Custom, Excise & Service Tax Tribunal
Shri Gorakh Bhandar vs Commissioner, Customs-New Delhi on 7 March, 2024
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI.
PRINCIPAL BENCH - COURT NO.III
Customs Appeal No.51711 of 2019 (DB)
[Arising out of Order-in-Appeal No.CC(A)CUS/D-II/ICD-PPG/219-220/2019-20
dated 27.05.2019 passed by the Commissioner of Customs (Appeals), New
Customs House, New Delhi]
M/s Shri Gorakh Bhandar Appellant
Shop No.202/A, 2380/12-13,
2nd Floor, Gali No.12, Beadon Pura,
Karol Bagh, Delhi-110 005.
VERSUS
The Commissioner of Customs (Appeals) Respondent
New Customs House, Near IGI Airport, New Delhi.
APPEARANCE:
Shri Devesh Tripathi, Advocate for the appellant Shri P.R.V. Ramanan, Special Counsel and Shri Rakesh Kumar, Authorised Representative for the respondent/Department.
CORAM:
HON'BLE MS. BINU TAMTA, MEMBER (JUDICIAL) HON'BLE MR. P.V. SUBBA RAO, MEMBER (TECHNICAL) FINAL ORDER NO. 55121/2024 DATE OF HEARING: 04.01.2024 DATE OF DECISION:07.03.2024 BINU TAMTA:
Challenge in the present appeal is to the Order-in-Appeal No.CC(A)CUS/D-II/ICD-PPG/219-220 dated 27.05.2019, whereby the Commissioner (Appeals) partly allowed the appeal by reducing the penalty amount of Rs.7 lakhs to Rs.4 lakhs imposed on the appellant under Section 112 (a)(i) of the Customs Act, 1962 (referred to as the Act) and set aside the penalty of Rs.70 lakhs imposed under Section 114 AA of the Act and upheld the order of confiscation of imported goods along with penalty of Rs.2 lakhs under Section 112 (a)(ii).2
C/51711/2019
2. The detailed facts necessary for considering the challenge by the appellant are as under:-
―(i) The appellant filed a Bill of Entry No. 2245370 dated 27.06.2017 for clearance of goods declared as Man PU Canvas Shoes through their Customs Broker namely M/s. HLPL Global Logistics Pvt. Ltd.
(hereinafter called as 'Customs Broker).
(ii) The examination of the said consignment was conducted on 29.06.2017, in presence of the representative of the customs broker wherein it was found that same pairs of shoes bore the logo of United Colors of Benetton (UCB) Brand. Since, there was a possibility that other branded goods might also be present in the said consignment, permission for 100% examination was obtained on 29.06.2017 itself and the representative of the customs broker signed below the directions given by Assistant Commissioner in token of having noted the same. On scrutiny of documents, it was found that the importer had declared retail sale price of a pair of shoes as Rs.
465/- for the purpose of assessment of additional duty of Customs. The importer had not declared in the documents filed for Customs Clearance regarding the imported goods bearing any brand.
(iii) The representative of the customs broker requested for seal cutting for 100% examination on 3 C/51711/2019 10.07.2017 and on examination of the goods, it was found that 7512 pairs of shoes and their respective packaging (in 313 cartons containing 24 pairs each) bore the logo of United Colors of Benetton while shoes in the rest of the 300 cartons bore the title "ROCK".
(iv)The representative of the importer also signed below the observation in token of having seen the same. The report was presented to the Asstt.
Commissioner on 14.07.2017 wherein he directed to verify the matter. Accordingly, letters to M/s. Benetton India Pvt. Ltd. (hereinafter called as „the right holder‟) and the Deputy Registrar of Trade Marks were sent vide C.No.C.No.VIII(ICD FBD)6/SIIB/SGB/393/2017 dated 18.07.2017 respectively. In the said letter, the right holder was asked to inspect the goods and intimate whether the same are genuine or counterfeited and whether their trademark(s) had been violated.
(v) The importer had submitted a letter dated 17.07.2017 (received on 19.07.2017) wherein he submitted that his shipment was being investigated and he understood that investigation process would take some time to complete and therefore requested for warehousing of the goods under Section 49 of the Customs Act, 1962 which was allowed on 19.07.2017. 4
C/51711/2019
(vi) Since the right holder did not give any response to the correspondence made in this regard, the right holder was contacted telephonically on 25.07.2017. The representatives from M/s. Benetton India Private Limited (hereinafter referred to as Right Holder/BIL) visited the ICD Premises on 25.07.2017 and took a sample of the goods in question. He also requested to suspend the clearance of goods under Regulation No.3(1) of Intellectual Property Rights (Import of Goods) Enforcement Rules, 2007 (hereinafter referred to as "IPR Rules, 2007").
(vii) On 26.07.2017 the Right Holder informed through email that they had received the letter dated 18.07.2017 issued by the Asstt. Commissioner, ICD Ballabhgarh on 26.07.2017. They reiterated their request not to release the consignment. The right holder further submitted a letter through email on 28.07.2017 wherein they again maintained that the products of interdicted consignment are „counterfeit‟. The right holder further requested to suspend the clearance of the subject goods immediately. The right holder added that their letter may please be treated as notice under Regulation No.3(1) of IPR Rules, 2007.
(viii)A letter dated 01.08.2017 was sent to the importer intimating that the right holder had 5 C/51711/2019 requested to suspend the clearance of the goods as they believe that the questioned goods were counterfeited of United Colors of Benetton and the goods were infringed with the correct logo and trademark of United Colors of Benetton.
3. As Right Holder objected to the import of the impugned goods, a letter dated 01.08.2017 was sent to the Right Holder to comply with the conditions required for registration under IPR Rules, 2007, failing which, the goods shall be released inadvertently. Consequently, the Right Holder sent a request letter dated 03.08.2017 for getting registered as per IPR Rules and also to comply with the other requisite formalities, as provided under the IPR Rules. The Right Holder was informed vide letter dated 10.08.2017 that the notice for registration has been accepted by the competent authority on 09.08.2017. In the meanwhile, on a query received from the importer vide letter dated 3.8.2017, a letter dated 10.08.2017 was sent to the importer informing that M/s. Benetton India Pvt. Ltd. is the Right Holder and the notice for registration has been accepted by the competent authority.
