TaxTMI 
TaxTMI 
2021 (12) TMI 290
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....cers on 7.2.2018. The Panchnama states that "as the goods were found to be misdeclared in terms of quantity and value, imported goods were seized under Section 110 of the Customs Act, 1962" vide seizure Memo dated 7.2.2018 on reasonable belief the same were liable for confiscation under provisions of the Customs Act, 1962. The consignment was handed over to the Central Warehousing Corporation Patparganj which was the custodian of the imported goods. On 12.2.2018, the appellant requested that the goods may be warehoused which was permitted by the Department and thereafter re-examined in detail. As recorded in the Panchnama drawn on 27.2.2018, during examination of the goods, it was also noticed that the imported goods had mentioned brands such as AIR, MAX, logo of Adidas, Puma, Nike, etc. The details of the shoes found as recorded in the Panchnama are as follows: Sl.No. Carton No. Description of goods Brand Name/logo 1. 1 Men's shoes AIR on shoes and Nike on Shoe Flap 2. 6 Men's shoes Unbranded Shoes 3. 13 Men's shoe Unbranded Shoes, along with Adidas logo found separately 4. 216 Men's shoes Logo of horse on the shoes 5.....
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....t price of the goods after deducting the retailer's margin and importer's margin, post import expenses and duty. 4. The goods in question were, therefore, not as per the declarations made both in terms of quantity and quality. On the suggestion of the appellant, a joint market survey was conducted along with the appellant and based on the market price, the assessable value was determined through deductive method. There were also brand names of Nike, Puma and Adidas and the appellant's clarification was that those goods were sent by mistake to them by the supplier. 5. Imported goods which are suspected to have violated Intellectual Property Rights have to be dealt with as per the Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007 framed under the Customs Act. The right holder i.e., the one who has the IPR has to issue a notice under Rule 3 to the Principal Commissioner, or Commissioner of Customs along with fees. The Commissioner of Customs has to take a decision within 30 working days and notify the applicant Rights holder whether the notice has been registered or rejected and also the validity period of the registration (Rule 4). Registration under Rule 4 ....
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....ars" and entitled to use the trademark "adidas" and logos "Three Stripes", "Trefoil" and "three bars" under the Trademarks Act in India. ii. The 3-stripes mark is the quintessential adidas symbol. iii. M/s Sheikh & Mahajan LLP has imported consignment consisting of goods which bear either the trademark "adidas" and/or logos Three stripes, Trefoil and three bars and/or marks deceptively and confusing similarly to trademark "adidas" and logos "Three Stripes", "Trefoil" and "three bars" and shall cause confusion and deception amongst the purchasing public and trade, iv. The counterfeit goods imported by M/s Sheikh & Mahajan LLP, wherein trademark "adidas" and logos Three stripes and three bars have been used in deceptively and confusingly manner are deceptively and confusingly similar to the three bars logo of the Right Holder. v. On a close scrutiny of the infringing products following similarly and dissimilarity, the differences between a genuine "adidas" and sample of "adidas" shoes handed over to him are as follows: Sl.No. Original Product Counterfeit Products 1. The label fixed on the tongue is heat sealed The quality of label....
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....s, the said three stripes is not properly fixed and paced. Also, the shoes were packed in polythene bags. 8. Embroidery/stitching work on the original product is of superior quality Embroidery/stitching & pasting done samples collected is of poor quality which renders the sample product a fake product. 9. Detailed information in compliance of Legal Metrology Act, 2009 about every product is set out in adidas/Mrp Label attached to the box of every product. The information contained are: Product Quantity Size MRP Date of Manufacturing Name and address of Manufacturer/Customer Care Cell Email TWO DIMENSIONAL BAR CODE Article No. As the shoes were found to be packed in polythene bags, Mrp, Label is missing on the packaging of the shoes. 10. The security label fixed on the shoes contains adidas logo along with a printed bar code, which is unique for every individual product. The Care label attached to the shoes contain reasonable care to be taken for maintaining the product which is unique for every individual product. There is no Security label fixed on the shoes. The Care label is also missing on the security label attached t....
