J. Chelameswar, C. J.
1. Aggrieved by the judgment dated 5th July, 2011 in WP (C) No. 16503 of 2011, the unsuccessful petitioner preferred the instant appeal.
2. The appellant, one Mr. T. A. Joslin, describes himself to be the proprietor of a business concern carrying on business of imports and exports. He has been duly registered as such and duly allotted an ‘Import Export Code’. He imported certain consumer goods, such as cosmetics etc. The goods arrived at the Cochin Port some time in the month of April, 2011. They were de - stuffed on 27/04/2011 at the Container Freight Station, Petta. The said material was examined by the respondents in the first week of May, 2011. But the goods were not cleared for home consumption. The appellant received a communication dated 16/05/2011 from the Commissioner of Customs, Cochin, Special Intelligence and Investigation Branch (IPR Cell). The substance of the said communication is that, of the various items of the goods imported by the appellant (numbering 23), three items are found to be objectionable items. According to the said communication, import of the said items amounts to infringement of the Trade Marks Act, 1999. It appears from the said communication that the respondents received complaints from two companies, M/s.Johnson and Johnson Ltd. and M/s.Wipro Cyprus Private Ltd. claiming to be the holders of a trade mark in the products specified by them and the import of the same would infringe the trade mark conferred on them. The Commissioner, therefore, called for certain informations from the appellant, the details of which are contained in paragraphs 4 and 5 of the said communication. The relevant portion of the said communication reads as follows:
“Attention if invited to your Bill of Entry No.3302152 dated 25/04/2011 filed for the import and clearances of consumer items including facecream bearing the registered Trademark, viz. “Johnson’s” brand, “Yardley” brand soaps and powder through Cochin port.
2. In this regard you are hereby informed that--
(a) M/s.Johnson and Johnson Ltd., 30, Forjett Street, Mumbai - 400036 have informed to Customs authorities at New Custom House, Mumbai that in respect of products with registered trade marks “Johnson’s” they are the right holders. They have also submitted necessary registration certificates issued under Section (2), R.65(i) of the Trade and Merchandise Marks Act, 1958 and their notice / complaint has been registered vide UPRN No. A03911NBOM1TM dated 11/01/2011.
(b) Similarly, in respect of Yardley brand products, M/s.Wipro Cyprus Private Ltd. are the Trade Mark owners and they have been allotted UPRN NO.AO3911NBOM1TM dt. 28/03/2011 by the Customs authorities at New Delhi, with respect to the notice / complaint filed by them.
Therefore, the import of goods with the above brands amounts to infringement of the Trade Marks Act, 1999.
3. The Central Board of Excise and Customs (CBEC), New Delhi has issued the Notification 47/2007 - Cus(NT), dated 08-05-2007 and Circular No.41/2007 - Cus, dated 29/10/2007 regarding the intellectual Property Rights (Imported Goods) Enforcement Rules, 2007 and instructions for implementation respectively. (copy available at www.cbec.gov.in)
4. In the light of above and further in terms of S.140(2) of the Trade Marks Act, 1999 and other relevant provision of the Act, ibid, you are hereby directed to produce full and correct details regarding the name and address of the person by whom the goods were consigned to India and the name and address of the person to whom the goods were sent in India. Further any order, documents relating to the goods and authorization or consent from the manufacturer or agent or from the trade mark holder in India or abroad may also be submitted in support of your claim as required under the Trade Marks Act, 1999, so as to ascertain that the proviso relating the trade mark or trade description has not been infringed in any manner as provided in the Trade Marks Act, 1999.
5. You may also submit any order or other documents, evidences or any other material in support of your claim so as to prove that the goods imported under the aforesaid bill of entry are not prohibited under S.11 of the Customs, 1962, read with Notification Number 47/2007 - Cus, dated 08/05/2007 read with the CBEC Circular 1/2007 - Cus., dated 29/10/2007 issued there under and provisions of the Trade Marks Act, 1999.