4. The importer was also asked to join the proceedings to be held on 16.08.2017 in presence of the Right Holder. However, the importer did not join the proceedings either on 16.08.2017 or on the subsequent date on 28.08.2017. On the next date on 7.9.2017, Ms. Neha Kothari appeared on behalf of the Right Holder, where her statement was recorded under Section 108 of the Act 1962, wherein she stated that the appellant was not their Authorized Representative and no such order for import of the impugned goods 6 C/51711/2019 has been given to them. She categorically stated that the importer has imported counterfeit or prohibited goods in violation of the provisions of the Rules and of the provisions of the Customs Act. One Mr. Sagar Rohtagi appeared as Authorized Representative of the importer but he disappeared without giving any information during the course of drawing the samples. The importer was informed of such conduct and non-cooperation of his Authorized Representative vide letter dated 11.09.2017. Considering that the importer had indulged in mis-declaration/suppression of the goods in the import documents i.e. invoice, packing list and the bill of entry with intent to import counterfeit goods, which are prohibited for import, the goods were seized under Section 110 of the Act vide seizure memo dated 21.09.2017.
5. Show cause notice dated 16.11.2017 was issued to the appellant for non-declaration of the correct description of the goods in the import documents thereby violating Section 46(4) of the Act and Rules 11 and 14 of the Foreign Trade (Regulation) Rules, 1993, importing the prohibited goods bearing the logo of "UCB" and „ROCK‟ brand and hence the goods were liable for confiscation under Section 111(d) and 111(m) of the Act, respectively and for penal action under Section 112(a)(i), 112(a)(ii) and Section 114 AA of the Act. On adjudication vide order dated 08.03.2018, the proposal in the show cause notice was confirmed. The appellant challenged the said order before the Commissioner (Appeals), who was pleased to allow the same in part and modify the order-in- original reducing the penalty and setting aside the penalty under Section 114AA of the Act. Hence, the appellant has filed this appeal 7 C/51711/2019 before this Tribunal challenging the confiscation and penalty imposed under Section 112(a) of the Act.
6. Shri Devesah Tripathi, learned counsel for the appellant has challenged the impugned order on the ground that no order has been passed for suspension of clearance of the goods as per Rule 7 of IPR Rules, 2007 and the letter dated 18.07.2017 cannot be treated as the order of suspension. Referring to Rule 7(3), he submitted that there has to be a letter saying that the clearance of subject consignment has been suspended w.e.f. a certain date and also stating the reasons thereto. According to him, the IPR Rules prescribed the time limit for taking the action, which in the present case has not been followed. Rule 7(2) provides that the importer shall be immediately informed about the suspension of the clearance of the goods and since he has been informed as late as on 01.08.2017, it implies that clearance of goods was not suspended till that date. Learned Counsel also pointed out that the endorsement made by Shri C.K. Singh on 25.07.2017 shows that the Department is somehow trying to make up the case against him as the entire proceedings was conducted in the absence of the appellant or his representative and without drawing a Panchnama. He disputed the alleged examination on 25.07.2017 by Shri C.K. Singh and that the note has been inserted with back date only to establish that the time period was followed. The compliance of Rule 5 was also done as late as on 09.08.2017 and, therefore, the compliance of Rule 7(4) was beyond the prescribed period of 5 days. The fact is that the Right Holder joined the proceedings much later than the prescribed period of 10 working days and hence 8 C/51711/2019 violated Rule 7(6) of the IPR Rules. The submission of the learned counsel for the appellant is that the time limit prescribed in the Rules is mandatory as the consequence of not following the said time limit results in release of the goods. The appellant also challenged that on the date of seizure i.e. 21.09.2017, there was nothing on record that M/s. Benetton was the Right Holder of the logo in question and hence, there could not have been any reasonable belief that the goods were liable to be confiscated. Further, the goods can be seized under Section 110 of the Act by the Deputy Commissioner or the Asstt. Commissioner, whereas in the present case, the goods were seized by the Inspector. So far as the goods bearing the title "ROCK" are concerned, it is not a case of mis-declaration as "ROCK" is not a brand, which is owned by anybody and therefore, non-mentioning of the same on the import documents does not make any difference. Learned counsel for the appellant has also raised an issue of violation of principles of natural justice as the reply dated 08.08.2018, 13.08.2018 and 16.08.2018 have not been taken on record by the Commissioner (Appeals) and the Authorities below have relied upon fresh evidence, which was not part of the show cause notice. Therefore, the adjudication proceedings are bad. The learned Counsel for the appellant has relied upon the following decisions:-
"1. Jatin Ahuja Vs. Union of India - 2013 (287) ELT 3 (SC)
2. Shantilal Mehta Vs. Union of India - 1983 (14) ELT 1715 (Delhi)
3. SRK Enterprises Vs. Commr. of Cus (Import),
4. Nhava Sheva - 2012(280) ELT 264 (Tribunal-
Mumbai)‖ 9 C/51711/2019
7. Mr. P.R.V. Ramanan appeared as the Special Counsel for the Department and relied on the observations made in the impugned order as also the findings recorded in the order-in-original. Referring to the certificate having TN No.2326567, the trade mark and know-how agreement and the third amendment thereto dated 12.09.2014, which covered the logo in respect of the footwear also, he submitted that Benetton India is the Right Holder of the logo w.e.f. 12.09.2014 and which continued up to 31.01.2022. He further submitted that comparing the logo bearing on the shoes with the logo registered in the name of Benetton, the Authorities below have come to the conclusion that the former was deceptively similar so as to mis-lead a person and cast a confusion in his mind while purchasing the product. Learned counsel relies on the provisions of the Notification No.51/2010 dated 30.06.2010 and as a result thereof, the goods in question were liable for confiscation in terms of Section 111(d). The other aspect relating to the use of the "ROCK" brand, the appellant had not made full and complete disclosure thereof in the bill of entry regarding the description of the goods and thereby contravened the provisions of Section 46 of the Act. In so far as the non-adherence of the time limit prescribed under Rules 2007, he submitted that the Authorities below have noted that the same have been complied with except for sub- rule(4) of Rule 7. However, the goods could not be released as all other conditions of import of the goods under the Act were not complied with.
8. Heard both the sides and perused the records. 10
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9. We find that though the learned Counsel for the appellant has basically challenged the non-compliance of the provisions of the IPR Rules, 2007, particularly with reference to the time line prescribed therein, however, since the IPR Rules have been made under Section 156 read with Section 11 of the Act, it is necessary to first examine the provisions of the Act. Therefore, the preliminary subject matter of dispute, in the present case which needs to be addressed is whether the goods in question are "genuine or counterfeit goods" as they bear the logo "UCB" and whether M/s Benetton India Ltd. is the rightful owner of the logo. Since the issues relate to the import of goods by the appellant as "Men Footwear", we need to consider the declaration made in the import documents. In the Bill of Entry the goods have been described as, "Man PU Canvas Shoes" and in the Invoice and the Packing List, the description of goods is mentioned as "Men Footwear (PU Canvas Shoes)". The appellant had nowhere mentioned in these documents about the brand or title of the Shoes, i.e., logo "UCB" or "ROCK", whereas on examination it was observed that 7512 pairs of shoes were bearing the logo of "UCB" and 7200 pairs of shoes, bearing title "ROCK". Thus, it appears that the appellant had not declared the correct description of the goods in the import documents and have thereby resorted to mis-
declaration/suppression of the goods in the import documents. The appellant having contravened the provisions of the Customs Act is liable for action there under.
