Custom, Excise & Service Tax Tribunal
Srk Enterprises vs Nhava Sheva on 15 December, 2011
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
APPEAL NO: C/1254/2009
[Arising out of Order-in-Original No: 131/2009-C.C(I) JNCH dated 31/08/2009 passed by the Commissioner of Customs (Import), Nhava Sheva.]
For approval and signature:
Honble Shri Ashok Jindal, Member (Judicial)
Honble Shri P.R. Chandrasekharan, Member (Technical)
1.
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
:
No
2.
Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
:
Yes
3.
Whether Their Lordships wish to see the fair copy of the Order?
:
Seen
4.
Whether Order is to be circulated to the Departmental authorities?
:
Yes
SRK Enterprises
Appellant
Vs
Commissioner of Customs (Import)
Nhava Sheva
Respondent
Appearance:
Shri Satish Sundar, Advocate for the appellant Shri Y.K. Agarwal, Additional Commissioner (AR) for the respondent CORAM:
Honble Shri Ashok Jindal, Member (Judicial) Honble Shri P.R. Chandrasekharan, Member (Technical) Date of decision: 15/11/2011 ORDER NO: ____________________________ Per: Ashok Jindal:
This appeal is preferred by the appellant against the impugned order wherein the value of the imported consignment has been re-determined at Rs. 22,19,319/-; and the three items branded with Dove valued at Rs. 7,92,172/- are absolutely confiscated and the remaining items also confiscated as the goods had already been released under bond, redemption fine of Rs. 3.5 lakhs is also imposed which are directed to be recovered through bank guarantee executed by the appellant.
2. The brief facts of the case are that the appellant imported a consignment of perfumes, deodorant, cosmetics and toiletries and filed Bill of Entry No. 713116 on 16/02/2008 declaring the value of the goods as Rs. 4,21,587/- which are imported from one Bhavna Pte Ltd., Singapore. The said Bill of Entry was assessed to duty of Rs. 1,73,330/- on the enhanced value.
3. Thereafter, on intelligence, the goods were intercepted by SIIB, Imports, Nhava Sheva and 100% examination of the goods were carried out. On scrutiny of the documents, it was revealed that the appellant (importer) has not declared the complete description and brand of some of the items and same price was declared for different brands of perfumes and deodorants. In the light of the non-declaration of brands of these items and incomplete description of the goods as well as declaration of same price for different brands of perfumes and deodorants, it created a doubt about the true and accuracy of the declared value of the goods. Therefore, declared value was rejected. It was further observed that three items, namely, Dove Fresh touch Deodorant Body Spray 150 ml., Dove Moisturising cream 500 ml., and Dove Body Lotion 250 ml. bears the trade mark Dove which is a trade mark of M/s. Hindustan Unilever Ltd. who has registered a complaint on the imports of such goods bearing the trade mark Dove with the office of Commissioner of Customs, Cochin under IPR Act and Rules made thereunder.
4. The NIDB data was perused for ascertaining the value of the imported goods based on the contemporaneous import price, but details of the comparable quantities and brands of identical or similar goods were not available. Therefore, valuation was done as per Rule 8 of the Customs Valuation Rules, 2007. Market enquires were conducted and the goods were held to be undervalued and valued at Rs. 22,19,319/-. As the three items of Dove brand were in violation of IPR Act and Rules, therefore, they were absolutely confiscated and the other three items which were provisionally released on execution of bank guarantee and bond, therefore, redemption fine of Rs. 3.5 lakhs was imposed and penalty of Rs. 3.5 lakhs were also imposed on the appellant. Aggrieved from the said order, the appellant is before us.
5. Shri Satish Sundar, learned advocate appeared on behalf of the appellant and submitted that the appellant has not violated the IPR Rules. Moreover, while adjudicating the case, the provisions of IPR Act and Rules were not followed. He further submitted that on the same day another Bill of Entry No. 713117 was filed having the same type of items. In that consignment also there are three items under the band name of Dove which were released without invoking the provisions of IPR Act or Rules. Therefore, discrimination was done with the appellant. He finally submitted that the valuation arrived by the adjudicating authority is also not correct as it was not disclosed, as to how the market survey was done and, further, no opportunity of cross-examination was given to the appellant of the persons whose statements were recorded to ascertain the market value of the goods. In support of his contention, he relied on the following judgments:
(i) M/s. Landom Distributors Pte Ltd. (Writ Petition No. 8937 of 2011 dated 01/12/2011 Madras HC);
(ii) Consolidated Mfg. & Mktg. Co. vs. Commissioner of Customs, New Delhi 2009 (238) ELT 811(Tri.-Del.);
(iii) I.S. Lulla vs. H.R. Syem, Asstt. Collector of Customs 2000 (125) ELT 23 (Bom.);
(iv) Durga Marketing vs. Commissioner of Customs, Mumbai 2002 (139) ELT 107 (Tri.-Mumbai);
(v) Commissioner of Customs, Mumbai II vs. Hakim Hardware & General Stores 2001 (139) ELT 650 (Tri,-Mum.);
(vi) R.V. Fashion vs. Commissioner of Customs (Export), Nhava Sheva 2009 (246) ELT 535 (Tri.-Mumbai);
(vii) Commissioner of Customs, Calcutta vs. South India Television (P) Ltd. 2007 (214) ELT 3 (SC);
(viii) Commissioner of Customs (Prev.), Mumbai vs. Paras Electronics 2009 (246) ELT 231 (Tri. Mumbai)
(ix) Commissioner of Customs (Imports), Mumbai vs. Lord Shiva Overseas 2005 (181) ELT 213 (Tri.-Mumbai);
(x) Sha Rikabdoss Bhavarlal vs. Collector of Customs, Mysore 2000 (125) ELT 65 (Mad.)
