (ACC), Sahar, Mumbai. Against the export transactions undertaken in various Shipping Bills (S/Bs) by appellant exporter during the disputed period 2018-2019, in respect of 46 S/Bs out of total 112 S/Bs filed for export of mobile phones, the appellant exporter had claimed drawback benefits. An investigation was initiated by the Special Investigation and Intelligence Branch of the ACC, Sahar (SIIB-X), on the basis of a clarification issued by the Drawback Division of Central Board of Indirect Taxes & Customs (CBIC) vide letter F. No. 609/ 4/2020-DBK/1063 dated 25.09.2020 with respect to admissibility of duty drawback on export of ‘unlocked/tested’ mobile phones by merchant exporters. Further, statements were also recorded from various persons concerned and documents were also obtained from the appellants. It was observed by SIIB-X that the mobile phones which were locally procured by the appellants, were subjected to usage prior to export; this was done by unsealing the original packaging and activating the handsets through means such as placing calls, updating the language settings, or flashing the software, followed by repacking after removing the local SIM card and subsequently dispatching it for export. Further, in the “Regional Lock Guide” booklet accompanying Samsung brand mobile phones, SIIB-X observed that the unlocking of the mobile phone devices was a mandatory procedure to render them functional outside India. These activities of unlocking, activation and testing were performed after the manufacturing and packing processes had been completed. Therefore, they concluded that these activities were carried out by the appellant merchant exporter prior to export of already manufactured goods. As a result, SIIB-X had interpreted that the exported goods had already been used by the exporter, disqualifying them from eligibility for Duty Drawback in accordance with the applicable rules and regulations.

On completion of investigation, SIIB-X had concluded that the appellant exporter had by mis-declaration of the description of mobile phones under export; by mis-stating that the mobile phones being exported were not taken into use after manufacture declaration and for omission, suppression of facts, had exposed the export goods of total FOB value of Rs.27,99,38,728/- for confiscation under Section 113(i) and 113(ia) of the Customs Act,1962 along with rejection of drawback benefits, imposition of penalty on the appellants under Section 114(iii), 114AA ibid and accordingly issued Show Cause Notice (SCN) to the appellants vide F. No. CUS/DBK/SCN/54/2023-DBK(EDI) dated 26.04.2024.

The said SCN dated 26.04.2024 was adjudicated by the learned Commissioner of Customs-IV (Export), ACC, Mumbai confirming all the proposals made in the SCN by issuing the Order-in-Original dated 30.09.2024, which is impugned herein. In the said order the adjudicating authority has confiscated the exported goods under Section 113(i) and 113(ia) of the Customs Act,1962 and allowed the same upon payment of redemption fine of Rs. 2,70,00,000/-; further, he also rejected drawback benefits being ineligible on such ex