10. There is no dispute that the goods under import were bearing the logo of "UCB" and title "ROCK". Now we come to the issue 11 C/51711/2019 whether appellant is the owner of the logo and the title. From the records of the case, we find that appellant has not claimed himself to be the owner of the logo or the title in question rather has only challenged that right holder is not the rightful owner of the logo "UCB" on various grounds. We find that the right holder has provided the Trademark and Know How License Agreement dated 26.12.2010 executed between Benetton India Pvt. Ltd. and Bencom s.r.l, the relevant paragraphs of the agreement are quoted below :
"viii(a) manufacture, or permit to be manufactured by its Agreed Sub-contractors, the Licensed Products, bearing the Licensed Trademarks;
(b) market, distribute and sell in the Territory the
Licensed Products, bearing the Licensed
Trademarks and manufactured on the basis of the Clause 3(1)(a) above, solely through the Authorised Sales Outlets (as specified in the fourth Schedule hereto);
(c) under Clause 3(1)(a) and 3(1)(b) hereof.
As per Para-15 of the said agreement "This Agreement shall have its date of signature as its initial Date of Effect and shall remain in force for an undetermined period of time until terminated by either party giving to the other three (3) months‟ prior notice in writing― Subsequently, Certificate having Trademark No. 2326567 registered on 4.05.2012 under the Trademarks Act, 1999 was issued on 26.12.2013 by Registrar of Trademark, Delhi wherein the said logo "UCB" has been registered in the name of Bencom s.r.l. which apart from other goods also includes footwear. We further find that the original agreement was amended on 12.9.2014 where right to use the said logo "UCB" is also covered. The first schedule of the letter dated 12.09.2014 provides for licensed goods which includes footwear items also. The third schedule of the letter has trademark registration, the logo 12 C/51711/2019 "UCB" finds mention at the end of the said trademark registration wherein details are as under:
Class Country Trade Filing Filing Reg. Date Reg. Validity mark Date No. No. 25 India 31/01/92 566633 31/01/2002 566633 31/1/2022
11. From the aforesaid, we find that M/s Benetton India Pvt. Ltd is the right holder (Licensee) of the said logo w.e.f. 12.09.2014 to 31.01.2022 as the original agreement dated 26.12.2010 has to be read with the amended agreement dated 12.09.2014 which incorporates the right to use the logo "UCB" having been registered on a later date. The right holder has also claimed their right on the said logo w.e.f. 25.07.2017. They produced the photograph of the genuine shoe of Benetton having the "UCB" logo . . The contention raised by the appellant that BIL is not the right holder for the logo mentioned on the shoes and they are not licensed for the said logo needs to be rejected. We are, therefore, of the view that the logo "UCB" belongs to BIL for footwear also and they are the right holder of the logo . Consequently, the use of the said logo by anybody else (the appellant) who is not authorized by BIL would amount to infringement of the trademark of BIL.
12. In this regard we need to appreciate the statement of Neha Kothari, Company Secretary & Assistant Manager of BIL recorded under section 108 of the Customs Act where she specifically stated that the appellant is not their authorised importer and also that they do not have any importer rather they directly import their products from other countries. It is on record that Neha Kothari while giving notice under Rule 3(2) of the Rules, 2007, has stated 13 C/51711/2019 that the goods in question infringed their intellectual property rights by infringing the correct logo and trademark of UCB. Neha Kothari was cross examined on 21.2.2018 where also she reiterated her statement. Sh. Yogesh Kumar Yadav, Senior Executive Legal of BIL categorically denied that the goods in question pertained to their company and stated that they are counterfeit goods. Thus we conclude that the goods in question bearing the logo of "UCB" are counterfeit goods as the appellant has failed to substantiate that they are the rightful owners of the logo and on the other hand BIL has proved that the logo "UCB" belongs to them and they are the rightful owners of the logo and the appellant by using the said logo on the shoes under import has infringed the trademark rights of BIL. The appellant deliberately suppressed that the goods are marked with the brand/logo as no such declaration was made on the Bill of Entry, Invoice or the Packing List and the goods are therefore liable for confiscation under Section 111(d).
13. We may now deal with the other goods bearing the title or name "ROCK". Here also we find that the appellant had intentionally and deliberately not mentioned in the import documents that the Shoes imported by them were bearing the mark "ROCK". The plea taken by the appellant is that "ROCK" brand was not claimed by anyone as their Trademark/Brand and hence there was no infringement in terms of the IPR Rules, 2007, however, we do not find any merit in the argument. Here also we find that in the bill of entry the declaration made by the appellant is "Man PU Canvas Shoes" and no brand is mentioned whereas in terms of Section 46(4) of the Customs Act, the importer while 14 C/51711/2019 presenting a bill of entry is required to make and subscribe to a declaration as to the truth of the contents of such bill of entry and shall in support of such declaration, produce to the proper officer the invoice, if any relating to the imported goods. As the appellant did not make correct and complete disclosure of the brand "ROCK", the goods did not correspond to the description with the entry made under Section 46 of the Act and was therefore liable for confiscation under Section 111(m) of the Act.
14. The goods in question bearing the logo "UCB" and the brand "ROCK" have been assessed under self assessment which casts responsibility on the importer/exporter to furnish full, correct and complete description. The appellant having suppressed the fact that the shoes imported bears the logo "UCB" and brand "ROCK" have mis-declared the goods under import with intent to evade the duty liability as the goods bearing a registered logo or brand name are normally priced at higher value. It is a known fact that brand/trademark has goodwill in the market and have special recognition in the commercial world fetching higher price. There is no dispute that the logo bearing on the shoes is deceptively similar to the logo of UCB so as to mislead a buyer. In this regard we may refer to the decision in the case of Amritdhara Pharmacy Vs. Satya Deo Gupta - AIR 1963 SC 449, where Apex Court while considering the test for determining the similarity in two words relevant to an infringement action held that:
"you must take the two words. You must judge them, both by their look and by their sound. You must consider the goods to which they are to be applied. You must consider the nature and kind of customer who would be likely to buy those goods. In fact you must consider all the surrounding circumstances and you must further consider what is likely to happen if each of those trademarks is used in normal ways as a trade mark for the 15 C/51711/2019 goods of the respective owner of the marks. If considering all those circumstances, you come to the conclusion that there will be a confusion- that is to say, not necessarily that one man will be injured and the other will gain illicit benefit, but that there will be a confusion in the mind of the public which will lead to confusion in the goods-then you may refuse the registration, or rather you must refuse the registration in the case".
