Counterfeit imported mobile phones upheld for absolute confiscation, while customs penalty was reduced as excessive.

Imported mobile phones were found, on examination and brand-owner verification, to be counterfeit: the goods were marked as made in Finland, packed in loose polythene, and bore IMEI numbers not issued by the brand owner. On that factual basis, absolute confiscation was sustained because the challenge to the manner of proof did not dislodge the department's findings. The penalty under the Customs Act was, however, reduced because it was considered excessive in the circumstances, particularly where the goods had already been absolutely confiscated and were liable to destruction.

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Issues: (i) Whether the absolute confiscation of the imported mobile phones as counterfeit goods was sustainable; (ii) whether the penalty imposed under the Customs Act warranted reduction.

Issue (i): Whether the absolute confiscation of the imported mobile phones as counterfeit goods was sustainable.

Analysis: The goods were declared as Chinese-origin mobile phones, but examination showed them to be marked as made in Finland, packed in loose polythene and bearing IMEI numbers that, on enquiry with the brand owner, were found never to have been issued. The finding that the goods were counterfeit was therefore supported by the examination and verification carried out by the department. The challenge based on the manner of proof did not dislodge the factual basis on which the adjudicating authority proceeded.

Conclusion: The order of absolute confiscation was upheld.

Issue (ii): Whether the penalty imposed under the Customs Act warranted reduction.

Analysis: Although the confiscation was sustained, the penalty of Rs. 3,50,000 was considered excessive in the facts, particularly since the goods had been absolutely confiscated and were liable to be destroyed. A lesser penalty was found sufficient to meet the ends of justice.

Conclusion: The penalty was reduced to Rs. 70,000.

Final Conclusion: The confiscation was affirmed, but the penal liability was substantially curtailed.

Ratio Decidendi: Where imported goods are found on examination and verification to be counterfeit and falsely declared, absolute confiscation may be sustained, but the penalty can be moderated where the quantum is found excessive in the circumstances.

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