2021 (3) TMI 544 - HC - Customs

Customs authorities cannot detain goods without court order. Petitioners to receive goods upon bond execution.

NBU Bearings Pvt. Ltd. & Anr. Versus Union of India & Ors.

NBU Bearings Pvt. Ltd. & Anr. Versus Union of India & Ors. - TMI Issues Involved:1. Suspension of clearance of imported goods.2. Violation of principles of natural justice.3. Compliance with statutory provisions of Rule 7 of the IPR Rules and the Copyright Act, 1957.4. Ownership and entitlement to the trademark 'TR'.5. The validity of customs authorities' actions under the IPR Rules.6. The relationship between the Copyright Act and the IPR Rules.7. The legal effect of pending civil suits on customs actions.Detailed Analysis:1. Suspension of clearance of imported goods:The petitioners filed a writ of mandamus under Article 226 of the Constitution, requesting the revocation of the suspension of clearance of their consignment by the customs authorities. The petitioners argued that the suspension was without any confiscation order and violated Rule 7 of the IPR Rules and the Copyright Act, 1957.2. Violation of principles of natural justice:The petitioners contended that the suspension of clearance without informing them of the grounds for such seizure and detention violated the principles of natural justice. They argued that the continued suspension was arbitrary, high-handed, and without authority of law.3. Compliance with statutory provisions of Rule 7 of the IPR Rules and the Copyright Act, 1957:The petitioners submitted that Rule 7 of the IPR Rules prescribes the procedure for suspension of clearance of goods. They argued that the customs authorities had no authority to suspend clearance beyond 20 days and that the goods should be released after the prescribed period of 3 days from the date of interdiction, subject to the condition of depositing a specific bond along with 25% security of the value of the interdicted goods.4. Ownership and entitlement to the trademark 'TR':The petitioners and respondent No.6 were involved in litigation over the ownership and right to use the trademark 'TR'. The petitioners argued that they were the registered proprietors of the trademark 'TR' in India and had submitted all relevant documents to the customs authorities. They contended that the customs authorities should have sought a restraint order from the court having jurisdiction over the matter.5. The validity of customs authorities' actions under the IPR Rules:The customs authorities argued that they had acted in accordance with the Customs Act, 1962, and the IPR Rules. They contended that respondent No.6 was the registered owner of the trademark 'TR' and had filed a complaint with the customs department, leading to the suspension of clearance of the imported goods.6. The relationship between the Copyright Act and the IPR Rules:The court noted that the IPR Rules do not confer any new intellectual property rights but merely provide a mechanism to enforce existing ones. The court emphasized that the provisions of the Copyright Act, 1957, and the IPR Rules must be read harmoniously. The court held that the customs authorities could not detain the consignment beyond the prescribed period of 14 days without a court order from the right holder.7. The legal effect of pending civil suits on customs actions:The court observed that both the petitioners and respondent No.6 were involved in pending civil suits regarding the ownership and entitlement to the trademark 'TR'. The court held that in the absence of any interim order from the civil courts, the customs authorities could not withhold the consignment beyond the prescribed period.Conclusion:The court found merit in the petitioners' submissions and held that the customs authorities could not detain the consignment beyond the prescribed period of 14 days without a court order. The court directed the customs authorities to release the imported goods to the petitioners, subject to the execution of a bond with surety or security and other conditions as specified in the bond. The writ petition was disposed of accordingly.