Validity of equipment type approvals upheld where same-brand goods differed by country of origin; penalty reduced for only two fake approvals

Later departmental clarification on Equipment Type Approvals for identical goods manufactured in different countries of the same brand owner meant that 14 approvals could not be treated as invalid merely because the country of origin differed from the named manufacturer. Those approvals were therefore valid and the goods covered by them were not liable to confiscation. Only two approvals were found to be fake, so confiscation and penalty survived only to that extent. The penalty under Section 112(a) of the Customs Act was accordingly reduced to reflect the corrected factual position, while the rectification application succeeded in part on the mistaken premise about the ETAs.

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Issues: (i) Whether the 14 Equipment Type Approvals produced for goods manufactured in China but issued in the name of the same brand owner in the USA were valid in view of the later clarification of the Department of Telecommunications. (ii) Whether the penalty under Section 112(a) of the Customs Act, 1962 required reduction because only two of the 16 ETAs were fake.

Issue (i): Whether the 14 Equipment Type Approvals produced for goods manufactured in China but issued in the name of the same brand owner in the USA were valid in view of the later clarification of the Department of Telecommunications.

Analysis: The rectification application proceeded on the scope of correction of a mistake apparent on record and not on review. On the merits of the ETAs, the record showed that only two ETAs were fake. The remaining 14 ETAs were issued by the competent authority but were treated as invalid only because the country of origin differed from the manufacturer named in the ETA. The later departmental clarification recorded in the minutes of the meeting stated that where the same brand owner manufactures identical goods in different countries, a fresh ETA is not necessary if the technical specifications are satisfied. That clarification undermined the earlier assumption that all ETAs were invalid.

Conclusion: The 14 ETAs were valid and the goods covered by them were not liable to confiscation.

Issue (ii): Whether the penalty under Section 112(a) of the Customs Act, 1962 required reduction because only two of the 16 ETAs were fake.

Analysis: Liability under Section 111(d) was attracted because import contrary to a prohibition under the Customs Act or any other law remains confiscable, and compliance with domestic law under paragraph 2.03 of the Foreign Trade Policy 2015-20 applies to imports. However, the factual position was materially different from what had been recorded earlier: only two ETAs were fake, while the remaining 14 were genuine though bearing the wrong country of origin. Since more than half of the disputed imports were covered by valid ETAs, the penalty required reconsideration. The reference to Section 112(a)(ii) in the operative part of the original order was treated as a typographical error, but the quantum of penalty had to reflect the corrected factual matrix.

Conclusion: The penalty was reduced to Rs. 4,50,000 under Section 112(a) of the Customs Act, 1962.

Final Conclusion: The rectification application succeeded in part by correcting the factual premise on the ETAs and by reducing the penalty, while maintaining confiscation only in relation to the two fake ETAs.

Ratio Decidendi: Where the issuing authority clarifies that an ETA remains valid despite a difference in country of origin for identical goods of the same brand owner, such approvals cannot be treated as invalid; but fake approvals continue to attract confiscation and penalty, with the quantum calibrated to the corrected factual position.

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