COLLECTOR OF CUSTOMS VS DECENT AUTOS

2015 P T D (Trib.) 611

[Customs Appellate Tribunal]

Before Khalid Mahmood, Member Technical

COLLECTOR OF CUSTOMS through Assistant Collector

versus

Messrs DECENT AUTOS and another

Customs Appeal No. K-894 of 2014, decided on 07/11/2014.

Customs Act (IV of 1969)---

----Ss. 15, 17, 32, 79, 80, 156(1)(9) & 194-A---Trade Marks Ordinance (XIX of 2001), Ss.53, 54, 55, 56 & 57---Confiscation of imported goods on allegation of mis-declaration and infringement of trade mark---Importer, filed Goods Declaration in respect of imported goods; determined his liability of payment of applicable duties and taxes and sought clearance under S.79(1) of Customs Act, 1969---Goods Declaration of the importer was selected for scrutiny in terms of S.80 of Customs Act, 1969---Examination report revealed that importer allegedly had imported an item for which Trade Mark Registration existed in the name of a different company---Consequently, imported goods were confiscated in terms of S.17 & S.156(1)(9) of Customs Act, 1969 by Adjudicating Authority vide order-in-original---Appellate Authority allowed appeal of importer, set aside order-in-original declaring the same to be null and void; and Customs---Validity---Company in its letter/complaint, did not allege any infringement of its trade mark rights; rather highlighted the import in question to be "parallel import"---Such complaint was not a bona fide complaint, nor it should provide occasion to the Customs Authorities to invoke S.15 of the Customs Act, 1969 in isolation or exclusion of other statutory requirements---Said letter/complaint by any account did not appear to be in consonance with the parameters, laid down under Ss.53 & 54 of Trade Marks Ordinance, 2001---No case of infringement of trade mark rights had been made out---Goods imported were not associated with any mis-declaration, or any other offence under the Customs Act, 1969---Impugned order-in-appeal, being correct, warranted no interference, in circumstances.

Abdul Ghani Soomro for Appellant.

Nadem Ahmed Mirza for Respondents.

Date of hearing: 6th November, 2014.

ORDER

KHALID MAHMOOD, MEMBER TECHNICAL.---This appeal under section 194-A of the Customs Act, 1969, has been directed against Order-in-Appeal No.8855/2014, dated 21-7-2014, passed by the Collector of Customs (Appeals), Karachi.

2.Brief facts of the case are that respondent No.1 (importer) had electronically filed a Goods Declaration (GD) bearing No.KAPE-HC-64838-23-1-2014, declared to contain Aerosol Insecticides Spray, Mortien brand, classifiable under PCT Heading 3808.9110, at total invoice value of US$ 7437.60. The respondent importer determined his liability of payment of applicable duties and taxes and sought clearance under section 79(1) of the Customs Act, 1969. In order to check as to whether the appellant had correctly paid the legitimate amount of duties and taxes and observed other laws, like Import Policy Order etc, the under reference GD was selected for scrutiny in terms of section 80 of the Customs Act, 1969. Scrutiny of the GD in the light of examination report revealed that the respondent importer had imported an item for which Trade Mark Registration No.151968 dated 17-12-1998 existed in the name of Messrs Reckit and Colman (Overseas). The importers were asked to explain as to why the goods, having allegedly infringed Trade Marks, have been imported, constituting a violation of section 15 of the Customs Act, 1969. Accordingly, a show-cause notice was issued to the respondent importer. After due process of law and infringed goods were confiscated in terms of sections 17 and 156(1)(9) of Customs Act, 1969 vide Order-in-Original No.202999-22042014.

