Delhi HC Quashes ₹3.20 Crore Customs Communication Against Vivo India After Customs Agrees To Issue SCN

The Delhi High Court on May 20 quashed a customs communication issued to Vivo Mobile India Pvt. Ltd. indicating differential duty liability of ₹3.20 crore, after the Customs Department stated that it would issue a show cause notice within four weeks.

A Division Bench of Justices Nitin Wasudeo Sambre and Ajay Digpaul noted,

“In consideration of the statement made by Mr. Naushad for issuance of a show cause notice within four weeks, we quash and set aside the impugned communication dated 12.12.2025, with no finding on impugned communication dated 14.01.2026 owing to Mr. Naushad‟s statement as recorded in our order dated 16.04.2026.”

The court was dealing with a plea filed by Vivo Mobile India Pvt. Ltd. challenging communications dated December 12, 2025 and January 14, 2026 issued during an investigation into the company's import of screw washer/gasket components used in mobile phone manufacturing.

The Customs Department had alleged misclassification of imported goods. During the investigation, statements of the company's authorised representative were recorded on April 7, 2025 and December 4, 2025, wherein it was stated that the screw washer was not an essential component in the manufacturing process and that the company was willing to pay differential duty on imports of the component. The representative had also requested the department to issue an appropriate duty demand letter.

The communication dated December 12, 2025 indicated differential customs duty of ₹3.20 crore for the period April 2023 to February 2025, while the communication dated January 14, 2026 indicated differential duty of ₹3.57 crore for the period February 2021 to March 2023.

Before the High Court, Vivo contended that the December 12, 2025 communication amounted to a direct imposition of demand without issuance of a show cause notice. The company also argued that the amount of ₹3.20 crore deposited under protest could not be appropriated without adjudication.

The Customs Department argued that the impugned communication was not a demand notice but only a letter issued during investigation indicating the differential duty payable by the petitioner.

The bench observed:

"We are not persuaded with the petitioner‟s argument that the impugned communication is a formal demand notice, since the impugned communication was issued as a follow up to the statement of the petitioner‟s own authorized representative who expressed a willingness to pay the differential duty and requested that a letter be issued to that extent.”

The High Court, however, held that the petitioner remained entitled to adjudication of its liability.

“However, this admission does not bar the petitioner from its entitlement to the statutory process of adjudication of its liability, if any, and it is trite that such amounts paid during investigation, whether under protest or otherwise, may be appropriated towards the final liability of an assessee at the time of passing of an adjudicatory order.”

While declining to direct refund of the deposited amount, the court accepted the Department's statement that a show cause notice regarding the petitioner's liability, if any, would be issued within four weeks.

The bench also directed that, in the meantime, “no further demands or recovery shall be made against the petitioner.”

The court clarified that it had made “no finding” on the communication dated January 14, 2026, and further stated that the order did not adjudicate the merits of the petitioner's liability, if any.

For Petitioner: Mr. Kishore Kunal and Mr. Aditya Rathore, Advocates

For Respondents: Mr. Gibran Naushad, SSC with Mr. Suraj Shekhar Singh, Advocate