6. Replies to this letter along with documentary evidences if any in support of your claim shall be submitted within fourteen (14) days from the receipt of this letter. In the event of failure of compliance to the directions herein, you will be liable for consequential penal action.
7. This letter is issued without prejudice to any other action that may be taken under the Customs Act, 1962, rules, Regulations there under or any other law for the time being in force in India.”
3. On receipt of the said communication, it appears that the appellant sent a letter dated 18/05/2011, in substance, requesting the respondents to detain the three objectionable items referred to above and clear the rest of the imported goods. The relevant portion of the said letter reads as follows:
“We therefore request you to kindly permit us to detain item Sl. No. 19 and 28 in the Bill of Entry and release the rest of goods. The Bill of Entry may be assessed and released on payment of duty for the rest of goods.”
4. It also appears from the pleadings that on 02/06/2011, there was a search on the residential premises of the appellant, full details of which may not be necessary for the present purpose, except to state that on the said date a statement of the appellant came to be recorded under S.108 of the Customs Act, 1962.
5. Notwithstanding the fact that the appellant gave Ext. P3 letter dated 18/05/2011 referred to earlier, the respondents did neither release the goods as requested by him in the abovementioned letter, nor assess the goods for customs and clear the goods for home consumption. Therefore, the respondents approached this Court by way of a Writ Petition, from out of which the instant appeal arises. The prayers in the Writ Petition read as follows:
“i) Issue a writ of mandamus directing respondents 1 and 2 to release the goods which are covered through Bill of Entry No. 3302152 dated 25/04/2011 excluding the items mentioned in Ext. P2.
ii) Issue a writ declaring that there is no justification in delaying the processing of the papers after the examination and completing the assessment to enable the petitioner to release the goods which are not covered in Ext. P2.
iii) Issue a writ order or direction commanding the 2nd respondent to furnish copy of the bill of entry, inspection report, search list, statement, etc. to the petitioner without delay.
iv) Pass such other order or direction as this court may deem fit and proper in the interest of justice.”
6. The respondents filed a counter - affidavit dated 28/06/2011. The substance of the counter affidavit is that apart from the question of infringement of the intellectual property rights (the trade mark), the import in question involved the issues of “under invoicing, mis - declaration, bogus imports for third parties by misusing Import Export Code etc.” It is also stated in the counter - affidavit that the track record of the importer indicated that he habitually declares very low prices to evade duty and therefore, a detailed investigation is required in the matter. The relevant portion of the counter - affidavit reads as follows:
“....The issue of intellectual property right infringement is one among the many issues involved in this case. Major issues involved are under invoicing, mis - declaration bogus imports for third parties by misusing Import Export Code etc. Regarding intellectual property right infringement, department is bound to initiate proceedings, wherever import of goods with registered trade mark by authorized importers are noticed. On detailed scrutiny three items are found covered under intellectual property right regulations. Hence a single letter in this regard was issued. There is no piecemeal approach as alleged by the importer as the single letter Ext. P2 issued by Department to importer covers all these items. The contention that these items are not covered by Intellectual Property Right rules is also absolutely false and hence denied.
8. With reference to the averments in paragraph 2 of the writ petition, it is submitted that in view of the discrepancies noticed it appeared that this is not a bona fide import. Mis - declaration is noticed in the quantity, packing and description in respect of many items in the consignment. The track record of the importer, indicated that they habitually declare very low prices to evade duty also. Therefore it appeared that detailed investigation is required in this case.”
7. By the judgment under appeal, the learned Judge opined that it is not a fit case for relief in the proceedings under Art.226 of the Constitution of India. The learned Judge also held that S.110A of the Customs Act relied upon by the appellant does not create any absolute right in favour of the appellant. Hence the appeal.
8. Heard learned counsel for the appellant Sri. George Poonthottam and the learned counsel for the respondents Sri. John Varghese.
