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2024 (3) TMI 464
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.... the appellant are as under : - "(i) The appellant filed a Bill of Entry No. 2245370 dated 27.06.2017 for clearance of goods declared as Man PU Canvas Shoes through their Customs Broker namely M/s. HLPL Global Logistics Pvt. Ltd. (hereinafter called as 'Customs Broker). (ii) The examination of the said consignment was conducted on 29.06.2017, in presence of the representative of the customs broker wherein it was found that same pairs of shoes bore the logo of United Colors of Benetton (UCB) Brand. Since, there was a possibility that other branded goods might also be present in the said consignment, permission for 100% examination was obtained on 29.06.2017 itself and the representative of the customs broker signed below the directions given by Assistant Commissioner in token of having noted the same. On scrutiny of documents, it was found that the importer had declared retail sale price of a pair of shoes as Rs. 465/- for the purpose of assessment of additional duty of Customs. The importer had not declared in the documents filed for Customs Clearance regarding the imported goods bearing any brand. (iii) The representative of the customs broker reques....
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....may please be treated as notice under Regulation No.3(1) of IPR Rules, 2007. (viii)A letter dated 01.08.2017 was sent to the importer intimating that the right holder had requested to suspend the clearance of the goods as they believe that the questioned goods were counterfeited of United Colors of Benetton and the goods were infringed with the correct logo and trademark of United Colors of Benetton. 3. As Right Holder objected to the import of the impugned goods, a letter dated 01.08.2017 was sent to the Right Holder to comply with the conditions required for registration under IPR Rules, 2007, failing which, the goods shall be released inadvertently. Consequently, the Right Holder sent a request letter dated 03.08.2017 for getting registered as per IPR Rules and also to comply with the other requisite formalities, as provided under the IPR Rules. The Right Holder was informed vide letter dated 10.08.2017 that the notice for registration has been accepted by the competent authority on 09.08.2017. In the meanwhile, on a query received from the importer vide letter dated 3.8.2017, a letter dated 10.08.2017 was sent to the importer informing that M/s. Benetton India Pvt. ....
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....ed under Section 112(a) of the Act. 6. Shri Devesah Tripathi, learned counsel for the appellant has challenged the impugned order on the ground that no order has been passed for suspension of clearance of the goods as per Rule 7 of IPR Rules, 2007 and the letter dated 18.07.2017 cannot be treated as the order of suspension. Referring to Rule 7(3), he submitted that there has to be a letter saying that the clearance of subject consignment has been suspended w.e.f. a certain date and also stating the reasons thereto. According to him, the IPR Rules prescribed the time limit for taking the action, which in the present case has not been followed. Rule 7(2) provides that the importer shall be immediately informed about the suspension of the clearance of the goods and since he has been informed as late as on 01.08.2017, it implies that clearance of goods was not suspended till that date. Learned Counsel also pointed out that the endorsement made by Shri C.K. Singh on 25.07.2017 shows that the Department is somehow trying to make up the case against him as the entire proceedings was conducted in the absence of the appellant or his representative and without drawing a Panchnama. He disp....
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....to dated 12.09.2014, which covered the logo in respect of the footwear also, he submitted that Benetton India is the Right Holder of the logo w.e.f. 12.09.2014 and which continued up to 31.01.2022. He further submitted that comparing the logo bearing on the shoes with the logo registered in the name of Benetton, the Authorities below have come to the conclusion that the former was deceptively similar so as to mis-lead a person and cast a confusion in his mind while purchasing the product. Learned counsel relies on the provisions of the Notification No.51/2010 dated 30.06.2010 and as a result thereof, the goods in question were liable for confiscation in terms of Section 111(d). The other aspect relating to the use of the "ROCK" brand, the appellant had not made full and complete disclosure thereof in the bill of entry regarding the description of the goods and thereby contravened the provisions of Section 46 of the Act. In so far as the non-adherence of the time limit prescribed under Rules 2007, he submitted that the Authorities below have noted that the same have been complied with except for sub-rule(4) of Rule 7. However, the goods could not be released as all other conditions ....