Similarly in the case of Parle Products Vs. J.P. & Co. - (1972) 1 SCC 618), the Supreme Court held that in order to come to the conclusion whether one mark was deceptively similar to another the broad and essential feature of the two were to be considered. They should not be placed side by side to find out if there were any differences in the design and if so, whether they were of such character as to prevent one design from being mistaken for the other. It would be enough if the impugned mark bore such an overall similarity to the registered mark as would be likely to mislead a person usually dealing with one to another, if offered to him. It is well known that UCB has acquired international reputation and goodwill and has also been able to establish its name in the Indian market and has significant presence in India. Consequently, the goods in question (shoes) bearing the logo of UCB are bound to differ their trade name and are therefore, counterfeit goods, the import of which is prohibited in the Act.
15. We may now consider whether absolute confiscation of the goods bearing the logo "UCB" is justified. Notification No.51/2010-Cus (NT) dated 30.06.2010 has been issued by the Government of India in exercise of powers under Section 11(2)(n) and Section 11(2)(u) of the Act which empowers the government to prohibit importation of certain goods for the purpose of the protection of patents, trademarks, designs, and geographical 16 C/51711/2019 indications and copyrights or the prevention of the contravention of any law for the time being in force. The notification, therefore prohibits the import of goods intended for sale or use in India, subject to following conditions and procedures as specified in Intellectual Property Rights, (Imported Goods) Enforcement Rules, 2007 namely :
―i. goods having applied thereto a false trademark as specified in Section 102 of the Trade Mark Act, 1999 (47 of 1999);
ii. goods having applied thereto a false description within the meaning of Clause(i) of sub-section(1) of Section 2 of the Trade Marks Act, 1999 (47 of 1999), otherwise than in relation to any of the matters specified in sub- clauses (ii) and (iii) of the Clause (za) of that sub- section."
16. We have already held as above that the goods imported by the appellant are „counterfeit goods‟ being marked with the logo of UCB and thereby infringed the trademark rights of BIL. In terms of the aforesaid notification read with Rule 6 of IPR Rules the goods in question fall in the category of "prohibited goods" which is defined under Section 2(33) of the Act as under :
"Section 2(33) "prohibited goods" means any goods the import or export of which is subject to any prohibition under this Act or any other law for the time being in force but does not include any such goods in respect of which the conditions subject to which the goods are permitted to be imported or exported have been complied with"
It would also be relevant to refer to the definition of the term "smuggling" as defined under Section 2(39) of the Act, which reads as :
―2(39) ―smuggling‖, in relation to any goods, means any act or omission which will render such goods liable to confiscation under section 111 or section 113;"
Since the goods fall in the category of "prohibited goods", the appellant by his act or omission of not furnishing the correct description of the goods in the import documents has rendered 17 C/51711/2019 such goods liable for absolute confiscation as per Section 111 and consequently, the import thereof amounts to "smuggling". We therefore do not find any error in the impugned order ordering for absolute confiscation of the prohibited goods. We would like to refer to certain decisions in this regard.
17. The Supreme Court in the case of Om Prakash Bhatia Vs. Commissioner -- 2003 (155) ELT 423 (SC) following the decision in Sheikh Mohammed Omar -1970 (2) SCC 728 enunciated the meaning of the term „prohibited goods‟ as defined by Section 2(33) and the authority of the Customs department to confiscate the goods, observing as:
―10. From the aforesaid definition, it can be stated that (a) if there is any prohibition of import or export of goods under the Act or any other law for the time being in force, it would be considered to be prohibited goods; and (b) this would not include any such goods in respect of which the conditions, subject to which the goods are imported or exported, have been complied with. This would mean that if the conditions prescribed for import or export of goods are not complied with, it would be considered to be prohibited goods. This would also be clear from Section 11 which empowers the Central Government to prohibit either ‗absolutely' or ‗subject to such conditions' to be fulfilled before or after clearance, as may be specified in the notification, the import or export of the goods of any specified description. The notification can be issued for the purposes specified in sub-section (2). Hence, prohibition of importation or exportation could be subject to certain prescribed conditions to be fulfilled before or after clearance of goods. If conditions are not fulfilled, it may amount to prohibited goods."
18. Similar issue was raised in the case of Malabar Diamond Gallery P. Ltd Vs. Additional Director General, Directorate of Revenue Intelligence, Chennai - 2016 (341) ELT 65 (Mad.), where the Madras High Court referring to the observations in Sheikh Mohammed Omar (Supra) and Om Prakash Bhatia (Supra) and other decisions, inter-alia observed:
―86. For prohibitions and restrictions, Customs Act, 1962, provides for machinery, by means of search, seizure, 18 C/51711/2019 confiscation and penalties. Act also provides for detection, prevention and punishment for evasion of duty.
87. The expression, "subject to prohibition in the Act and any other law for the time being in force." in Section 2(33) of the Customs Act, has wide connotation and meaning, and it should be interpreted, in the context of the scheme of the Act, and not to be confined to a narrow meaning that gold is not an enumerated prohibited goods to be imported into the country. If such narrow construction and meaning have to be given, then the object of the Customs Act, 1962, would be defeated."
19. The High Court of Delhi in the case of Nidhi Kapoor - dated 21.08.2023 reported in 2023 (8) TMI 1008 considered similar issues on the point as under:-
―I. In respect of Scope of „prohibited goods‟ under section 2(33) of the Customs Act, 1962 („Act‟) i. Whether the definition of prohibited goods under the Act includes goods which are subject to conditions?
ii. Which category of goods will be non-prohibited, but nonetheless liable to confiscation.
II xxx III. What is the scope of redemption under section 125 of the Act?"
20. Further, in the main judgment, Justice Dharmesh Sharma categorically held:-
―70. In the foregoing discussion, we answer the issues framed to the effect that Section 2(33) of the Act shall also include importation of such goods within the scope of "prohibited category" with regard to which the mandatory condition under the Act as also in other relevant notifications/circulars issued by the DGFT, the RBI or any other authority have not been complied with ,or in other words the restrictions imposed by the concerned authorities have not been adhered to.
21. In his separate judgment concurring with the aforesaid view, Justice Yashwant Varma observed as under:-
"145. In summation, we note that Section 2(33) of the Act while defining prohibited goods firstly brings within its dragnet all goods in respect of which a prohibitory notification or order may have been issued. That order could be one promulgated either under Section 11 of the Act, Section 3(2) of the FTDR or any other law for the time being in force. However, a reading of the 19 C/51711/2019 latter part of Section 2(33) clearly leads us to conclude that goods which have been imported in violation of a condition for import would also fall within its ambit. If Section 2(33) were envisaged to extend only to goods the import of which were explicitly prescribed alone, there would have been no occasion for the authors of the statute to have spoken of goods imported in compliance with import conditions falling outside the scope of prohibited goods‖.
