2018 (5) TMI 1307 - AT - Customs

Valuation of imported goods - television sets - rejection of declared value - enhancement of value - rule 9 of Customs Valuation (Determination Of Value of Imported Goods) Rules, 2007 - non-compliance with the compulsory registration scheme - absolute confiscation - penalties. Whether the television sets are liable to confiscation under section 111 of Customs Act, 1962 for non-compliance with the compulsory registration scheme of the Bureau of Indian Standards? - Held that - It is not in dispute that SONY Sony television sets have been procured from facilities which supply the same to M/s Sony India Ltd, and the registration for import by M/s Sony India Ltd being approved, compliance with the registration scheme is beyond question. The confiscation of SONY television sets under section 111(d) is not tenable - Insofar as SAMSUNG sets are concerned, there is no evidence of registration which warrants confiscation under section 111(d) as a natural consequence and, in view of the lack of registration, clearance into the domestic market on payment of redemption fine would run counter to the objectives of the Foreign Trade Policy in prescribing such registration as a pre-requisite for import. The quality of the goods and safety to the consumer is assured only with such registration - confiscation of SAMSUNG sets is valid. Valuation - Held that - In the absence of any evidence of contemporaneous imports to support the enhancement, and the failure to taken into consideration factors that may had the effect of abating the value at which imports were made by M/s Sony India Ltd, we are unable to assent to the finding of misdeclaration. Consequently, the confiscation of SONY television sets under section 111(m) of Customs Act, 1962 for misdeclaration of value is not correct in law - As the SAMSUNG television sets are required to be re-exported without being cleared on payment of duty, valuation is not relevant. The Rules exist to detect and destroy counterfeits. Counterfeits can be detected only though the prescribed procedure. That does not appear to have occurred and, hence, the goods are not counterfeits. Section 11 and, consequently section 111, is not liable to be invoked. The confiscation being without authority of law is set aside as is the penalty. The confiscation of the SONY television sets and SONY panels set aside and the enhancement of assessable value of both - The confiscation of SAMSUNG television sets is upheld with the redemption fine, subject to re-export, being reduced to ₹ 5,00,000/- - appeal allowed in part.

Summary

Issues Involved:
1. Confiscation of television sets for non-compliance with the compulsory registration scheme.
2. Valuation of imported goods.
3. Absolute confiscation of panels for SONY television sets for intellectual property rights violations.

Detailed Analysis:

1. Confiscation of Television Sets for Non-Compliance with the Compulsory Registration Scheme:
The first issue pertains to whether the television sets imported by M/s Raj Traders are liable to confiscation under section 111 of the Customs Act, 1962, due to non-compliance with the compulsory registration scheme of the Bureau of Indian Standards (BIS). The tribunal observed that SONY television sets were procured from facilities supplying to M/s Sony India Ltd, which had the requisite registration, thus making the confiscation and re-export order untenable. However, for SAMSUNG television sets, there was no evidence of registration, justifying their confiscation under section 111(d). The tribunal upheld the confiscation of SAMSUNG sets and the condition of re-export for redemption, emphasizing that the quality and safety standards mandated by the Foreign Trade Policy necessitate such registration.

2. Valuation of Imported Goods:
The second issue concerns the valuation of the imported goods. The tribunal noted that the adjudicating authority relied on prices furnished by M/s Sony India Ltd to reject the declared value, which was not in accordance with the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. The tribunal found that the adjudicating authority failed to sequentially apply the rules of valuation and did not consider contemporaneous imports. Consequently, the tribunal did not agree with the finding of misdeclaration of value for SONY television sets and set aside their confiscation under section 111(m). For SAMSUNG television sets, the valuation was deemed irrelevant as they were to be re-exported without being cleared for the domestic market. The tribunal reduced the redemption fine for SAMSUNG sets to ?5,00,000/-.

3. Absolute Confiscation of Panels for SONY Television Sets for Intellectual Property Rights Violations:
The third issue involves the absolute confiscation of panels imported by M/s Ideal Impex for SONY television sets, alleged to violate intellectual property rights. The tribunal scrutinized the enforcement of the Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007, and found that the adjudicating authority exceeded its jurisdiction. The tribunal highlighted that the local right holder must be notified and given an opportunity to ascertain the detriment to the intellectual property right owner, which was not done. The tribunal emphasized that customs authorities' jurisdiction is limited to preventing the entry of goods falsely claiming provenance from the intellectual property right owner. Since the prescribed procedure to detect counterfeits was not followed, the tribunal set aside the confiscation and penalties imposed on the panels.

Conclusion:
The tribunal set aside the confiscation and enhancement of assessable value for SONY television sets and panels, while upholding the confiscation of SAMSUNG television sets with a reduced redemption fine of ?5,00,000/-. The appeals were allowed to the extent specified.