2015 (1) TMI 575 - HC - Customs

Customs Tribunal quashes fine for phones lacking IMEI; traceability deemed sufficient security measure

THE COMMISSIONER OF CUSTOMS (I&G) Versus NAVSHIV RETAILS PVT. LTD.

The High Court upheld the decision of the Customs, Excise and Service Tax Appellate Tribunal to quash the redemption fine and penalty imposed on M/s ... Confiscation of goods - International Mobile Equipment Identity number of phones were allocated to other brands like Nokia and Samsung and exported phones did not pertain to the declared brand - Re-export of goods - Redemption fine - whether the Customs authorities were justified in confiscating the goods and allow the re-export on payment of redemption fine and imposition of penalties on the ground that IMEI numbers available in respect of phones belonging to original equipment manufacturer like Nokia and Samsung - Held that:- The admitted position was that the mobile handsets did have IMEI numbers. Once the IMEI number was mentioned on the mobile handset and was duly declared, then there is no possibility or chance of misuse and accordingly no threat to national security. IMEI number once embedded in the mobile phone becomes the identification code for the said mobile handset. There was no tampering with the said IMEI number. It has not been explained, how and in what circumstances that there was a security threat in the present case. The requirement that there should be an IMEI code identification was satisfied. - M/s Bonae Innovation Corporation had only done re-designing and embellishing the casing of the existing handset by using their cutting edge engineering technology. The aforesaid findings of fact are not disputed and under challenge. The fact that the phones did have IMEI number is not disputed - Decided against Revenue. Issues:1. Appeal against the order passed by the Customs, Excise and Service Tax Appellate Tribunal quashing redemption fine and penalty.2. Import of mobile phones without the requisite International Mobile Equipment Identification (IMEI) number.3. Allegation of illegal import posing a threat to national security.4. Dispute over the brand name and embellishment of the mobile handsets.5. Security concerns related to IMEI numbers and identification of mobile phone instruments.Issue 1:The appeal by the Revenue under Section 130 of the Customs Act challenges the Tribunal's order quashing redemption fine and penalty imposed on M/s Navshiv Retail Private Limited. The original adjudicating authority had directed re-export of goods with fines, which were subsequently reduced in the first appeal.Issue 2:The appellant argued that the imported mobile phones lacked the required IMEI numbers, crucial for identification and security purposes. The phones bore the brand name Mobiado, different from the original manufacturers like Nokia and Samsung.Issue 3:Concerns were raised regarding the illegal import of mobile phones without IMEI numbers, alleging a threat to national security. The appellant contended that each phone must have a unique IMEI number, and importing handsets without this identifier is prohibited.Issue 4:The Tribunal's finding revealed that the brand name Mobiado belonged to M/s Bonae Innovation Corporation, a Canadian company engaged in distributing and retailing mobile handsets embellished with cutting-edge technology. The phones were not altered in terms of functionality, with only the casing being replaced to enhance aesthetics.Issue 5:Security risks associated with the absence of IMEI numbers were discussed, emphasizing the importance of identifying mobile instruments for tracking and security purposes. However, since the imported handsets did have IMEI numbers, the identification code was present, ensuring no misuse or security threat. The Tribunal concluded that the embellishment by M/s Bonae Innovation Corporation did not compromise security as the IMEI numbers were intact and traceable.In light of the detailed analysis and factual findings, the High Court dismissed the appeal, upholding the Tribunal's decision to quash the redemption fine and penalty, as the presence of IMEI numbers on the imported mobile phones mitigated any security concerns.