146. Our conclusion is further fortified when we move on to Section 11 and which while principally dealing with the power to prohibit again speaks of an absolute prohibition or import being subject to conditions that may be prescribed. It is thus manifest that a prohibition could be either in absolutist terms or subject to a regime of restriction or regulation. It is this theme which stands reiterated in Section 3(2) of the FTDR which again speaks of a power to prohibit, restrict or regulate. It becomes pertinent to bear in mind that in terms of the said provision, all orders whether prohibiting, restricting or regulating are deemed, by way of a legal fiction, to fall within the ambit of Section 11 of the Act. This in fact reaffirms our conclusion that Section 2(33) would not only cover situations where an import may be prohibited but also those where the import of goods is either restricted or regulated. A fortiori and in terms of the plain language and intent of Section 2(33), an import which is effected in violation of a restrictive or regulatory condition would also fall within the net of prohibited goods‖.
22. In the case of Malabar Diamonds Gallery P. Ltd. (supra), the Madras High Court while interpreting the provisions of section 110A of the Act, especially the word "may" and having regard to the prohibition/restrictions in the Act and the conditions to be complied with held that provisional release of the goods liable for confiscation, is not automatic. As prohibition/ restriction is inbuilt in the Customs Act the Court rejected the prayer for provisional release of the goods, observing as under:
―95. Under the Customs Act, 1962, the authorities are duty bound to pass orders for confiscation, impose penalty, initiate prosecution and pending conclusion of the adjudicating proceedings, may order provisional release. At the time, when discretion is exercised under Section 110A and if any challenge is made under Article 226 of the Constitution of India, the twin test, to be satisfied is "relevance and reason". Testing the discretion exercised by the authority, on both subjective and objective satisfaction, as to why, the goods seized, cannot be released, when smuggling is alleged and on the materials on record, we are of the view that the discretion exercised by the competent authority, to deny provisional release, is in accordance with law. When 20 C/51711/2019 there is a prima facie case of smuggling, for which, action for confiscation is taken, such proceedings taken should be allowed, to reach its logical end, and not to be stiffed, by any provisional release.‖
23. The issue whether the goods are liable to absolute confiscation has been dealt by the Supreme Court in Union of India Vs. Raj Grow Impex LLP - 2021 (377) ELT 145 (SC) and referring to the provisions of section 125 of the Act, it was observed:
―69.1 A bare reading of the provision aforesaid makes it evident that a clear distinction is made between ‗prohibited goods ‗ and ‗other goods'. As has rightly been pointed out, the latter part of section 125 obligates the release of confiscated goods (i.e., other than prohibited goods) against redemption fine but, the earlier part of the provision makes no such compulsion as regards the prohibited goods; and it is left to the discretion of the Adjudicating Authority that it may give an option for payment of fine in lieu of confiscation. It is innate in this provision that if the Adjudicating Authority does not choose to give such an option, the result would be of absolute confiscation.
―79. As noticed, the exercise of discretion is a critical and solemn exercise, to be undertaken rationally and cautiously and has to be guided by law; has to be according to the rules of reason and justice; and has to be based on relevant considerations. The quest has to be to find what is proper. Moreover, an authority acting under the Customs Act, when exercising discretion conferred by Section 125 thereof, has to ensure that such exercise is in furtherance of accomplishment of the purpose underlying conferment of such power. The purpose behind leaving such discretion with the Adjudicating Authority in relation to prohibited goods is, obviously, to ensure that all the pros and cons shall be weighed before taking a final decision for release or absolute confiscation of goods."
24. In Nidhi Kapoor (supra), the Delhi High Court while holding that an infraction of a condition for import of goods would also fall within the ambit of section 2(33) of the Act, and thus their redemption and release would become subject to the discretionary power of the Adjudging Officer, also observed :
―70. We further have no hesitation in holding that the importation of the gold is a prohibited item within the meaning of Section 2(33) of the Act; and that redemption in case of importation of gold which is brought into India illegally in the form of "smuggling" does not entitle the owner or importer for automatic release/redemption of such item, and therefore, as a necessary corollary a decision to allow release/redemption of the 21 C/51711/2019 goods confiscated with or without imposition of fine in addition to payment of requisite duty is vested in the discretion of the Adjudicating Officer, who needless to state is duty bound to exercise his discretionary powers not only after considering the facts and circumstances of each case before it, but also in a transparent, fair and judicious manner under Section 125 of the Act."
"136. We also take note of the significance of Section 111 of the Act which deals with the confiscation of improperly imported goods. While dealing with the circumstances in which the imported goods may become liable for confiscation, the provision firstly speaks of dutiable or prohibited goods. Section 111, apart from speaking of dutiable or prohibited goods also brings within its net goods which have come to be imported either in violation of conditions prescribed or goods which have been concealed as well as imported articles which may have otherwise not complied with the conditions prescribed under the Act.
137. What thus clearly appears to flow from Section 111 is of the power of confiscation being extendable not just in the case of dutiable or prohibited goods but also to goods whose import may have been effected in violation of the conditions prescribed by the Act. This is clearly evident from a reading of Clauses (e), (f), (g), (h), (i), (j), (m),(n), (o) and
(p) of Section 111."
In view of the judicial pronouncements, we have no hesitation in arriving at the conclusion that the goods under import affixed with the logo In view of the judicial pronouncements, we have no hesitation in arriving at the conclusion that the goods under import affixed with the logo In view of the judicial pronouncements, we have no hesitation in arriving at the conclusion that the goods under import affixed with the logo of UCB has infringed the intellectual property rights of BIL, therefore, being counterfeit goods, they fall in the category of "prohibited goods", the import of which amounts to "smuggling" and hence have been rightly confiscated in absolute terms. Thus no interference is called for with the impugned order of absolute confiscation.- of UCB has infringed the intellectual property rights of BIL, therefore, being counterfeit goods, they fall in the category of "prohibited goods", the import of which amounts to "smuggling" and hence have been rightly confiscated in absolute terms. Thus no interference is called 22 C/51711/2019 for with the impugned order of absolute confiscation. - of UCB has infringed the intellectual property rights of BIL, therefore, being counterfeit goods, they fall in the category of "prohibited goods", the import of which amounts to "smuggling" and hence have been rightly confiscated in absolute terms. Thus no interference is called for with the impugned order of absolute confiscation.
