CESTAT Quashes ₹56.47 Crore Customs Duty Demand On Dish TV Over Smart Card Classification

A coram of Justice Dilip Gupta (President) and Technical Member P V Subba Rao quashed an order dated April 28, 2020, passed by the Additional Director General (Adjudication), DRI.

The tribunal observed that “Merely because the classification in the Bill of Entry does not conform to the view of DRI in hindsight, the goods will not be liable to confiscation, even if the DRI's classification is correct.”

Videocon had imported viewing cards between July 2013 and March 2018 for use in its DTH set-top boxes. These cards enable conditional access to subscribed television content and are inserted into the STBs provided to customers. The company classified the imported cards under Customs Tariff Item (CTI) 8523 52 90, which specifically covers smart cards, and claimed exemption from basic customs duty and additional duty

A total of 144 Bills of Entry were filed for these imports at ports in Delhi and Mumbai. Notably, in 63 of these consignments, customs officers examined the goods before clearing them, accepting the declared classification. However, following an investigation, the Directorate of Revenue Intelligence (DRI) alleged that the cards were misclassified. It argued that the cards were not merely smart cards but functioned as integral parts of set top boxes, falling under CTI 8529 90 90.

Based on this reclassification, the DRI issued a show cause notice demanding ₹56.47 crore in customs duty and imposed equal penalties on Videocon under Section 114A. Separate penalties of ₹56 lakh each were also imposed on three senior company officials — Executive Director Saurabh Dhoot, CFO Avanthi Kanthalia, and Associate Vice President Pankaj Mathur under Section 112 of the Customs Act

Videocon contended that the imported viewing cards were standalone articles with an independent function and identity, and therefore could not be classified as “parts” of set-top boxes under Customs Tariff Item (CTI) 8529 90 90. It maintained that the goods were correctly classified under CTI 8523 52 90, which specifically covers smart cards, and that this specific heading would override any general classification under the “parts” heading in terms of Section Note 2(a) to Section XVI of the First Schedule to the Customs Tariff Act, 1975.

Videocon submitted that mere functional association or exclusive compatibility with another machine does not ipso facto render a good a part of that machine. Citing settled principles of classification, it argued that an article does not become a part merely because it is used in conjunction with another article.

The Tribunal accepted Videocon's classification. It held,

“A good will not become part of another good simply because it is used in conjunction with such good or because it is customized to work with that good. ATM cards are designed to work with ATM machines only but they do not become their parts for that reason. Likewise, a credit card is not a part of the Point of Sale Machine in which it is swiped. A audio cassette is not a part of the cassette player nor is a DVD part of the DVD player.”

On the issue of limitation, the Tribunal held that the extended period under Section 28(4) of the Customs Act could not be invoked. It observed,

“Merely because DRI has a view different from the view of the importer and the proper officers who cleared the Bills of Entry, extended period of limitation under section 28(4) cannot be invoked.” It further added, “It is neither possible nor does the importer have an obligation to anticipate the future views of DRI.”

The tribunal found that the smart cards were correctly classified. It set aside the demand of ₹56.47 crore, the confiscation of goods, and all penalties. The appeals filed by Videocon, Saurabh Dhoot, Avanthi Kanthalia and Pankaj Mathur were allowed.

Case Name: Videocon D2H Limited/Dish TV v Additional Director General, DRI

Case Number: CUSTOMS APPEAL NO. 51007 OF 2020

For DRI: Advocate Gurdeep Singh

For Dish TV : Advocates A R Madhav Rao, Mukunda Rao and Krishna Rao

Date of decision: September 23, 2025

Click Here To Read/Download The Order