CESTAT Hyderabad Sets Aside Differential CVD Demand — Importer Not Liable for Dealer's MRP Alteration
Case Background and Overview
Celkon Impex Pvt Ltd Vs Commissioner of Customs (CESTAT Hyderabad)
In a significant ruling pronounced on 08.04.2026, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Hyderabad, set aside a demand for differential Countervailing Duty (CVD) against a cellular phone importer. The Tribunal held that in the absence of direct and concrete evidence linking the importer to post-clearance alteration of Maximum Retail Price (MRP) labels, neither duty demand, nor confiscation, nor penalties could be sustained against the appellant.
The impugned order had been passed by the Commissioner (Adjudicating Authority) on 12.11.2015, confirming duty demands, ordering confiscation of seized goods, and imposing penalties not only on the appellant but also on its dealer — M/s Big C Mobiles Pvt Ltd — and certain named individuals, including Shri Y. Guruswamy Naidu, Shri M. Balachandrudu, and Shri K. Krishnapavan.
Facts of the Case
The appellant, Celkon Impex Pvt Ltd, was engaged in importing cellular phones marketed under the 'Celkon' brand. These imported handsets were distributed through a network of dealers, one of which was M/s Big C Mobiles Pvt Ltd, with whom the appellant had entered into a formal distribution agreement.
The Revenue department, acting on intelligence inputs and a market survey, alleged that the appellant had systematically declared a Retail Sale Price (RSP) below ₹2,000/- at the time of import for six specific models. This lower declared RSP attracted a lower rate of CVD — initially at 1%, which was revised to 6% for cellular phones with RSP above ₹2,000/- with effect from 01.03.2013. The department alleged that once the goods were cleared from customs, higher MRP stickers — reflecting values exceeding ₹2,000/- — were affixed to individual unit boxes at the dealer's premises.
Key allegation: The appellant intentionally suppressed RSP at import stage to pay lower CVD, and subsequently arranged for higher MRP labels to be applied post-clearance, in connivance with its dealer M/s Big C Mobiles Pvt Ltd.
During investigation, the department found packages of Celkon brand phones — models including ARR35, C66+, C208, C42, AR45, C720, and C820 — at the premises of M/s Big C, bearing import dates and MRP figures. Certain consignments were also seized from the customs area itself, where the declared MRP was below ₹2,000/-, while phones of similar models were reportedly being sold in the market at prices above ₹2,000/-.
Arguments Raised by the Appellant
The appellant's counsel raised several substantive legal and factual challenges before the Tribunal:
On the Alleged Related-Party Relationship
- M/s Big C Mobiles Pvt Ltd was merely one among several distributors of the appellant and operated as an independent legal entity.
- The mere presence of common directors or references in the 5th Annual Report of Celkon could not establish that the two companies had mutuality of interest or were a single economic unit.
- Shri K. Krishnapavan, Director of M/s Big C, had clearly stated in his statement that he was a non-working, sleeping partner in the appellant company with no involvement in its day-to-day operations.
- He had only ordered replacement of MRP stickers on a limited stock of certain models during the festival season to facilitate a 1+1 Jodi offer for customer discounts — a practice confirmed by Shri Poleesu Naidu, Manager (Logistics) of M/s Big C.