25. The shoes bearing the brand "ROCK" not being "prohibited goods" can be released as per the provisions of Section 125 of the Act which provides that the officer adjudging in case of other goods which are not prohibited goods shall give an option to the owner or the person from whose possession or custody the goods have been seized to pay fine in lieu of confiscation. The impugned order holding that such goods not being prohibited goods could not be confiscated absolutely was justified in granting an option to redeem the same on payment of redemption fine of Rs.2,50,000/- under Section 125(1) of the Act. There is no infirmity in the impugned order and hence the same is hereby affirmed.
26. The reliance placed by the appellant on the decision of the Delhi High Court in Jatin Ahuja (supra) and also in Shanti Lal Mehta (supra) do not support the case of the appellant as the judgements were delivered in the context of Section 110 of the Customs Act which puts a limit to the power of seizure and retention of goods by the officer. The High Court took the view that when once action is taken under Section 124, before the expiry of the period, as contemplated in Section 110(2), Revenue may continue to retain the goods. Since, the right of restoration of the seized goods is a vested civil right, which accrued to the owner of 23 C/51711/2019 the goods on the expiry of six months, therefore, the retention of the seized goods by the Customs in this case beyond the time limit was held to be illegal and without jurisdiction as the same was directly in contravention of subsection (2) of Section 110 of the Customs Act. There is no quarrel with the observations made by the High Court in Jatin Ahuja (supra) that when a provision of law enjoins the performance of any Act and further mandates the consequences for non-performance, the condition is mandatory, however, the same is not applicable here, for the simple reason that the IPR Rules specifically provides that goods shall be released provided that all of the conditions of import of such goods under the Customs Act, 1962 have been complied with. Thus the consequences of release of goods is not automatic but is shifted on the satisfaction that other conditions of import of such goods under the Customs Act, 1962 have been complied with. We have already discussed above that in the present case the basic conditions of import of goods of making correct declaration in the import documents has not been satisfied thereby there is clear violation of the provisions of the Customs Act. The decision of the Tribunal in SRK Enterprises (supra) is also distinguishable as finding has been recorded in paragraph 10 there that neither the time prescribed in the IPR rules have been followed, nor the conditions laid down in Rule 3 has been complied with. Here we find that the Adjudicating Authority has dealt in detail with the compliance of the provisions of the IPR Rules and we do not find any infirmity in the findings recorded in that regard. 24
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27. Having upheld the confiscation of the impugned goods as ordered by the Authorities below, we may examine whether the penalty imposed on the appellant is justified. The issue of imposition of penalty under Section 112(a)(i)and Section 114AA has already been re-considered by the Commissioner in the impugned order finding it excessive and therefore reduced the same from Rs.7,00,000/- imposed under Section 112(a)(i) to a sum of Rs.4,00,000/-. The penalty imposed under Section 114AA of the Act has already been set aside in the impugned order observing that Section 114AA was introduced, mainly to cover paper transactions, without physical movement of goods in export matters, with a view to obtaining export benefits fraudulently and since the present case is one of mis-declaration of description and value for which Section 112(a)(i) of the Act has already been invoked, there is no justification to impose further penalty under Section 114AA of the Act. We are of the opinion that the Commissioner has dealt with the issue very reasonably and fairly which do not require any interference and the penalty imposed under Section 112 (a)(i) and (ii) of the Act is justified.
28. We now come to the applicability of the Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007. The said Rules are framed by the Central Government in exercise of the powers conferred by sub-section (1) of Section 156 of the Customs Act, 1962 read with clauses (n) and (u) of sub-section (2) of section 11 of the said Act. Rule 2 is a definition clause. Rule 2(a) defines "goods infringing intellectual property rights". Rule 2(b) defines "Intellectual Property". Rule 2(c) defines "Intellectual property law" 25
C/51711/2019 to mean the Copyright Act, 1957, the Trade Marks Act, 1999, the Patents Act, 1970, the Designs Act, 2000 or the Geographical Indications of Goods (Registration and Protection) Act, 1999. Rule 2(d) defines "right holder."
The said Rules have been examined in the decision of the Bombay High Court in UPS Sales Vs. Union of India - 2023 -SCC- Online 1433, which are quoted below:-
"10. Rule 3 provides for "Notice by the right holder". A right holder is empowered to give notice in writing to the Commissioner of Customs or any Customs officer authorized in this behalf by the Commissioner, at the port of import of goods infringing intellectual property rights in accordance with the procedures and under the conditions as set out in these Rules, requesting for suspension of clearance of goods suspected to be infringing intellectual property right. The notice is required to be given in the prescribed format as provided for under the rules. If such a notice is not provided, sub-rule (4) of Rule 3 would empower the Deputy Commissioner of Customs or Assistant Commissioner of Customs to ask the right holder or his authorized representative to provide the same within 15 days. The right holder is also required to inform customs authority when his intellectual property ceased to be valid or if he ceases to be the owner of such intellectual property right. Rule 4 provides for "Registration of notice by the Commissioner". Rule 5 provides for "Conditions for registration". Rule 6 provides for "Prohibition for import of goods infringing intellectual property rights". Rule 7 provides for "Suspension of clearance of imported goods.
11. Insofar as the present proceedings are concerned, Rules 6 and 7 are relevant in regard to exercise of powers by the Deputy Commissioner of Customs or Assistant Commissioner of Customs are concerned. Rules 6 and relevant extract of Rule 7 reads thus:
―6. Prohibition for import of goods infringing intellectual property rights.-
After the grant of the registration of the notice by the Commissioner on due examination, the import of allegedly infringing goods into India shall be deemed as prohibited within the meaning of Section 11 of the Customs Act, 1962.
7. Suspension of clearance of imported goods-
(1)(a) Where the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, based on the notice given by the right holder has a reason to believe that the imported goods are suspected to be goods infringing intellectual property rights, he shall suspend the clearance of the goods.
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(b) The Deputy Commissioner of Customs or
Assistant Commissioner of Customs, as the case may be, may, on his own initiative, suspend the clearance of goods, in respect of which he has prima facie evidence or reasonable grounds to believe that the imported goods are goods infringing intellectual property rights."
12. Rule 10 provides for "supply of information to the importer, which reads thus:
―10. Supply of information to the importer-
At the request of the importer or his duly authorized representative, Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, shall inform the name and address of the right holder and without prejudice to the protection of confidential information the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, may also provide additional relevant information relating to the consignment which has been suspended from clearance."