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....tractors, the Licensed Products, bearing the Licensed Trademarks ; (b) market, distribute and sell in the Territory the Licensed Products, bearing the Licensed Trademarks and manufactured on the basis of the Clause 3(1)(a) above, solely through the Authorised Sales Outlets (as specified in the fourth Schedule hereto); (c) under Clause 3(1)(a) and 3(1)(b) hereof. As per Para-15 of the said agreement "This Agreement shall have its date of signature as its initial Date of Effect and shall remain in force for an undetermined period of time until terminated by either party giving to the other three (3) months" prior notice in writing" Subsequently, Certificate having Trademark No. 2326567 registered on 4.05.2012 under the Trademarks Act, 1999 was issued on 26.12.2013 by Registrar of Trademark, Delhi wherein the said logo "UCB" has been registered in the name of Bencom s.r.l. which apart from other goods also includes footwear. We further find that the original agreement was amended on 12.9.2014 where right to use the said logo "UCB" is also covered. The first schedule of the letter dated 12.09.2014 provides for licensed goods which includes footwear items a....
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....B" belongs to them and they are the rightful owners of the logo and the appellant by using the said logo on the shoes under import has infringed the trademark rights of BIL. The appellant deliberately suppressed that the goods are marked with the brand/logo as no such declaration was made on the Bill of Entry, Invoice or the Packing List and the goods are therefore liable for confiscation under Section 111(d). 13. We may now deal with the other goods bearing the title or name "ROCK". Here also we find that the appellant had intentionally and deliberately not mentioned in the import documents that the Shoes imported by them were bearing the mark "ROCK". The plea taken by the appellant is that "ROCK" brand was not claimed by anyone as their Trademark/Brand and hence there was no infringement in terms of the IPR Rules, 2007, however, we do not find any merit in the argument. Here also we find that in the bill of entry the declaration made by the appellant is "Man PU Canvas Shoes" and no brand is mentioned whereas in terms of Section 46(4) of the Customs Act, the importer while presenting a bill of entry is required to make and subscribe to a declaration as to the truth of the conte....
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....at in order to come to the conclusion whether one mark was deceptively similar to another the broad and essential feature of the two were to be considered. They should not be placed side by side to find out if there were any differences in the design and if so, whether they were of such character as to prevent one design from being mistaken for the other. It would be enough if the impugned mark bore such an overall similarity to the registered mark as would be likely to mislead a person usually dealing with one to another, if offered to him. It is well known that UCB has acquired international reputation and goodwill and has also been able to establish its name in the Indian market and has significant presence in India. Consequently, the goods in question (shoes) bearing the logo of UCB are bound to differ their trade name and are therefore, counterfeit goods, the import of which is prohibited in the Act. 15. We may now consider whether absolute confiscation of the goods bearing the logo "UCB" is justified. Notification No.51/2010-Cus (NT) dated 30.06.2010 has been issued by the Government of India in exercise of powers under Section 11(2)(n) and Section 11(2)(u) of the Act whic....
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....o refer to certain decisions in this regard. 17. The Supreme Court in the case of Om Prakash Bhatia Vs. Commissioner - 2003 (155) ELT 423 (SC) following the decision in Sheikh Mohammed Omar -1970 (2) SCC 728 enunciated the meaning of the term "prohibited goods" as defined by Section 2(33) and the authority of the Customs department to confiscate the goods, observing as: "10. From the aforesaid definition, it can be stated that (a) if there is any prohibition of import or export of goods under the Act or any other law for the time being in force, it would be considered to be prohibited goods; and (b) this would not include any such goods in respect of which the conditions, subject to which the goods are imported or exported, have been complied with. This would mean that if the conditions prescribed for import or export of goods are not complied with, it would be considered to be prohibited goods. This would also be clear from Section 11 which empowers the Central Government to prohibit either "absolutely' or "subject to such conditions' to be fulfilled before or after clearance, as may be specified in the notification, the import or export of the goods of any specified d....
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.... not been complied with ,or in other words the restrictions imposed by the concerned authorities have not been adhered to. 21. In his separate judgment concurring with the aforesaid view, Justice Yashwant Varma observed as under:- "145. In summation, we note that Section 2(33) of the Act while defining prohibited goods firstly brings within its dragnet all goods in respect of which a prohibitory notification or order may have been issued. That order could be one promulgated either under Section 11 of the Act, Section 3(2) of the FTDR or any other law for the time being in force. However, a reading of the latter part of Section 2(33) clearly leads us to conclude that goods which have been imported in violation of a condition for import would also fall within its ambit. If Section 2(33) were envisaged to extend only to goods the import of which were explicitly prescribed alone, there would have been no occasion for the authors of the statute to have spoken of goods imported in compliance with import conditions falling outside the scope of prohibited goods". 146. Our conclusion is further fortified when we move on to Section 11 and which while principally dealing ....
