Delhi High Court Quashes Customs Communication Seeking ₹3.2 Crore From Vivo India, Orders Fresh SCN

The Delhi High Court on 20 May held that customs communications issued during investigation cannot substitute a statutory show cause notice under Section 28 of the Customs Act, 1962, and that any duty deposited during investigation does not extinguish the importer's right to adjudication in accordance with law.

A Division Bench of Justices Nitin Wasudeo Sambre and Ajay Digpaul partly allowed the writ petition filed by Vivo Mobile India Pvt. Ltd., and directed the customs authorities to issue a proper show cause notice within four weeks, while holding that further recovery or coercive action would not be taken in the interim. The judges held:

“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 dispute arose after customs authorities initiated an investigation into Vivo India's import of screw washer/gasket components used in mobile phone manufacturing, alleging misclassification of the imported goods.

During the investigation, the statement of the company's authorised representative was recorded, 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. Subsequently, the authorities issued communications dated 12 December 2025 and 14 January 2026 indicating alleged differential duty liabilities of Rs. 3.20 crore and Rs. 3.57 crore for different periods.

Vivo India challenged the communication dated 12 December 2025, contending that it effectively operated as a demand notice without issuance of a statutory show cause notice under Section 28 of the Customs Act. The company further argued that the amount of Rs.3.20 crore deposited under protest could not be appropriated without adjudication, relying on the Supreme Court decision in Radhika Agarwal v. Union of India and the Karnataka High Court ruling in Suretex Prophylactics (India) Pvt. Ltd. v. Union of India.

The Customs Department, however, contended that the impugned communication was only a suggestive letter issued during investigation and not a formal demand notice under Section 28 of the Act.

Accepting the Department's stand to a limited extent, the High Court held that the communication, by itself, could not be treated as a statutory demand notice. However, it clarified that such correspondence could not deprive the petitioner of its statutory entitlement to adjudication of liability.

“this admission does not bar the petitioner from its entitlement to the statutory process of adjudication of its liability, if any”

The Bench noted that since the Department had already stated that a show cause notice would be issued within four weeks, the impugned communication dated 12 December 2025 deserved to be set aside.

Accordingly, the High Court quashed the communication, directed issuance of a proper show cause notice under Section 28, and held that the amount deposited by the petitioner would remain subject to adjudication.

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

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