Supreme Court Upholds Delhi High Court Ruling On Duty Drawback For Unlocked Mobile Phones

The Supreme Court has recently dismissed a Special Leave Petition filed by Customs, thereby letting stand a Delhi High Court ruling that unlocking or activating mobile phones prior to export does not disentitle exporters from claiming duty drawback.

By an order dated January 30, 2026, a Bench of Justices J.B. Pardiwala and Joymalya Bagchi declined to interfere with the Delhi High Court's judgment, observing that it found “no good ground to interfere with the impugned order passed by the High Court.”

The case arose from the denial of duty drawback claims to Avik Televentures Pvt. Ltd., an exporter of mobile phones, on the ground that the phones had been unlocked or activated before export.

The Delhi High Court was called upon to decide whether unlocking or activation of mobile phones amounts to the goods being “taken into use” under Rule 3 of the Duty Drawback Rules, a condition that would disqualify exporters from availing the benefit.

In its May 27, 2025 judgment, the Delhi High Court held that unlocking or activating mobile phones before export is only a technical configuration and therfefore does not amount to the phones being “taken into use”.

It had set aside a June 26, 2023 order of the Assistant Commissioner of Customs that had denied duty drawback to Avik Televentures on the ground that the phones were unlocked prior to export.

Referring to its earlier ruling in AIMS Retail Services Private Limited(2023), the High Court said that limited steps such as switching on a phone, inserting a SIM card, or making a short call for activation do not involve real use of the device or reduce its value, and are undertaken only to enable the phone to function in a specific territory.

The court also noted India's expanding role in mobile phone manufacturing and assembly, observing that unlocking or activation adds value for overseas consumers by allowing seamless use across networks and countries.Such configuration, the Court held, “cannot operate as a ground to deprive the Petitioners of their rightful claim to duty drawback under the prevailing legal framework”.

While allowing the writ petition, the High Court clarified that although unlocking or activation does not amount to “use” under the Duty Drawback Rules, individual claims would still have to be processed by Customs in accordance with law.

With the Supreme Court declining to interfere with this ruling, the Delhi High Court's interpretation of Rule 3, that unlocking or activation of mobile phones prior to export does not amount to the goods being “taken into use”, now holds the field.