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....s taken should be allowed, to reach its logical end, and not to be stiffed, by any provisional release." 23. The issue whether the goods are liable to absolute confiscation has been dealt by the Supreme Court in Union of India Vs. Raj Grow Impex LLP - 2021 (377) ELT 145 (SC) and referring to the provisions of section 125 of the Act, it was observed: "69.1 A bare reading of the provision aforesaid makes it evident that a clear distinction is made between "prohibited goods " and "other goods'. As has rightly been pointed out, the latter part of section 125 obligates the release of confiscated goods (i.e., other than prohibited goods) against redemption fine but, the earlier part of the provision makes no such compulsion as regards the prohibited goods; and it is left to the discretion of the Adjudicating Authority that it may give an option for payment of fine in lieu of confiscation. It is innate in this provision that if the Adjudicating Authority does not choose to give such an option, the result would be of absolute confiscation. "79. As noticed, the exercise of discretion is a critical and solemn exercise, to be undertaken rationally and cautiously and has t....
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....ns prescribed under the Act. 137. What thus clearly appears to flow from Section 111 is of the power of confiscation being extendable not just in the case of dutiable or prohibited goods but also to goods whose import may have been effected in violation of the conditions prescribed by the Act. This is clearly evident from a reading of Clauses (e), (f), (g), (h), (i), (j), (m),(n), (o) and (p) of Section 111." In view of the judicial pronouncements, we have no hesitation in arriving at the conclusion that the goods under import affixed with the logo In view of the judicial pronouncements, we have no hesitation in arriving at the conclusion that the goods under import affixed with the logo In view of the judicial pronouncements, we have no hesitation in arriving at the conclusion that the goods under import affixed with the logo of UCB has infringed the intellectual property rights of BIL, therefore, being counterfeit goods, they fall in the category of "prohibited goods", the import of which amounts to "smuggling" and hence have been rightly confiscated in absolute terms. Thus no interference is called for with the impugned order of absolute confiscation.- of UCB has inf....
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....ns the performance of any Act and further mandates the consequences for non-performance, the condition is mandatory, however, the same is not applicable here, for the simple reason that the IPR Rules specifically provides that goods shall be released provided that all of the conditions of import of such goods under the Customs Act, 1962 have been complied with. Thus the consequences of release of goods is not automatic but is shifted on the satisfaction that other conditions of import of such goods under the Customs Act, 1962 have been complied with. We have already discussed above that in the present case the basic conditions of import of goods of making correct declaration in the import documents has not been satisfied thereby there is clear violation of the provisions of the Customs Act. The decision of the Tribunal in SRK Enterprises (supra) is also distinguishable as finding has been recorded in paragraph 10 there that neither the time prescribed in the IPR rules have been followed, nor the conditions laid down in Rule 3 has been complied with. Here we find that the Adjudicating Authority has dealt in detail with the compliance of the provisions of the IPR Rules and we do not ....
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....goods infringing intellectual property rights in accordance with the procedures and under the conditions as set out in these Rules, requesting for suspension of clearance of goods suspected to be infringing intellectual property right. The notice is required to be given in the prescribed format as provided for under the rules. If such a notice is not provided, sub-rule (4) of Rule 3 would empower the Deputy Commissioner of Customs or Assistant Commissioner of Customs to ask the right holder or his authorized representative to provide the same within 15 days. The right holder is also required to inform customs authority when his intellectual property ceased to be valid or if he ceases to be the owner of such intellectual property right. Rule 4 provides for "Registration of notice by the Commissioner". Rule 5 provides for "Conditions for registration". Rule 6 provides for "Prohibition for import of goods infringing intellectual property rights". Rule 7 provides for "Suspension of clearance of imported goods. 11. Insofar as the present proceedings are concerned, Rules 6 and 7 are relevant in regard to exercise of powers by the Deputy Commissioner of Customs or Assistant Commi....
