“Crowd Wisdom Isn’t Legal Evidence”: CESTAT Rejects Reliance on Wikipedia for Determining Tax Liability

“Crowd Wisdom Isn’t Legal Evidence”: CESTAT Rejects Reliance on Wikipedia for Determining Tax Liability

Introduction

The New Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that crowd-sourced online information, such as Wikipedia, cannot be relied upon to determine or fasten tax liability on an assessee. The Tribunal emphasized that Wikipedia, being an open-source platform subject to public edits, lacks the authenticity and reliability required for adjudication under the Customs Act.

Factual Background

The case arose when M/s Lasco Chemie Pvt. Ltd. was alleged to have fraudulently imported epoxy resin under Duty-Free Import Authorisation (DFIA) licenses issued to certain Kanpur-based leather exporters. The Directorate of Revenue Intelligence (DRI) contended that the DFIA licenses only permitted the import of impregnating resin, whereas the appellant misdeclared epoxy resin as impregnating resin to wrongfully claim exemption under the said licenses. Consequently, a show-cause notice was issued demanding differential duty under Section 28(1) of the Customs Act, 1962.

Procedural Background

The Joint Commissioner of Customs confirmed the allegations in the show cause notice, primarily relying on information obtained from Wikipedia to conclude that epoxy resin and impregnating resin were distinct substances. The Commissioner (Appeals) upheld this order.

Aggrieved, the assessee preferred an appeal before the CESTAT, New Delhi.

Issues

1. Whether reliance on information sourced from Wikipedia can form the basis for adjudication or determination of tax liability.

2. Whether epoxy resin imported by the appellant qualifies as impregnating resin eligible under DFIA licenses.

Contentions of Parties

Appellant’s Contentions: The appellant contended that epoxy resin can be categorized as impregnating resin, and therefore, the imported goods were validly covered under the DFIA licenses. It was argued that reliance on Wikipedia was impermissible as it is not an authoritative source and can be edited by anyone, thereby lacking credibility. The appellant relied on expert opinions and scientific literature to establish that epoxy resin could indeed function as impregnating resin.

Revenue’s Contentions: The Department asserted that epoxy resin and impregnating resin are different types of synthetic resins, as shown in Wikipedia. It maintained that the importer had misdeclared the goods to avail undue benefits under the DFIA licenses and was, therefore, liable for differential duty under Section 28(1) of the Customs Act.

Reasoning and Analysis

The Tribunal, comprising Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member), held that the heavy reliance by the adjudicating and appellate authorities on Wikipedia was highly misplaced. The Bench stated that, “Wikipedia is an open-source platform where anyone can write or edit information; what is on Wikipedia today may not be the same tomorrow.”

The Tribunal observed that Wikipedia entries do not constitute expert opinions and cannot be treated as evidence to support findings of misdeclaration or fraud. Such dynamic, crowd-sourced material cannot form the basis for fastening tax liability or adjudicating disputes under statutory provisions. Further, the Tribunal noted that there was insufficient evidence to conclusively establish that epoxy resin imported by the assessee was not impregnating resin. In the absence of such proof, the findings of the Joint Commissioner and Commissioner (Appeals) could not be sustained.

The CESTAT refrained from substituting its technical judgment over expert agencies like the Central Leather Research Institute (CLRI) or the Central Revenue Control Laboratory (CRCL), noting that such scientific determinations fall beyond its domain. Accordingly, the Tribunal allowed the appeal and set aside the impugned orders.

Implications

This decision reinforces the principle that administrative and quasi-judicial authorities must rely on authoritative, verifiable evidence rather than open-source or crowd-edited information. The decision underscores the evidentiary limitations of Wikipedia and similar online resources in legal and tax adjudication. It serves as a cautionary precedent for revenue authorities to base findings on technical reports, expert opinions, and statutory evidence rather than informal internet sources.

In this case the appellant was represented by Shri Alok Aggarwal and Shri Prachit Mahajan, Advocates. Meanwhile the respondent was represented by Shri Rakesh Kumar and Shri Girijesh Kumar, Advocates.