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....ds are counterfeit product. 3. Max (Mentioned on Shoes) 50 1200 There was no IPR on the brand name Max. 4. Logo of Horse on Shoes 60 1420 The DC (IPR) has informed that the said product is not registered with Customs. However, the products was checked by the authorized representative of PUMA and after examination of the same, they informed that the said product pertain to Puma brand. The authorized representative vide their letter dated 14.03.2018 has informed that the goods are counterfeit products. 5. Logo of Man printed 144 3456 The DC (IPR) has informed that the said product is not registered with Customs. However, the products was checked by the authorized representative of PUMA and after examination of the same, they informed that the said product pertain to Puma brand. The authorized representative vide their letter dated 14.03.2018 has informed that the goods are counterfeit products. 6. Logo of Nike Presto, BRS 100, Duralon, AIR (Printed on Shoes) 30 720 The DC (IPR) has informed that the NIKE brand is registered with Customs. Also the said product was checked by the authorized representative of NIKE and after exa....
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.... brand on the basis of three strips vide technical report dated 14.03.2018 submitted by authorized representative of M/s Adidas ad on the basis of which they claimed their IPR), Logo of Horse on shoes and Man Printed on Shoes (regarding which M/s Pume Se has claimed its IPR through its authorized representative vide its technical report dated 21.03.2018) imported vide Bill of entry No. 4927337 dated 24.01.2018, under Section 14(1) of the Customs Act, 1962 read with Rule 5 & Rule 7 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. (iii) I order for confiscation of the goods other than counterfeit goods (i.e. Unbranded Shoes as per Panchnama dated 27.02.2018 (which are identified as shoes of adidas brand on the basis of three strips vide technical report dated 14.03.2018 submitted by authorized representative of M/s Adidas and on the basis of which they claimed their IPR), Logo of Horse on shoes and Man Printed on Shoes (regarding which M/s Puma Se has claimed its IPR through its authroised representative vide its technical report dated 21.03.2018) valued at Rs. 14,25,462/- covered under Bill of Entry No. 4927337 dated 24.01.2018 under Section ....
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....peals) passed the impugned order upholding the above order of the Additional Commissioner. The appellant has filed this appeal assailing the impugned order on the following nine grounds: (i) None of the goods imported by the appellant under subject bill of entry are prohibited, in terms of Section 11 of the Customs Act, 1962 read with Rule 6 of IPR Rules ibid, which provides that for being deemed prohibited under section 11 of Customs Act, 1962, the right holder needs to obtain registration from the Commissioner and after registration, if on examination, it is found that alleged goods are infringing the right of right holder, the goods shall be deemed as prohibited. In the instant case, it is evident from the report of Assistant Commissioner, which has been quoted by the learned Original Authority at page No. 8 of the order in original (which is placed at page No. 185 of the paper book), wherein in the chart at serial No. 4 & 5, it is mentioned that logo of Horse on shoes and logo of men printed is not registered with customs. Since the goods of these two brands are not registered with the Customs, in terms of Rule 6 of IPR Rules read with Rule 11 of Customs Act, 1962, the....
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....- upon the goods under section 114A of the Customs Act, 1962 is illegal and arbitrary, as there is no violation of IPR and Section 14 of Customs Act, 1962 and Valuation Rules, by the appellant. (viii) Without prejudice to the contentions and rights of the appellant, imposition of penalty under section 112 of the Customs Act, 1962 is contrary to the provisions of proviso 5 of Section 114A of the Customs Act, 1962, which itself provides that where any penalty has been levied under section 114A, no penalty shall be levied under Section 112 or 114. (ix) The impugned order in original and order in appeal are liable to be set aside, in terms of order passed by this Tribunal (Mumbai Bench) in case of SRK Enterprises Vs. Commissioner of Customs (Imports) Nhava Sheva, 2012 (280) ELT 264 (Tri.-Mum.), wherein this Tribunal observed that "since the timeline prescribed in IPR Rules has not been followed (relying upon judgment of Landom Distributors Pvt. Ltd. (Madras High Court), provisions of IPR Act and Rules inapplicable)." 13. Learned Departmental Representative supports the impugned order. On the first and sixth arguments of the appellant, learned Departmental Represent....