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....aid goods. This more particularly as "right holder" has been defined in Rule 2(d) to mean a natural person or a legal entity, which according to the laws in force is to be regarded as the owner of protected intellectual property right or its duly authorized exclusive licensee as defined. As noted above, Rule 3 provides for "Notice by the right holder" to the Customs Authorities in relation to goods infringing Intellectual property rights and requesting for suspension of clearance of goods suspected to be infringing intellectual property rights. Rule 4 provides for registration of such notice and Rule 6 provides for prohibition for import of goods infringing intellectual property rights. Thus, the 2007 Rules provide for a complete scheme in relation to the goods infringing Intellectual property rights falling under the definition of Intellectual Property as defined in Rule 2(a). It is only after the registration of notice by the Commissioner, the import of infirming goods into India is deemed to be prohibited within the meaning of Section 11 of the C.E. Act as ordained by Rule 6". 29. As noted by the Bombay High Court in NBU Bearings Pvt Ltd vs Union of India, 2021 SCC Online Bom....
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....give notice under Rule 3 of the Rules or does not fulfill the obligation under Rule 5, within five days from the date of suspension of clearance, the goods shall be released provided that all other conditions of import of such goods under the Customs Act, 1962, have been complied with. (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 authorized 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." 32. The adjudicating authority has dealt in detail the date- wise steps taken by the department while carrying out the 10% examination of the goods in the presence of the representative of the revenue on 29.06.2017, when some pairs of the shoes were found to have the logo and on that basis 100....
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....ort of such goods under the customs act, 1962 have been complied with. Here we find that the report of 100% examination was sent to the Assistant Commissioner on 14.07.2017 and consequently action was taken by him by sending the communication dated 18.07.2017 both to the right holder and also to the Deputy Registrar of the Trade Marks. The right holder had approached the department on 25.07.2017, i.e., within the prescribed period of 10 days and hence there is no violation. 34. The adjudicating authority had calculated the date of deemed suspension with effect from 14.07.2017, when the report of 100% examination of the goods duly signed by the representative of the importer was brought to the knowledge of the Assistant Commissioner he took the follow up action by sending letters dated 18.07.2017 to BIL & Deputy Registrar of Trade Marks being the appropriate authority and therefore when the right holder had given an informal notice to the Assistant Commissioner on 25.07.2017, the same has been held to be beyond the period of five days as mandated under rule 7(4). We are of the view that non-compliance of rule 7(4) is not material as the consequent release of goods is not automati....
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....e construed as directory as the Rules itself provide that what is mandatory is the compliance of the provisions of the Act. The provisions of the Rules cannot be construed as mandatory for the simple reason as noted above, any action for release of the goods is with a rider, subject to the compliance of other provisions of the import under the Customs Act. We also find support from the recent observations of the Constitution Bench in HC Bar Association, Allahabad Vs. State of U.P & Others - Civil Appeal No. 3589 of 2023 dated 29.02.2024. "It is worth noting that wherever under a statute any such time limit has been prescribed or is fixed for deciding a particular nature of proceedings, it has been held to be directory in nature rather than mandatory." Therefore, the objections taken by the importer on the basis of strict adherence to the time line in terms of the provisions of the Rules have no merit and deserves to be rejected. 35. The IPR Rules, 2007, have been the subject matter of consideration before the High Court of Delhi in Telefonaktiebolaget LM Ericcson vs. Union of India - 2014 (299) ELT 184 (Del.), where the appellant was the registered owner of patents a....
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....ounterfeit goods" which fall in the category of prohibited goods and are therefore liable for confiscation. Thus, the issue before us is directly linked to the confiscation order passed by the Adjudicating Authority under Section 111(d) and (m) of the Act. The contention raised by the appellant that the endorsement dated 25.07.2017, by Shri C K Singh, Deputy Manager of BIL on the letter dated 18.07.2017, has been manipulated to meet the timeline schedule is without any substance and needs to be rejected considering the action taken by the official authorities in this regard. The letter dated 18.07.2017 by the Assistant Commissioner granted one week to BIL to inspect the goods and intimate whether the same are genuine or counterfeit and since the period of one week expired on 25.07.2017, that BIL was contacted telephonically and in response Shri C K Singh appeared and made an endorsement duly signed to suspend the clearance of goods. No error can be found in the process adopted. CONCLUSION : i). Admittedly, the goods were bearing the logo of UCB and the brand name "ROCK" which was not declared in the import documents. ii). Undisputed fact is that the impor....