3.Aggrieved by the Order-in-Original, the importers (respondents) filed appeal before the Collector of Customs, Appeals, Karachi, who passed the Order-in-Appeal No.8855/14 dated 21-7-2014, which is the subject of this appeal. The Collector of Customs, Appeals, Karachi, concluded by observing:--

"5. I have gone through the record of the case including the grounds of memo of appeal/additional grounds dated 26-6-2014 submitted by the appellant along with the exhibits and my findings on the issue under dispute are as follows:--

(i)That the show-cause notice in the instant case has been issued by the Assistant Collector of Customs on the basis of completed assessment under section 80 of the Customs Act, 1969 which shows that an amount of Rs. 416,547.00 has yet to be paid by the appellant/importer for obtaining clearance under section 83 and Rule 442 of Act/Rules.

(ii)Upon perusal of show-cause notice, it has been noted that although the provision of section 32 of the Customs Act, 1969 has been invoked by the respondent on the basis of amount of duty and taxes to be paid by the appellant upon receipt of view message after completion of assessment order under section 80 and Rule 438 of Act/Rules. No allegation in regards to mis-declaration of value is visible from the show-cause notice nor Order-in-Original, confirming that invoking of section 32 is out of context and the case is simply of importability in terms of notification issued by the Ministry of Commerce or FBR under Section 15 of the Customs Act, 1969.

(iii)That it was mandated upon the Deputy Collector of Customs to consult the Trademark Ordinance, 2001 prior to issuing any instructions, show-cause notice or passing of order specifically sections 53 to 57, this was not done and show-cause notice was issued on receipt of a letter dated 14-2-2013 from Reckitt and Benckiser Pakistan, this is totally contrary to the laid down procedure. Section 53 of the Trademark Ordinance, 2001 express with clarity that the person person/company lodging complaint in regards to infringement of the goods, material or article has to give a notice in writing to the Collector of Customs, that he is the sole agent of the goods in question and he only can import or distribute/sell those within the territory of Pakistan. While doing so he has to make request to the Collector to treat such goods as prohibited and the said notice shall be accompanied with an undertaking by the person sending the notice to indemnify the Custom Authorities concerned and to compensate any importer, consignee or owner of the goods or damage resulting from wrongful suspension of the clearance of the goods under section 54. Upon receipt of the complaint the Collector of Customs if desire may ask the complainant to provide a security or an equivalent assurance sufficient to protect the importer or consignee or owner of the good but such security or equivalent assurance shall not be such as to unreasonably deter recourse to these procedure as per the expression of section 55.

(iv)Notwithstanding to the above observation, it is worth adducing that Messrs Reckitt and Colman (Overseas) Ltd., UK has nominated Messrs Reckitt and Benckiser in Pakistan being their sole agent for importing, distributing and selling (refer to letter dated 14-2-2013), Mortein Brand of insecticide spray i.e. being shipped by Reckitt and Colman, UK to Reckitt and Benckiser (Pakistan) Ltd, but the said letter and the registered trade mark in Pakistan does not debar the manufacturer of the said product around the globe or commercial exporter not to export/market their product in the territory of Pakistan. In the absence of any restriction worldwide, neither Reckitt and Colman (Overseas) Ltd., UK and Reckitt and Benckiser Pakistan Ltd., has locus standi to object to the imported consignment of the appellant which in the given circumstances infact least fall within the ambit of infringed goods, instead are of Mortein Brand and nothing has been concealed by the appellant as evident from the declaration, which is true and correct in all respect, further stood validated from the examination report, therefore confiscating the consignment of appellant is without any lawful authority instead in derogation of provisions of sections 53 to 57 of Trademark Ordinance, 2001.

6. In view of the foregoing the show-cause notice and order-in-original are infested with patent illegalities and declared to be null and void and are therefore set-aside and the appeal is allowed."

4.The Order-in-Appeal aggrieved the appellant, who filed the present appeal on the following grounds:--

"(a)That considering the law i.e. sections 15, 17 and 156(1)(a) of the Act, read with the provisions of S.R.O. 499(I)/2009 dated 13-6-2009, the learned Collector (Appeals)'s impugned order for release of the confiscated goods is unjust, without jurisdiction and against the law. The provisions of section 17 of the Act empowers the Assistant Collector to seize and confiscate the goods, imported in violation of section 15 of the Act.