6. On the other hand, the learned Additional Commissioner (AR) reiterated the impugned order and specifically submitted that during the course of adjudication, the provisions of IPR Act/Rules were complied with, therefore, the goods having the brand name Dove were correctly confiscated absolutely. As per market survey, the goods were found undervalued and, therefore, the valuation resorted under Rule 8 of the Customs Valuation Rules is also correct.
7. Heard both sides and considered the submissions made by both the sides.
8. In the impugned order, we find that, the brand/right owner M/s. Hindustan Unilever Ltd. was informed by the department through e-mail on 12/03/2008 with a request to join the proceedings as per Intellectual Property Rights Act and Rules and the right owner has filed his objections on 17/04/2008. We have gone through the respective rules which are reproduced hereunder:
Rule 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.
(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.
(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 authorised representatives through a letter issued by speed post or through electronic mode of the suspension of clearance of the goods and shall state 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 authorised 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 import of such goods under the Customs Act, 1962, have been complied with:
Provided that the above time-limit of ten working days may be extended by another ten days in appropriate cases by the Commissioner or an officer authorized by him in this behalf.
(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.
(5) Where the clearance of goods has been suspended, customs may, where it acts on its own initiative, seek from the right holder any information or assistance, including technical expertise and facilities for the purpose of determining whether the suspect goods are counterfeit or pirated or otherwise infringe an intellectual property right.
(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 authorised 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:
Provided that the above time-limit of ten working days may be extended by another ten working days in appropriate cases by the Commissioner or an officer authorized by him in this behalf.
(7) In the case of perishable goods suspected of infringing intellectual property rights, the period of suspension of release shall be three working days which may be extended by another four days subject to the satisfaction of the Commissioner or the officer authorized by him in this behalf that such extension shall not affect the goods.
(8) Notwithstanding anything contained in these Rules, in the case of suspension of clearance of perishable goods on the basis of notice of the right holder or his authorized representative, the right holder or his authorized representative shall join the proceedings as required under these Rules within three working days or the extended period as provided in sub-rule (7) and in case of suspension of clearance of perishable good by the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, on his own initiative, the right holder shall give notice, execute a bond and join the proceedings as required under these Rules within three working days or the extended period as provided in sub-rule (7) , as the case may be, failing which the goods shall be released.
(9) If within ten working days or the extended period under sub-rule (6), as the case may be, and within three working days or the extended period as provided in sub-rule (7) of this rule in the case of perishable goods, the right-holder or his authorized representative joins the proceedings, the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, having reasons to believe that the goods are goods infringing intellectual property rights and liable to confiscation under section 111 (d) of the Customs Act, may seize the same under section 110 of the Customs Act.
9. We find that, as per the said Rules, the right holder had to give a notice in writing to the Commissioner of Customs at the port of import of goods infringing IPR, in accordance with the procedure and under the condition as set out in these rules, requesting for suspension of goods suspected to be infringing IPR. The right owner has to get registered with the Commissioner of Customs within 30 working days from the date of receipt of the notice under Rule 3(1) and from the date of expiry of the extended time as contemplated under Rule 3(4). Further, as per Rule 7(3) where the clearance of the goods suspected to be infringing the intellectual property has been suspended and the right holder or his authorised 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 import of such goods under the Customs Act, 1962, have been complied with, provided that the above time-limit of ten working days may be extended by another ten days in appropriate cases by the Commissioner or an officer authorised by him in this behalf. Rule 7(4) further prescribes that, if the 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. In this case, we have observed that neither the time prescribed in the IPR Rules have been followed nor the conditions laid down in Rule 3 has been complied with. Therefore, provisions of IPR Act or Rules are not applicable in this case, relying on the judgment of the honble Madras High Court in the case of Landom Distributors Pte Ltd. wherein the honble High Court has held that neither the impugned order nor the counter filed by the respondents gives any indication about the compliance with the procedure stipulated under Rule 7 and they do not also show whether the right holder has registration or not. Therefore, in this matter, the three items under the brand of Dove, which are absolutely confiscated, are not liable for confiscation.
10. We have also seen that on the same day, another Bill of Entry No. 713117 has been filed by the same CHA for another importer having identical goods, which were allowed to be released. Therefore, discrimination has been done with the appellant, which is in violation of the principle of natural justice as held by the honble High Court of Bombay in the case of I.S. Lulla (supra) wherein the honble High Court held that non application of final decisions of High Courts by the department in other similar cases must be held to be perverse and capricious conduct.
11. We further find that, in case the transaction value has to be rejected, the adjudicating authority has to first arrive at the reasoning for the rejection of the transaction value and, thereafter, they have to resort to the procedure prescribed in the Customs Valuation Rules. As per Rule 5 of the Customs Valuation Rules, 2008, the absence of data about the sale price of the imported goods is no excuse for the department to rely on incomparable goods as this would lead to absurd result. In this case, we have seen that the goods were assessed after loading the value and, thereafter, re-enhancement has been done. Section 14(1) of the Customs Act provides for determination of value of such goods or like goods ordinarily available for sale, at the time and place of importation. In this case, it is seen that the method of valuation and market survey is not proper and no opportunity to the appellant were given to cross-examine the persons who have given the data for the valuation. As per Bill of Entry No. 713117 filed on the same day by another importer, the data was available for the contemporaneous import of the said goods and, therefore, following the same amounts to discrimination with the appellant. No reason has been cited as to why the value of the contemporaneous import is rejected and there was no reason cited doubting the value furnished.
12. In these circumstances, we hold that the impugned order is liable to be quashed. Therefore, we set aside the impugned order and allow the appeal with consequential relief.
(Operative part pronounced in Court) (P.R. Chandrasekharan) Member (Technical) (Ashok Jindal) Member (Judicial) 13