9. Learned counsel for the appellant argued that the goods in question are not goods, whose import is prohibited under any law. The question regarding the correctness of the valuation shown by the appellant can always be the subject matter of an assessment proceedings under the Customs Act and it is always open to the respondents if they are of the opinion that the appellant is guilty of undervaluing the goods imported to ascertain the real value of the goods for the purpose of levy of the customs duty, by following appropriate procedure. But the law does not provide for confiscation of the imported goods merely on the ground that the valuation disclosed by the importer is not accurate. At any rate, even if such goods are liable for confiscation, the appellant has a right under S.125 of the Customs Act to redeem them by paying an appropriate fine. Therefore, the respondents are not justified in indefinitely detaining the goods on the ground that an enquiry is pending. Further, it is submitted by the leaned counsel for the appellant that under S.110A of the Customs Act, the respondents are bound to release the goods detained by them by taking appropriate bond from the appellant along with calling for such security as the respondents deem fit and appropriate in the circumstances and also subject to further conditions regarding the release of the goods in those cases where they believe that some enquiry into the transaction of import is necessary.
10. On the other hand, learned counsel for the respondents Sri. John Varghese argued that it is not the case of the Department that the goods in question are goods, whose import is prohibited under law. He submitted that with reference to three of the items of the imported goods, there is a claim by third parties alleging infringement of their intellectual property right. Such claim is registered in accordance with R.4 of the Intellectual Property (Imported Goods) Enforcement Rules, 2007 and once such a claim is registered by virtue of the provisions contained in R.6 (R.6. “Prohibition for import of goods infringing intellectual property rights.-- After the grant of the registration of the notice by the Commissioner on due examination, the import of allegedly infringing goods into India shall be deemed as prohibited within the meaning of S.11 of the Customs Act, 1962”) of the abovementioned Rules, the import of such goods is deemed to be prohibited within the meaning of S.11 of the Customs Act. The learned counsel further argued that apart from that even with reference to other goods, though the import of other items of goods is not prohibited under any law since (according to the respondents) the importer has undervalued the goods with a view to evade customs duty payable on such goods and secondly such goods are liable for confiscation under S.111(m) of the Customs Act. Further submitted that, the importer is only a name lender for one Anvar and therefore, the goods are detained and the respondents are legally justified in making such a detention.
11. We shall first deal with the detention of three items of imported goods. The import of the said items is deemed to be prohibited in view of the abovementioned Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007 framed in exercised of the power under S.156 and S.11(2)(n) and (u) of the Customs Act. Under R.3 of the abovementioned Rules, a “right holder” (a defined expression under R.2(d), may give notice in writing to the Commissioner of Customs at the port of import of goods infringing intellectual property rights of such right holder. On receipt of the said notice, the Commissioner shall notify the applicant whether the notice is registered or rejected (see R.4). Once the notice is registered, the period of validity of the notice is also required to be indicated in the communication to the sender of notice. Under R.5, the right holder is directed to execute a bond with the Commissioner and comply with such other conditions to protect the importer or the consignee or the owner of the goods and also the competent authorities against all liabilities, obviously that might arise in the event of the failure of the claim, and bear the cost towards the destruction, demurrage etc. Under R.7, the clearance of the goods, which is the subject matter of dispute under the abovementioned rules is required to be suspended. Thereafter, the Commissioner is required to examine the claim of the right holder and determine whether there is an infringement of the intellectual property right claimed by such right holder. In the event of the Commissioner reaching the conclusion that there is an infringement of the intellectual property right, the goods are required to be confiscated under S.111(d) of the Customs Act. In view of the specific case of the appellant that he is only seeking release of the goods other than the one against which a claim under the abovementioned rules is made, we do not propose to go further into the details of the scheme or the rules. The rights and obligations of the appellant and the right holders may be determined by the respondents in accordance with law.