(b)That admittedly the goods "Mortein" brand Aerosol Cans, imported by the respondent are having infringed trade mark for which complaint has been received in the Collectorate from Messrs Reckitt Benckiser Pakistan Ltd., vide their letter dated 14-2-2013. So in the presence of a complaint the appellant Collectorate's action for confiscation of goods, in terms of sections 17 and 156(1)(9) read with section 15 of the Act is correct in law. The learned Collector (Appeals) has failed to consider the provisions of section 17 of the Customs Act, 1969, which have over-riding effect on all other provisions including the provisions of sections 53 to 57 of the Trade Mark Ordinance, 2001.

(c)That, without prejudice to the above, the Customs Act, 1969, is a "Special Law" and it has over-riding effect on the Trade Mark Ordinance, 2001. Secondly, the procedural lapses/technicalities if any, cannot scrap the merits of the case. In view of the section 17 of the Act, the impugned goods have been rightly confiscated by the appellants."

5.The appellant further prayed that:--

"in the light of submissions made above it is respectfully prayed to this Honourable Appellate Tribunal to allow the appeal and set aside the impugned Order-in-Appeal which patently against the specific provisions of law i.e. sections 15, 17 and 156(1)(9) of the Act read with S.R.O. 499(I)/2009 dated 13-6-2009."

6.Availing of their right to file cross objections under subsection (4) of section 194-A of the Customs Act, 1969, the respondents filed a rebuttal to the memo. of appeal, which, inter alia, contained:--

"(vii) That for issuance of show-cause notice for the contravention of section 15 of the Customs Act, 1969, the Trade Mark Ordinance, 2001 has to be kept in mind and action so taken shall be as per the expression of the sections 53 to 66, verbatim of relevant sections namely 53, 54, 55, 56, 57 are reproduced herein below:

53. Infringing goods, material or articles may be treated as prohibited.-

(1)The proprietor of the registered trade mark may give notice in writing to the Collector of Customs that-

(a)he is the proprietor of the registered trade mark:

(b)at a time and place specified in the notice, goods which, in relation to that registered trade mark are infringing goods, material or article, or bear false indications as to their source or the identity of their manufacture are expected to arrive in Pakistan from outside Pakistan and that they are subject to the control of the customs authorities under the Customs Act, 1969 (IV of 1969): and

(c)he requests the Collector of Customs to treat such goods as prohibited goods.

54. Notice for intervention by customs authorities.---When any notice to the Collector of Customs is made under section 53, it shall be accompanied by an undertaking by the person sending the notice to indemnify the customs authorities concerned and to compensate any importer, consignee or owner of the goods for loss or damage resulting from the wrongful suspension of clearance of goods.

55. Furnishing of security or equivalent assurance to customs authority.-

The Collector of Customs may require an application to provide a security or equivalent assurance sufficient to protect the importer, consignee or owner of the goods but such security or equivalent assurance shall not be such as to unreasonably deter recourse to these procedures.

56. Collector of Customs may seize goods bearing infringing trade mark.---If goods to which section 53 applies-

(a)bear on them a trade mark which, in the opinion of the Collector of Customs, is identical with, or deceptively similar to the registered trade mark; and

(b)are goods in respect of which the trade mark is registered, the Collector of Customs shall seize the goods unless he is satisfied that there are no reasonable grounds of believing that the trade mark shall be infringed by the importation of the goods and the seized goods shall be kept in a secure place as directed by the Collector of Customs.

57. Notice of seizure.---The Collector of Customs shall, as soon as practicable-

(a)give, either personally or by urgent post, to the importer, consignee or owner of the goods a notice of seizure in writing identifying the goods and stating that they have been seized under section 56; and

(b)give to the applicant a notice in writing-

(i)identifying the goods and stating that they have been seized under section 56;

(ii)giving the full name and address of the importer, consignee or owner of the goods and any information that the Collector of Customs has and believes, on reasonable grounds, to be likely to help the applicant to identify the importer or the owner of the goods; and

(iii)starting that the goods shall be released to the importer, consignee or owner of the goods unless the applicant brings an action for infringement of the registered trade mark in respect of goods before a District Court having jurisdiction in the matter and gives the Collector of Customs notice in writing of the action, within the period of ten working days after the applicant has been given the notice, or if the Collector of Customs extends the period under subsection (1) of section 60, within such extended period."

