Customs Department Appeals Supreme Court Against Tribunal Order Favoring Samsung on Tax Demand

The Indian Customs Department has initiated legal proceedings by filing an appeal in the Supreme Court, challenging a decision made by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT). The tribunal had previously ruled in favor of South Korean electronics giant Samsung, quashing a significant tax demand. The core of the dispute lies in Samsung's classification of imported lithium-ion batteries. Customs officials allege that Samsung deliberately classified these batteries under the category of "parts for telephones for cellular networks" to benefit from a lower Integrated Goods and Services Tax (IGST) rate of 12%, instead of the applicable rates of 28% (until July 2018) and 18% thereafter. Customs claims this misclassification resulted in underpaid duties since a June 2020 notice. However, CESTAT, in June 2025, found Samsung's classification to be in line with existing tariff rules and overturned the department's demand. The Customs Department's fresh appeal seeks to reinstate this higher tax demand, escalating the legal battle. This situation further compounds Samsung's tax-related difficulties in India, following a March 2025 order where the government demanded $601 million in back taxes and penalties for alleged tariff evasion on imported telecoms equipment.

Impact This news can have a moderate impact on investor sentiment and the operational costs for Samsung India. Significant tax disputes can affect profitability and create uncertainty for multinational corporations operating in the country. It also highlights the stringent tax enforcement environment in India. Rating: 5/10.

Definitions Customs Department: A government body responsible for assessing and collecting duties on imported and exported goods and regulating the flow of goods across borders. Supreme Court: The highest judicial court in India, responsible for hearing appeals from lower courts and making final judgments on legal matters. Tribunal: An independent body established to resolve specific types of disputes, often administrative or quasi-judicial in nature. CESTAT (Customs, Excise and Service Tax Appellate Tribunal): A specialized appellate tribunal in India that handles appeals related to customs, central excise, and service tax matters. IGST (Integrated Goods and Services Tax): A tax levied on the supply of goods and services in the course of inter-state trade or commerce, including imports. It is a component of India's Goods and Services Tax regime. Misclassification: The act of incorrectly categorizing goods or services, often to gain an unfair advantage, such as lower tax rates or circumventing regulations.