14. From the reading of the Rules, it is clear that they are in the context of goods infringing intellectual property rights as defined in Rule 2(a), to mean any goods which are made, reproduced, put into circulation or otherwise used in breach of the intellectual property laws in India or outside India and without the consent of the right holder or a person duly authorized to do so by the right holder. Thus, what is significant is that the same directly concern Intellectual property rights of the right holder or a person authorized to do so by the right holder and not any other person who would not have any relation to the said goods. This more particularly as „right holder‟ has been defined in Rule 2(d) to mean a natural person or a legal entity, which according to the laws in force is to be regarded as the owner of protected intellectual property right or its duly authorized exclusive licensee as defined. As noted above, Rule 3 provides for "Notice by the right holder" to the Customs Authorities in relation to goods infringing Intellectual property rights and requesting for suspension of clearance of goods suspected to be infringing intellectual property rights.
Rule 4 provides for registration of such notice and Rule 6 provides for prohibition for import of goods infringing intellectual property rights. Thus, the 2007 Rules provide for a complete scheme in relation to the goods infringing Intellectual property rights falling under the definition of Intellectual Property as defined in Rule 2(a). It is only after the registration of notice by the Commissioner, the import of infirming goods into India is deemed to be prohibited within the meaning of Section 11 of the C.E. Act as ordained by Rule 6".
29. As noted by the Bombay High Court in NBU Bearings Pvt Ltd vs Union of India, 2021 SCC Online Bom 361, "The IPR Rules do not confer any new intellectual property rights. They prescribe a remedy to prevent importation of goods that infringe 27 C/51711/2019 intellectual property rights recognized and defined under the parent statutes relating to copyright, patent, trademarks, designs, and geographical indications."
30. Having noted the analysis of the Rules, we may examine the compliance of the said Rules in the facts of the present case and also the prejudice, if any, that has been caused to the appellant by the non compliance thereof. The two material issues relating to the procedure followed in terms of the rules, as considered by the adjudicating authority are:
(i) Whether jurisdictional Assistant Commissioner of Customs has immediately informed the importer and the right holder or their respective authorized representative through a letter issued by speed post or through electronic mode of suspension of clearance of goods and had stated reasons for suspension as per Rule 7(2) of the Intellectual Property Right (Imported Goods) Enforcement Rules, 2007, (hereinafter referred to as Rules, 2007).
(ii) Whether time limit in sub-rule (3), (4) and (6) of the Rules, 2007 was followed by the jurisdictional Assistant Commissioner.
31. Before examining the compliance of the IPR Rules, 2001, we may quote the relevant clauses of Rule 7 as under:
"7(2) The Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be shall immediately inform the importer and the right holder or their respective authorized representatives through a letter issued by speed post or through electronic mode of the suspension of clearance of the goods and shall stated in the reasons for such suspension.
(3) Where clearance of the goods suspected to be infringing intellectual property has been suspended and the right holder or his authorized representative does not join the proceedings within a period of ten working days from 28 C/51711/2019 the date of suspension of clearance leading to a decision on the merits of the case, the goods shall be released provided that all other conditions of import of such goods under the Customs Act, 1962 have been complied with.
(4) where the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, has suspended clearance of goods on his own initiative and right holder does not give notice under Rule 3 of the Rules or does not fulfill the obligation under Rule 5, within five days from the date of suspension of clearance, the goods shall be released provided that all other conditions of import of such goods under the Customs Act, 1962, have been complied with.
(6) Where the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, has suspended clearance of goods on his own initiative and right holder has given notice under Rule 3 of the Rules and fulfilled the obligations under Rule 5, but, the right holder or his authorized representative does not join the proceedings within a period of ten working days from the date of suspension of clearance leading to a decision on the merits of the case, the goods shall be released provided that all other conditions of their import under the Customs Act, 1962, have been complied with."
32. The adjudicating authority has dealt in detail the date- wise steps taken by the department while carrying out the 10% examination of the goods in the presence of the representative of the revenue on 29.06.2017, when some pairs of the shoes were found to have the logo and on that basis 100% examination of the goods was conducted on 10.07.2017, in the presence of the representative of the importer and thereafter the counterfeit nature of the shoes was reported to the Assistant Commissioner on 14.07.2017. Since entire proceedings for examination of the goods had taken place in the presence of the representative of the importer and he was aware that the goods imported were bearing the logo which was not indicated in the bills of entry and were not even claimed by the importer that the logo belonged to them, the necessary communication was sent to the right holder on 15.07.2017 in terms of Rule 7(2). The adjudicating authority correctly observed that as the importer was aware of the 29 C/51711/2019 discrepancy in the declaration of the goods and the fact that he never lodged a protest for 100% examination shows that he accepted the same. Also the gap of 11 days between 10% examination and 100% examination of the goods was also on account of the conduct of the importer who could not arrange for immediate 100% examination due to shortage of labour though permission for conducting 100% examination was granted on the same day, i.e. on 29.07.2017. In any event, the importer was informed vide letter dated 31.07.2017 (dispatched on 01.08.2017) issued by the Assistant Commissioner that the authorized representative from the right holder had visited their office and examined the consignment on 25.07.2017 which was informed to the customs broker of the importer on the same day. Further, under Rule 3 the right holder had sent a notice requesting to suspend the clearance of the goods as they believed that the questioned goods are counterfeit of UCB and the goods are infringed with the correct logo and trademark of UCB. In the facts and circumstances of the present case we do not find any substance in holding against the department, more so when Rule 7(2) does not prescribe any consequences that may accrue in favour of the importer in absence of immediate information to him.
33. Rule 7(3) requires that where clearance of the goods suspected to be infringing intellectual property has been suspended and the right holder or his authorized representative does not join the proceedings within a period of 10 working days from the date of suspension of clearance leading to a decision on the merits of the case, the goods shall be released, provided that all other conditions 30 C/51711/2019 of import of such goods under the customs act, 1962 have been complied with. Here we find that the report of 100% examination was sent to the Assistant Commissioner on 14.07.2017 and consequently action was taken by him by sending the communication dated 18.07.2017 both to the right holder and also to the Deputy Registrar of the Trade Marks. The right holder had approached the department on 25.07.2017, i.e., within the prescribed period of 10 days and hence there is no violation.
