2010 (6) TMI 684 - AT - Customs

Partial success in appeal against counterfeit phone confiscation & penalty reduction under Customs Act

The appeal against the absolute confiscation of counterfeit mobile phones and penalty under Section 112 of the Customs Act, 1962 was partially successful. ... - Issues:1. Absolute confiscation of counterfeit mobile phones2. Penalty under Section 112 of the Customs Act, 1962Analysis:1. The appellant challenged the absolute confiscation of 850 counterfeit Nokia E 51 Mobile Phones and a penalty of Rs. 3,50,000 under Section 112 of the Customs Act, 1962. The goods were declared as 'Made in Finland' instead of China, packed in loose polythene, and falsely branded as Nokia. The appellant argued that the examination report was not issued by Nokia Ltd., and the country of origin declaration does not impact duty demand. The appellant also cited Notification No. 49/2007-Cus. (N.T.) prohibiting goods with false trademarks. However, the adjudicating authority based its decision on the report from Nokia's representative, confirming the phones as counterfeit. The appellant disputed the evidence and lack of investigation by the authority.2. The Department's representative contended that the issue centered on misdeclaration of the product's origin, as the IMEI numbers on the phones were never issued by Nokia Ltd., indicating counterfeiting. It was alleged that the appellant had prior knowledge of the counterfeit nature of the goods, justifying the penalties. After hearing both sides, the judge upheld the decision, noting that the phones were not of Chinese origin as declared but made in Finland. The IMEI numbers were unauthorized by Nokia, supporting the counterfeit claim. Consequently, the confiscation was deemed valid. However, the judge found the penalty excessive given the confiscation for destruction and reduced it to Rs. 70,000.In conclusion, the appeal against the absolute confiscation of counterfeit mobile phones and the penalty under Section 112 of the Customs Act, 1962 was partially successful. The confiscation was upheld due to the phones being counterfeit and falsely labeled, but the penalty was reduced from Rs. 3,50,000 to Rs. 70,000 considering the impending destruction of the confiscated goods.