Pranav B Prem

The New Delhi Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has ruled that crowd-sourced information available on open platforms such as Wikipedia cannot be relied upon to impose tax liability or adjudicate disputes. The bench comprising Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member) delivered this observation while allowing two connected appeals filed by M/s Lasco Chemie Pvt. Ltd. and its Director, Amit Kumar Jain, challenging the Commissioner (Appeals)’ order that upheld the denial of duty exemption under Duty-Free Import Authorisation (DFIA) licences.

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Background

The appellants had imported epoxy resin under DFIA licences obtained from leather exporters. The Directorate of Revenue Intelligence (DRI) alleged that these licences only permitted the import of impregnating resin and not epoxy resin. Consequently, it was alleged that the importers had mis-declared the goods to wrongly avail exemption under Notification No. 98/2009-Cus dated 11.09.2009. Based on this allegation, the Joint Commissioner of Customs confirmed a duty demand of ₹33.29 lakh and imposed penalties under various sections of the Customs Act, 1962, holding that epoxy resin and impregnating resin are distinct materials. The Commissioner (Appeals) upheld this view, relying heavily on information sourced from Wikipedia to distinguish between the two substances.

Tribunal’s Findings

The Tribunal took strong exception to the reliance placed on Wikipedia by both the lower authorities. It observed that:“Wikipedia is an open-source platform where anyone can add or edit information. What appears on Wikipedia today may be changed tomorrow. Such crowd-sourced information cannot form the basis of any adjudication or fastening liability on any assessee.”  The Bench further noted that the authorities had failed to send the imported samples for scientific testing to an expert body such as the Central Leather Research Institute (CLRI) or the Central Revenue Control Laboratory (CRCL).

Interestingly, in another similar case, the CRCL had issued a report certifying that epoxy resin finds use as impregnating resin, which was accepted by customs authorities at the time. The Tribunal held that, in the absence of specific test results in the present case, there was no reliable evidence to conclude that the imported epoxy resin was not an impregnating resin.

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The CESTAT found that the findings of the lower authorities were unsustainable due to their reliance on Wikipedia and the lack of technical verification. Accordingly, it set aside the demand, confiscation orders, and penalties, allowing both appeals. The Tribunal emphasized that adjudicating authorities must base their findings on verifiable and authoritative sources, not on editable online content, especially in cases involving technical or scientific classification of goods.

Appearance

Counsel for Appellant/ Assessee: Shri Alok Aggarwal and Shri Prachit Mahajan

Counsel for Respondent/ Department: Shri Rakesh Kumar and Shri Girijesh Kumar

Cause Title: M/s Lasco Chemie Pvt. Ltd. v. Commissioner of Customs (Export)

Case No: Customs Appeal No. 50208 Of 2020

Coram: Justice Dilip Gupta (President), P.V. Subba Rao (Technical Member)