34. The adjudicating authority had calculated the date of deemed suspension with effect from 14.07.2017, when the report of 100% examination of the goods duly signed by the representative of the importer was brought to the knowledge of the Assistant Commissioner he took the follow up action by sending letters dated 18.07.2017 to BIL & Deputy Registrar of Trade Marks being the appropriate authority and therefore when the right holder had given an informal notice to the Assistant Commissioner on 25.07.2017, the same has been held to be beyond the period of five days as mandated under rule 7(4). We are of the view that non-compliance of rule 7(4) is not material as the consequent release of goods is not automatic but has to be read with the next set of records i.e. "provided that all other conditions of import of such goods under the Customs Act, 1962, have been complied with". If the substantive provisions of the Act are not complied with but are blatantly contravened, the importer cannot seek the benefit of release of the goods under the Rules. On the same footing are the provisions of Rule 7(6). Therefore, the department, having reasons to believe that the goods were infringing the 31 C/51711/2019 intellectual property right were liable to confiscation under section 111 of the Act, the action for seizing the goods under section 110 of the Act read with Rule 7(9) was justified and no error can be found on the ground of time line as no time limit has been prescribed under the provisions of section 110 or under rule 7(9). We are conscious of the fact that the IPR rules, 2007 prescribe the procedure to be followed for dealing with imported goods which are found to be infringing the intellectual property rights. Rules of procedure cannot be interpreted to defeat the ultimate object of the Act. The very purpose of the IPR Rules is to put on notice both the right holder as well as the importer and take timely action of suspension of clearance, seizure and disposal of the imported goods found to be counterfeit . Here on receipt of the report on 100% examination on 14.07.2017, the departmental machinery had been put in action on which the right holder had duly responded and the intimation thereof was given to the appellant/importer. We do not find any violation of the rules which could have prejudiced the appellant in any manner nor has he pleaded any such prejudice. We agree with the adjudicating authority that the instant rules, 2007 being creation of the Customs Act, therefore, any conflict on any issue between the two, the provisions of the Act shall prevail and have precedence. It is settled principle of law that Rules framed under a statute cannot go against the provisions of the statute, A.K. Roy Vs. State of Punjab - 1986 (4) SCC 326 (para 12), Tata Sky Ltd. Vs. State of MP - 2013 (4) SCC 656 (para 33). As noticed above, the IPR Rules have been framed under the provisions of the 32 C/51711/2019 Customs Act to carry out the purposes of the Act i.e. to restrain the import of prohibited goods which infringe the intellectual property rights. The Rules in so far as they fix the time limit can only be construed as directory as the Rules itself provide that what is mandatory is the compliance of the provisions of the Act. The provisions of the Rules cannot be construed as mandatory for the simple reason as noted above, any action for release of the goods is with a rider, subject to the compliance of other provisions of the import under the Customs Act. We also find support from the recent observations of the Constitution Bench in HC Bar Association, Allahabad Vs. State of U.P & Others - Civil Appeal No. 3589 of 2023 dated 29.02.2024.
―It is worth noting that wherever under a statute any such time limit has been prescribed or is fixed for deciding a particular nature of proceedings, it has been held to be directory in nature rather than mandatory."
Therefore, the objections taken by the importer on the basis of strict adherence to the time line in terms of the provisions of the Rules have no merit and deserves to be rejected.
35. The IPR Rules, 2007, have been the subject matter of consideration before the High Court of Delhi in Telefonaktiebolaget LM Ericcson vs. Union of India - 2014 (299) ELT 184 (Del.), where the appellant was the registered owner of patents and claimed exclusive rights in the said technology, the imported consignment was suspended under Rule 7(1)(a) of the IPR Rules. However, before any injunction order could be passed, the importer filed the writ petition challenging the order of suspension. Therefore, the subject matter of judicial review and the bone of contention before the High Court was the 33 C/51711/2019 communication/suspension order in light of the objection that the issue relating to infringement of „Patent‟ is a complex matter and it may not be possible or feasible for the competent authority to come to any such prima-facie conclusion for „reasons to believe‟ and therefore the same has to be considered only by the Court through judicial pronouncements. The observations of the Court are set out below:
―24. It is necessary that this aspect is to be considered only by the Court through judicial pronouncements? Even Mr. Chandra, learned Senior Counsel appearing for the Respondent No. 4 itself conceded that there may be clear cut patent violation cases and in those simple matters the competent authority could pass the orders. However the poser would be, how to decide the case whether the case is simple or complex. Secondly, in any case, it is the competent authority who has to arrive at a conclusion that the matter involves complexities and, therefore, exercising extreme caution, the competent authority may pass appropriate orders that it is not possible to arrive at "reasons to believe". We are of the opinion that the discretion is to be left with the authority under Rule 7 to relegate the parties to civil proceedings. Per se, the patent cases cannot be excluded from the ambit of IPR Rules or particularly Rule 7."
The High Court, therefore held, that on the facts of that case, the order of suspension does not disclose on what basis the Dy. Commissioner had entertained the „reasons to believe‟ that the goods in question infringed the patent claimed by the appellant.
The present case is clearly distinguishable for the reason that the subject matter before the High Court was the „suspension order‟ itself before the adjudication proceedings commenced which can be termed as a preliminary stage. Whereas, in the present case, the proceedings on adjudication have culminated into an order of confiscation (absolute) along with penalty, thereby the issue has been decided on merits that the goods are „counterfeit goods‟ which fall in the category of prohibited goods and are therefore liable for confiscation. Thus, the issue before us is directly linked to the 34 C/51711/2019 confiscation order passed by the Adjudicating Authority under Section 111(d) and (m) of the Act. The contention raised by the appellant that the endorsement dated 25.07.2017, by Shri C K Singh, Deputy Manager of BIL on the letter dated 18.07.2017, has been manipulated to meet the timeline schedule is without any substance and needs to be rejected considering the action taken by the official authorities in this regard. The letter dated 18.07.2017 by the Assistant Commissioner granted one week to BIL to inspect the goods and intimate whether the same are genuine or counterfeit and since the period of one week expired on 25.07.2017, that BIL was contacted telephonically and in response Shri C K Singh appeared and made an endorsement duly signed to suspend the clearance of goods. No error can be found in the process adopted.
CONCLUSION:
i). Admittedly, the goods were bearing the logo of UCB and the brand name "ROCK" which was not declared in the import documents.
ii). Undisputed fact is that the importer/appellant was neither the owner of the logo or the brand nor was authorized to use the same.
iii). The logo of UCB was registered in the name of Benetton India Ltd and they were authorised to use the same for the footwear also.
iv). The imported goods were counterfeit goods and infringed the trademark rights of the rightful holder, the import of which is banned.35
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v). Consequently, the shoes under logo of " UCB" are categorized as "prohibited goods" under the Customs Act.
vi). The absolute confiscation under section 111(d) of the Act is upheld.
vii). The confiscation of goods bearing the brand name "ROCK" under section 111(m) of the Act is upheld.
viii). The penalty under section 112(a)(i) as imposed under the impugned order is upheld.
ix). The provisions of the IPR Rules in so far as they prescribe the time schedule are directory as the consequences of not adhering to the same are subject to the compliance of the provisions of the Act which is specifically provided to be mandatory.
36. We do not find any merits in the submissions made on behalf of the appellant and hence no interference is called for in the impugned order which stands upheld. The appeal is, accordingly dismissed.
[Order pronounced on 07.03.2024] (Binu Tamta) Member (Judicial) ( P.V. Subba Rao) Member (Technical) CKP