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....discrepancies were noticed, summons were issued to Shri Asif Farooque, the Director of the appellant firm who, in his statement before the Customs officers, explained that the shoes with the flap bearing brand names Nike and Puma and logo Adidas do not belong to him at all. He further said that he had contacted his Chinese supplier and confirmed that the labour has dispatched the wrong shoes accidently and they do not belong to him. In fact, he said that he is trader in unbranded shoes. The Bill of Entry mentions "non- popular brands". At no point of time has he asserted that he has declared the goods which were imported. What has declared in the Bill of Entry was clearly different from what was imported. Shri Farooque also agreed that the MRP was not properly embossed and said the same would be got done on the shoes. Since the description of the goods was different from those that of imported, Shri Farooque suggested that a joint market survey to ascertain the price of the goods. This was the statement by Shri Farooque, Director of the appellant. Another Director of the appellant, Shri Rajeev Kumar Jaiswal also accepted that the goods were mis-declared in terms of value and descri....
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....valuation at the time of adjudication also. Therefore, the argument that the transaction value should be accepted as the assessable value has no force whatsoever especially when the assessee has accepted that what was imported were different from what were declared and further clarified from its overseas supplier and confirmed that wrong goods were imported which they had not ordered due to some supplier's end. On the fifth ground that the confiscation of the goods cleared on higher assessable value is illegal, arbitrary and contrary to the provisions, learned Departmental Representative submits that Section 111(d) provides for confiscation of any goods imported contrary to any provisions imposed by or under Customs Act or any other law for the time being for in force. Section 111(m) provides for confiscation of goods which do not correspond in value or in any other particular with the entry made under Customs Act. The entry in question is the Bill of Entry filed by the appellant. Admittedly, the goods do not confirm to the description. As per the report of the right holders given after examination of the imported goods, the goods infringe the Intellectual Property Rights of th....
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....of the Rule 7 says that Rule 7(1)(a) deals with cases where the right holder is already registered. Rule 7(1)(b) deals with cases where the right holders are not registered. In this case, the right holders have already been registered. If they were not registered, they would have had to fulfill the obligations under Rule 3 and Rule 5 and get registered under Rule 4 and these obligations would have to be fulfilled within five days of suspension of the clearance of the goods. The present case is not covered by these provisions because right holders were already registered. Therefore, he submits that there is no force in the submissions of the learned Counsel and his appeal may be rejected. 15. We have considered the submissions on both sides. The issues to be decided in this case are: i) Were the goods which were confiscated absolutely prohibited goods under Section 11 of the Customs Act read with Rule 6? ii) Were the goods seized by the Deputy Commissioner on his own initiative under Rule 7(1)(b) or on the basis of a registered right holder under Rule 7(1) (a)? iii) Have the Right Holders joined the proceedings within the time frame set out in the Rules....
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....rtain registered IPR on them. A plain reading of Rule 6 shows that import of goods is prohibited if the registered IPR is violated and it does not make any exception to goods which also have some other logos. It is immaterial how many logos are on the goods. If they violate any IPR, their import is prohibited, and not otherwise. In this case, the shoes with Man and Horse logos also had device mark "FORM strip" besides Puma on the flap of the shoes. The Delhi High Court has in the case of Puma Se held that the device mark Form strip Puma, and marks are registered marks of Puma besides catalog and the word Puma. Further in PUMA SE also the High Court of Delhi concluded that the form striped logo of Puma is registered in India and the right holders of the same. We find that the impugned goods have, therefore, violated the IPR and the import of these goods was, therefore, prohibited under Rule 6 read with Section 11. 18. Learned counsel for the appellant also argued that the goods were detained by the Deputy Commissioner on his own initiative and therefore, the proceedings fall under Rule 7(1) (b) and the Right holders should have fulfill their obligations within five days and since....