12. Coming to the other goods, which are pending clearance by the respondents, the goods are required to be cleared for home consumption as bill of entry for home consumption is already presented by the appellant, importer. Such a clearance is required in accordance with the provisions of the Customs Act and also the Customs Tariffs Act. Under S.17 of the Customs Act, it is stipulated that once an importer has “entered” (S.2(16) - "entry", in relation to goods means an entry made in a bill of entry, shipping bill or bill of export and includes in the case of goods imported or to be exported by post, the entry referred to in S.82 or the entry made under the regulations made under S.84") any imported goods under S.46 (S.46. Entry of goods on importation.-- (1) The importer of any goods, other than goods intended for transit or transhipment, shall make entry thereof by presenting to the proper officer a bill of entry for home consumption or warehousing in the prescribed form:
Provided that if the importer makes and subscribes to a declaration before the proper officer to the effect that he is unable for want of full information to furnish all the particulars of the goods required under this sub-section, the proper officer may, pending the production of such information, permit him, previous to the entry thereof (a) to examine the goods in the presence of an officer of customs, or (b) to deposit the goods in a public warehouses appointed under S.57 without warehousing the same.
(2) Save as otherwise permitted by the proper officer, a bill of entry shall include all the goods mentioned in the bill of lading or other receipt given by the carrier to the consignor.
S.46(3) - A bill of entry under sub-section (1) may be presented at any time after the delivery of the import manifest or import report, as the case may be:
Provided that the Commissioner of Customs may in any special circumstances permit a bill of entry to be presented before the delivery of such report:
Provided further that a bill of entry may be presented even before the delivery of such manifest if the vessel or the aircraft by which the goods have been shipped for importation into India is expected to arrive within thirty days from the date of such presentation.
(4) The importer while presenting a bill of entry shall at the foot thereof make and subscribe to a declaration as to the truth of the contents of such bill of entry and shall, in support of such declaration, produce to the proper officer the invoice, if any, relating to the imported goods.
(5) If the proper officer is satisfied that the interests of revenue are not prejudicially affected and that there was no fraudulent intention, he may permit substitution of a bill of entry for home consumption for a bill of entry for warehousing or vice versa") of the Act, the same may be examined and tested by the proper officer without undue delay. Under sub-section (2) of S.17, it is provided that on such examination and testing, the duty, if any, leviable on such goods is required to be assessed. S.17(1) and S.17(2) of the Customs Act reads as follows:
“17. Assessment of duty.-- (1) After an importer has entered any imported goods under S.46 or an exporter has entered any export goods under S.50 the imported goods or the export goods, as the case may be, or such part thereof as may be necessary may, without undue delay, be examined and tested by the proper officer.
(2) After such examination and testing, the duty, if any, leviable on such goods shall, save as otherwise provided in S.85, be assessed.”
13. Under S.18 of the Customs Act, it is provided that the customs authorities may make a provisional assessment of the duty of the goods imported if they are of the opinion that for any one of the reasons specified in S.18 that it is not possible to complete the regular assessment contemplated under S.17 of the Act expeditiously, and the goods may be released subject to the condition that the importer furnishes such security as the proper officer deems fit for the payment of the deficiency, if any, between the duty finally assessed and the duty provisionally assessed.
14. The question of value of goods arises in those cases of import where the imported of goods are subjected to customs duty on ad - valorem basis. In such case the value of goods imported is required to be determined by the customs authorities on the basis of appropriate materials either supplied by the importer or gathered by them. In the event of the customs authorities coming to the conclusion that the value entered by the importer is not accurate, appropriate action under the provisions of the Customs Act can be initiated. For example, under S.11(m) such goods can be confiscated and under S.112 penalty can be levied.
