2018 (5) TMI 362 - AT - Customs

Tribunal upholds cell phone confiscation under IPR Rules, reduces penalties for importer, CHA

Quick Systems, Masha Allah Agencies Versus Commissioner of Customs (Airport & Air cargo) Chennai

The Tribunal upheld the confiscation of 400 cell phones due to discrepancies in branding and labeling, under IPR Rules and Customs Act, 1962. However, it ... Confiscation of 3950 Cell Phones - retail packages had been imported without mandatory labelling requirement as required under Legal Metrology (Packaged Commodities) Rules, 2011 - Held that: - the imported goods had obtained customs clearance and out of charge order, however they had been intercepted before they had been removed for home consumption. From this crucial fact, it well-nigh appears to reason that had the DRI officers not accepted the consignment, the impugned cell phones would have been removed as such including the 3950 cell phones without, any labelling as required under Legal Metrology Rules - the averment of the appellants that they were ready with the MRP stickers to be affixed after examination does not wash. Confiscation of the 3950 cell phones upheld - main infraction related to only because of affixation of M.R.P stickers, the interest of justice would be served by causing reduction of the redemption fine imposed under Section 125 of the Act from ₹ 12,75,000/- to ₹ 6,00,000/-. Penalty u/s 112 (a) ibid on Quick Systems - Held that: - penalty reduced from ₹ 7 lakhs to ₹ 3,00,000/-. Penalty on CHA, Masha Allah Agencies - Held that: - there is no evidence has been brought forth to substantiate any wilful abetment or causing of any act or omission on the part of the CHA so as to have rendered the goods liable for confiscation - penalty on CHA set aside. Appeal allowed in part. Issues:1. Confiscation of imported cell phones under Customs Act, 1962.2. Violation of Intellectual Property Rights (IPR) Rules and Legal Metrology (Packaged Commodities) Rules, 2011.3. Imposition of penalties on the importer and Clearing House Agent (CHA).Confiscation of Imported Cell Phones:The case involved the interception of a consignment of cell phones imported by M/s.Quick Systems. The consignment contained cell phones with discrepancies, including using brand names resembling Sony Ericsson and lacking mandatory labeling. The importer failed to register with the Legal Metrology Department as required. The adjudication order confiscated 400 cell phones under IPR Rules and 3950 cell phones valued at Rs. 63,53,279 under Customs Act, 1962. Penalties were imposed on the importer and the CHA.Violation of IPR Rules and Legal Metrology Rules:During the hearing, the appellant contested the confiscation of 3950 cell phones, arguing they had not violated labeling provisions. They claimed they were awaiting affixing of MRP stickers and later registered with the Legal Metrology Department. The appellant challenged the redemption fine and penalties imposed. The CHA also contested the penalty, stating no allegations of connivance were proven.Imposition of Penalties:The appellant's advocate argued against the redemption fine and penalties, emphasizing compliance efforts post-interception. The respondent supported the impugned order, highlighting the lack of MRP labels on the cell phones. The Tribunal found no infirmity in the confiscation of the 3950 cell phones but reduced the redemption fine and penalties imposed on the appellant. The penalty on the CHA was set aside due to insufficient evidence of wilful abetment.Conclusion:The Tribunal upheld the confiscation of 400 cell phones but reduced the redemption fine and penalties on the appellant. The penalty on the CHA was set aside. The decision aimed to balance compliance requirements with the interests of justice, ensuring fair treatment based on the circumstances presented in the case.This detailed analysis of the judgment covers the issues of confiscation of imported cell phones, violation of IPR and labeling rules, and the imposition of penalties on the importer and CHA, providing a comprehensive overview of the legal proceedings and the Tribunal's decision.