2014 (8) TMI 211 - AT - Customs

Confiscation of goods - International Mobile Equipment Identity number of phones were allocated to other brands like Nokia and Samsung and exported phones did not pertain to the declared brand - Re-export of goods - Redemption fine - whether the Customs authorities were justified in confiscating the goods and allow the re-export on payment of redemption fine and imposition of penalties on the ground that IMEI numbers available in respect of phones belonging to original equipment manufacturer like Nokia and Samsung - Held that - the only requirement under the law is that mobile handsets should be carrying the IMEI numbers which admittedly the present consignment was having. As per the appellants, Bonac Company is only de-designing and embellishing the casing of existing handsets which are manufactured by the original equipment manufacturers like Nokia and Samsung, by using cutting edge engineering / technology. In such a case, the IMEI number has to be belonging to the manufacturer of mobile phones. Customs authorities are not proper officer to examine the issue as to whether the IMEI numbers stand validly given on hand sets or as to whether the brand name owner was the actual owner of the said IMEI numbers. If the IMEI numbers allocated to Nokia and Samsung are being used by another company, M/s. Nokia and M/s. Samsung are aggrieved party, and would have definitely taken action against M/s. Bonac. In the absence of any indication to that effect and in the absence of admitted position of mobile handsets carrying of IMEI numbers, I find no justification for confiscation of the goods or for imposition of penalties - Decided in favour of assessee.

Summary

Issues:
1. Interpretation of Foreign Trade Policy regarding IMEI numbers on mobile handsets.
2. Confiscation of goods and imposition of penalties based on IMEI numbers belonging to other brands.
3. Justification for re-export and reduction of redemption fine and penalty.

Analysis:
1. The judgment primarily revolves around the interpretation of the Foreign Trade Policy concerning the presence of IMEI numbers on mobile handsets. The Commissioner (Appeals) referred to the policy that prohibits the import of mobile handsets without valid IMEI numbers. The appellant had imported branded mobile phones with IMEI numbers allocated to other brands, leading to the direction for re-export by the original adjudicating authority. The Commissioner upheld this decision, emphasizing the security implications and correctness of disallowing home consumption due to invalid IMEI numbers.

2. The core dispute in the case was whether the confiscation of goods and imposition of penalties were justified based on the IMEI numbers not corresponding to the declared brand. The appellant argued that the brand name belonged to a legitimate company involved in embellishing existing handsets manufactured by OEMs like Nokia and Samsung. They contended that renowned brands like Vertu also used handsets from OEMs with IMEI numbers allocated to those manufacturers. The Tribunal agreed with the appellant, stating that customs authorities were not authorized to determine the validity of IMEI numbers or brand ownership. Without evidence of aggrieved parties or admission of invalid IMEI numbers, the confiscation and penalties were deemed unjustified.

3. Regarding the re-export and reduction of redemption fine and penalty, the Tribunal found merit in the appellant's argument that the presence of IMEI numbers on the imported phones satisfied the legal requirement. Since the appellant's activities involved embellishing existing handsets without altering their core functionality, the Tribunal concluded that the confiscation and penalties were unwarranted. Consequently, the impugned orders were set aside, and the appeal was allowed with consequential relief to the appellants, highlighting the importance of adhering to legal provisions while considering security implications in such cases.