“111. Confiscation of improperly imported goods, etc.-- The following goods brought from a place outside India shall be liable to confiscation:
xxxxxxxx xxxx
(m) any goods which do not correspond in respect of value or in any other particular with the entry made under this Act or in the case of baggage with the declaration made under S.77 in respect thereof or in the case of goods under transshipment, with the declaration for transshipment referred to in the proviso to sub-section (1) of S.54.
xxxxxxxx xxxx ”
Even those goods which are confiscated can be redeemed by the importer on payment of fine provided under S.125 (125. Option to pay fine in lieu of confiscation.-- (1) Whenever confiscation of any goods is authorised by this Act, the officer adjudging it may, in the case of any goods, the importation or exportation whereof is prohibited under this Act or under any other law for the time being in force, and shall, in the case of any other goods, give to the owner of the goods or, where such owner is not known, the person from whose possession or custody such goods have been seized, an option to pay in lieu of confiscation such fine as the said officer thinks fit:
Provided that, without prejudice to the provisions of the proviso to sub-section (2) of S.115, such fine shall not exceed the market price of the goods confiscated, less in the case of imported goods the duty chargeable thereon.
(2) Where any fine in lieu of confiscation of goods is imposed under sub-section (1), the owner of such goods or the person referred to in sub-section (1) shall, in addition, be liable to any duty and charges payable in respect of such goods.") of the Customs Act. Under the scheme of S.125, it is mandated that the importer must be given an option to pay fine in lieu of the confiscation, if the goods sought to be confiscated are not goods whose import is prohibited by law.
15. Coming to the submission that the appellant is only a “name lender” for the import of goods by one Anwar, we shall presume for the time being that the appellant is only a name lender, but the actual beneficiary of the import is one Anwar. We called upon learned counsel for the respondents to place the relevant provision which prohibits such an activity on the part of an Import Export Code Number holder. Learned counsel for the respondents categorically made a statement that he is not able to place any such prohibition in law except S.7 of the Foreign Trade (Development and Regulation) Act, 1992, which reads as follows:
“7. Importer - exporter Code Number.-- No person shall make any import or export except under an Importer - exporter Code Number granted by the Director General or the officer authorised by the Director General in this behalf, in accordance with the procedure specified in this behalf by the Director General.”
The expression “import” occurring in the said section means bringing into India of goods as defined under S.2(e). There is nothing in the law which requires an importer to be either the consumer or even the buyer of the goods also. Even otherwise, we are of the opinion that it is a matter of common sense that no importer would consume all the materials imported. Necessarily, the goods imported are meant for sale to the consumer, in which case, if an importer, who enjoys the facility of I.E Code imports certain goods in the normal course of business on the strength of a contract entered by such importer with either a consumer or a trader who eventually sells the imported goods to consumers. We do not understand what can be the legal objection for such a transaction especially where the import of such goods is otherwise not prohibited by law. At any rate, if the respondents have any tenable legal objection on that count, the 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, in our opinion, is absolutely illegal.
16. Coming to the submission of the appellant that the respondents are bound to release the goods under S.110A of the Customs Act pending adjudication of the legality of the import, we are of the opinion that as rightly held by the learned Single Judge, S.110A does not create an absolute right in favour of the importer, but vests a discretion in the customs authorities to follow such course in appropriate case goes without saying that it is only a discretion to be exercised in accordance with the well settled principles of law governing the exercise of a statutory discretion vested in a public authority, but not caprice. In either case the respondents are required to take a decision expeditiously either to make a regular assessment or a provisional assessment or a decision to confiscate the goods in question if it is permissible under law after following appropriate procedure or provisionally release the goods under S.110 - A of the Customs Act. As already noticed, even in a case where the goods are liable for confiscation, S.125 of the Customs Act provides for redemption of goods on payment of fine so long as the goods are not goods falling under the category of prohibited goods for the purpose of import.
17. In the circumstances, we are of the opinion that the appeal and the Writ Petitions are also required to be allowed directing the respondents to take a decision expeditiously, preferably within a period of two weeks from today and pass appropriate orders adopting any one of the courses indicated above.