2012 (6) TMI 30 - HC - Customs

Clearance of imported goods - Allegation of Infringement of trade mark - Trade Marks Act, 1999 - valuation - Held that - respondents must pass an appropriate order indicating the legal basis on which the action is proposed and also the nature of the action proposed for such perceived violation of law on the part of the respondents after giving a reasonable opportunity to the importer to meet the case against him. - Instead of proceeding to determine the duty leviable on the imported goods by following the appropriate procedure or passing an order of confiscation if they believe that they are justified in the facts and circumstances, the respondents, it appears, are indefinitely detaining the goods without any appropriate order being passed thereon. Such a course of action, is absolutely illegal. respondents are required to take a decision expeditiously either to make a regular assessment or a provisional assessment or a decision to confiscated the goods in question if it is permissible under law after following appropriate procedure or provisionally release the goods under Section 110-A of the Customs Act. Writ petition allowed

Summary

Issues Involved:
1. Detention of imported goods due to alleged infringement of intellectual property rights.
2. Allegations of under-invoicing, mis-declaration, and misuse of Import Export Code.
3. Legal obligations and rights under the Customs Act, including Sections 110A and 125.

Issue-wise Detailed Analysis:

1. Detention of Imported Goods Due to Alleged Infringement of Intellectual Property Rights:
The appellant, a proprietor engaged in import-export, imported consumer goods, including cosmetics, which arrived at Cochin Port in April 2011. The Commissioner of Customs, Cochin, issued a communication on 16-5-2011, stating that three items of the imported goods infringed the Trade Marks Act, 1999, based on complaints from M/s. Johnson & Johnson Ltd. and M/s. Wipro Cyprus Private Ltd. The Commissioner called for detailed information from the appellant, including the names and addresses of consignors and consignees, and any authorization from the trademark holders. The appellant requested the detention of the objectionable items and the release of the remaining goods, but the respondents did not comply, leading to the filing of a writ petition.

2. Allegations of Under-invoicing, Mis-declaration, and Misuse of Import Export Code:
The respondents' counter affidavit highlighted additional issues beyond intellectual property rights, including under-invoicing, mis-declaration, and bogus imports for third parties by misusing the Import Export Code. The affidavit alleged habitual low-price declarations by the importer to evade duty, necessitating a detailed investigation.

3. Legal Obligations and Rights Under the Customs Act:
The learned Judge ruled that relief under Article 226 of the Constitution was not appropriate and that Section 110A of the Customs Act did not create an absolute right for the appellant. The appellant argued that the goods were not prohibited and that valuation discrepancies should be addressed through assessment procedures, with the right to redeem confiscated goods under Section 125. The respondents contended that the goods were deemed prohibited under the Intellectual Property (Imported Goods) Enforcement Rules, 2007, and that undervaluation justified detention.

Judgment Analysis:
- Intellectual Property Rights: The court acknowledged that the import of the three disputed items was deemed prohibited under the Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007. The Commissioner must determine any infringement and, if confirmed, confiscate the goods under Section 111(d) of the Customs Act.

- Other Goods: The remaining goods should be cleared for home consumption as per the Customs Act and Customs Tariffs Act. The proper officer must assess the duty without undue delay under Sections 17 and 18 of the Customs Act. If undervaluation is suspected, appropriate actions, including confiscation and penalties, can be initiated under Sections 111(m) and 112.

- Name Lender Allegation: The court found no legal prohibition against an Import Export Code holder importing goods for another party, provided the import is not prohibited. The respondents must pass an appropriate order if they have legal objections, giving the importer a reasonable opportunity to respond.

- Section 110A of the Customs Act: The court held that Section 110A vests discretion in customs authorities to release goods pending adjudication, which must be exercised lawfully. The respondents must decide expeditiously on regular or provisional assessment, confiscation, or provisional release under Section 110A.

Conclusion:
The court directed the respondents to take a decision within two weeks, either to make a regular or provisional assessment, confiscate the goods if justified, or provisionally release the goods under Section 110A, ensuring compliance with the legal framework.