2022 (11) TMI 808 - AT - Customs

Tribunal overturns order for confiscation, emphasizes compliance with Intellectual Property Rights Enforcement Rules

The Tribunal allowed the appeal, setting aside the impugned order for confiscation and penalty, and directed the release of the goods without liability ... Confiscation of imported goods - penalty u/s 112(a) (i) of Customs Act - LED Module Lights Brand Samsung - HELD THAT:- The first time line prescribed that the Customs is, required to immediately inform the right holder on suspension of clearance. Such suspension was made on 22.03.2017 pursuant to examination of the goods. However, the Customs have given intimation to the right holder – Samsung Electronics Co. on 11.04.2017 i.e. after about 20 days and thus, have violated the time line. Secondly, the right holder is required to furnish the bond within a period of 5 days and was required to furnish such bond /bank guarantee by 17.4.2017. Whereas the Bond has been filed on 24.5.2018 and thus, there is breach of time limit at this stage also. The impugned order for confiscation and penalty is bad and against the provisions of the law. Further, the impugned order is bad for violation of the prescribed conditions and limitation prescribed under the Intellectual Property Rights; Customs Authorities prescribed by the Board and further also is in violation of Notification No.47 of 2007-Customs and the instructions dated 29.10.2007 prescribed by the Board vide F.No.305/96/2004-FTT(Part-I) read with F.No.305/1/2008-FTT dated 24.02.2011. Appeal allowed. Issues Involved:1. Confiscation of imported LED Module Lights under Section 111(d)2. Imposition of penalty under Section 112(a)(i) of the Act3. Compliance with Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007Analysis:Issue 1: Confiscation of Imported LED Module Lights under Section 111(d):The appellant imported LED Module Lights branded as 'Samsung,' which were found to be counterfeit goods violating the Intellectual Property Rights Enforcement Rules, 2007. The right holder, M/s. Samsung Electronics Co. Ltd., confirmed the goods were counterfeit. The Adjudicating Authority ordered absolute confiscation of the goods under Section 111(d) of the Customs Act and imposed a penalty of Rs.1,00,000 under Section 112(a)(i). The Commissioner (Appeals) upheld the confiscation and penalty. The appellant argued that the Customs violated the prescribed procedures and timelines, rendering the confiscation and penalty void. The Tribunal found the Customs' actions in violation of the prescribed conditions and limitations, setting aside the impugned order and directing the release of the goods without liability for demurrage charges.Issue 2: Imposition of Penalty under Section 112(a)(i) of the Act:The appellant contended that the penalty of Rs.1,00,000 was unsustainable as they did not order goods bearing the 'Samsung' brand, and the supplier acknowledged the mistake in sending the goods. The appellant cited case laws to support their argument that penalty is unsustainable when goods are confiscated. The Tribunal considered the appellant's arguments and found the penalty unsustainable, especially given the circumstances surrounding the import of the goods bearing the 'Samsung' brand. The Tribunal allowed the appeal and set aside the penalty imposed under Section 112(a)(i).Issue 3: Compliance with Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007:The appellant argued that the Customs failed to comply with the procedures outlined in the IPR Rules, specifically regarding the suspension of clearance of suspect imported goods and the timelines for right holders to join proceedings. The Tribunal noted the Customs' violations of the prescribed timelines and conditions under the IPR Rules, leading to the conclusion that the impugned order was against the provisions of the law. The Tribunal directed the release of the goods and emphasized the importance of adherence to the timelines and procedures outlined in the IPR Rules for enforcement actions related to imported goods.In conclusion, the Tribunal allowed the appeal, setting aside the impugned order for confiscation and penalty, and directed the release of the goods without liability for demurrage charges, emphasizing the importance of compliance with the Intellectual Property Rights Enforcement Rules, 2007 in customs enforcement actions.