IPL Broadcast Equipment Removed from SEZ as for ‘DEMO’ instead of ‘Commercial Purpose’: Delhi HC Upholds ₹9.8 Cr Customs Duty, Cuts Penalty [Read Order]

TheDelhi High Court recently upheld a customs duty demand of nearly ₹9.8 crore imposed on a broadcaster on the improper removal of equipment for broadcasting the Indian Premier League (IPL) from a Special Economic Zone (SEZ), declaring it as meant for “DEMO” purposes, rather than for “commercial purpose” which it was originally imported for. The High Court granted partial relief by reducing the penalty imposed on the petitioner.

The ruling was delivered by the Delhi High Court in a writ petition filed by Eastern Broadcast Solutions Pvt. Ltd. and its directors, challenging an order passed by the Customs, Central Excise and Service Tax Settlement Commission (Settlement Commission).

In 2012, Broadcast Solutions Pvt. Ltd., Singapore, was awarded a contract by the Board of Control for Cricket in India (BCCI) to provide broadcasting equipment and related services for IPL and other cricket events. The performance of the contract in India was undertaken by its Indian associate, Eastern Broadcast Solutions Pvt. Ltd., which then imported substantial quantities of broadcasting equipment between December 2012 and March 2013.

According to the record, the imported equipment was temporarily stored at the Arshiya Free Trade and Warehousing Zone at Panvel, Maharashtra - a SEZ facility. The goods were later removed by the petitioners from the SEZ into the Domestic Tariff Area, while stating the purpose of such removal was declared as for “DEMO”.

However, investigation by the Directorate of Revenue Intelligence (DRI) revealed that the equipment was in fact used for live commercial broadcasting of IPL and other cricket matches, generating revenue and not merely for demonstration.

The DRI concluded that the declaration of “DEMO” was incorrect and that the petitioner had violated conditions attached to SEZ-related customs benefits. Consequently, the benefit of duty-free treatment was denied and full customs duty became payable on the equipment as if it had been cleared for commercial use. During the course of the investigation, the equipment was seized and the petitioner paid approximately ₹8.69 crore, later quantified at about ₹9.8 crore towards customs duty under protest.

The petitioner was later served with a show cause notice in March 2015 seeking differential duty and penalties, which ultimately culminated in proceedings before the Settlement Commission. The Commission upheld the duty demand and imposed penalties, thus leading the petitioners to approach the High Court seeking relief.

Kamal Sawhney and counsel appeared on behalf of the petitioners and limited their challenge to the settlement amount and the penalty imposed

The customs were represented by Senior Standing Counsel Akshay Amritanshu.

The Division Bench comprising Justice Prathiba M. Singh and Justice Shail Jainnoted that the imported broadcasting equipment had been removed from the Free Trade and Warehousing Zone, which is treated as a SEZ, into the Domestic Tariff Area by declaring the purpose as “DEMO” while the record clearly established that the equipment was deployed for commercial broadcasting of IPL and other cricket events which led to revenue generation.

Noting that the declaration made at the time of removal was inconsistent with the actual end-use of the goods, the High Court reiterated that SEZ-related exemptions and procedural relaxations are conditional, the importer cannot seek to retain the exemption once the conditions attached to such benefits are violated.

It was accordingly held that the customs duty demand was justified and that there was no reason to interfere with the determination of duty liability as settled by the Settlement Commission.

Accordingly, taking into account that customs duty of approximately ₹9.73 crore had already been deposited, the High Court restricted the penalty on Eastern Broadcast Solutions Pvt. Ltd. to ₹50 lakh.

Since the petitioner had already paid ₹25 lakh towards the same, the Court directed that the balance ₹25 lakh be deposited within three months. Subject to payment of the said amount, the Bench ordered that all remaining penalties shall stand quashed.

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