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....the right holder any information or assistance, including technical expertise and facilities for the purpose of determining whether the suspect goods are counterfeit or pirated or otherwise infringe an intellectual property right. (6) Where the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, has suspended clearance of goods on his own initiative and right holder has given notice under rule 3 of the Rules and fulfilled the obligations under Rule 5, but, the right holder or his authorised representative does not join the proceedings within a period of ten working days from the date of suspension of clearance leading to a decision on the merits of the case, the goods shall be released provided that all other conditions of their import under the Customs Act, 1962, have been complied with: Provided that the above time- limit of ten working days may be extended by another ten working days in appropriate cases by the Commissioner or an officer authorized by him in this behalf. (7) In the case of perishable goods suspected of infringing intellectual property rights, the period of suspension of release shall be three workin....
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....)(b) deals with cases where the IPR has not been registered with the Customs and in such a case, the Rights holder has to give notice and fulfill obligations for registration within five days. On the other hand, Rule 7(1)(a) deals with cases where the Rights have already been registered with the Customs and in cases of suspension of clearance, the Rights holders have to join the proceedings within ten working days. In this case, the clearance of the goods was suspended on receiving information regarding some mis-declaration and on the request of the appellant, the goods were warehoused and thereafter a Panchnama was drawn after detailed examination which revealed that the goods had also logos of popular brands. When the matter was referred to the Deputy Commissioner (IPR cell), he confirmed that the logos were registered with the Customs. Thereafter, the goods were seized. As the seizure of the goods and suspension of the clearance was based on the IPR already registered with the Customs, it is covered under Rule 7(1)(a) and not under Rule 7(1)(b). Therefore, the assertion of the learned counsel that the clearance of the goods was suspended by the Deputy Commissioner on his own ini....
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....n costs which the importer would have to incur. The price after these deductions was reckoned as the cum-duty price and the assessable value was calculated therefrom. We find no force in the argument of the learned counsel that the transaction value should have been accepted because: a) According to the Director of the appellant Shri Farooque, the goods which were imported were not the same as were declared in the documents and they were sent by mistake. Evidently, if the goods are different, the value should be different too. b) Shri Farooque himself suggested that the value can be determined through a joint market survey and the department accepted the suggestion and thereafter he participated in the survey. c) Deductions have been made on account of retailer's margin, importer's margin, post-importation costs from the market price and what was left after these deductions was taken as cum-duty price and the value calculated backwards. d) There is nothing on record to show that Shri Farooque gave the statement under duress. e) After the entire exercise, another Director of the appellant firm, Shri Rajeev Jaiswal gave in writing that he ....
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.... violated the Rights of the rights holder, as per Rule 6, they become prohibited goods under section 11 of the Customs Act, 1962. Section 111(d) squarely applies to prohibited goods which are imported. It was also evident that these goods were not included in the entry made in the Bill of Entry. In fact, Shri Farooque, Director of the appellant firm has, after checking with his overseas Chinese supplier, confirmed that the goods were not even ordered by them and were sent by mistake of the labourers. Therefore, confiscation of these goods under section 111(l) in the order of the original authority affirmed in the impugned order is correct and proper. 27. As regards the goods which were not found to infringe any IPR, the same were found to be of not the value which was declared. Their value was reassessed as per the suggestion of Shri Farooque, Director of the appellant firm through a joint market survey. Therefore, these goods were correctly confiscated under section 111(l) and (m). Was the absolute confiscation of goods having men mark, horse mark and three strips is illegal, as these two marks were not registered with the customs but which also had the three stripes and "Tr....