7.Both the sides have been heard and the memo. of appeal as well as cross objections/comments filed by the respondents, have been examined. I have also given my thought to Trademarks Ordinance, 2001, read with section 15 of the Customs Act, 1969. The letter dated 14-1-2013, which has been addressed by Reckitt Benckiser Ltd., Pakistan to the Chief Collector of Customs, Custom House, Karachi, containing the complaint which gave rise to the action under section 15 of the Customs Act, 1969, by the appellants/Customs has also been seen. Sections 53 to 57 of Trademarks Ordinance, 2001, deal in detail, how imported goods have to be proceeded about, if the proprietor of registered trademark believes that his trademarks rights have been infringed upon and he has reasons to request the Collector of Customs to treat such goods as prohibited goods in terms of section 15 of the Customs Act, 1969, read with the relevant provisions of the Trademarks Ordinance, 2001. The action in this case by the appellant (Customs) has been initiated in pursuance of letter/complaint dated 14-1-2013, made by Messrs Reckitt Benckiser Pakistan Ltd., Karachi. The relevant contents of the letter are reproduced as follows:--

"We appreciate the initiative taken in bringing to light the menace of parallel import of MORTEIN AROSOLE available in the marketplace. In this regard, we would appraise you to the issue being faced by the company of its imported products like MORTEIN AROSOLE.

It has come to our knowledge that various consignments of Mortein Aerosol has been cleared by Customs. These are being imported by various un-uthorised importers.

This practice resulted a financial loss of company. Therefore you are requested to issue a ruling to stop import of Mortein Aerosol by other than Reckitt Benckiser Pakistan Ltd., (RBPL). As the (RBPL) is the only authorized company to import the product.

Please note that therefore two types of unauthorized importers are as under:--

1. By declaring the name of Mortein

2. Without declaring the name of Mortein. They just wrote mosquito Aerosol spray.

In this regard an authority letter that Reckitt Benckiser Pakistan Ltd. is authorized importer in Pakistan from Reckitt Benckiser Overseas (RCO) is attached for your ready reference.

Yours truly,

For RECKITT BENCKISER PAKISTAN LIMITED"

8.From the perusal of the above letter/complaint one finds that its writers were not aware of the manner in which they were supposed to be registering their complaint with the Customs authorities on the issue of alleged infringement of their right to trademark, as claimed. Sections 53 to 57 of the Trademarks Ordinance, 2001 provide in comprehensive manner, the parameters that should form a basis for complaint to Customs, and according to which only the Customs authorities ought to proceed in the matter. There is a certain amount of onus upon the person making complaint, emphasized upon through the provisions of the Trademarks Ordinance, 2001. The complainants' letter dated 14-1-2013 read with their subsequent letter of 25-8-2014 does not, in fact, allege any infringement of their trade mark rights; it rather highlights the import to be "parallel imports". In order to ensure their rights, as also the rights of the importer complained against, a complaint made out of the scope of statutory requirements, as above, would not constitute a bona fide complaint, nor it should occasion the Customs authorities to invoke section 15 of the Customs Act, 1969 in isolation or exclusion of the such statutory requirements. The letter dated 14-1-2013, by any account, does not appear to be in consonance with the parameters laid down under sections 53 and 54 of the Trademarks Ordinance, 2001. Similarly, it did not provide the Customs authorities with any appropriate reason to respond to, which they did, it in utter disregard of the provisions of sections 53 to 57 ibid.

9.That being so, no case of infringement of trademark rights has actually been made out. It is also observed that except the issue raised by the appellant upon the complaint made by the Messrs Reckitt Benckiser Pakistan, the goods imported are not associated with any mis-declaration or any other offence on the part of the respondent/importer, under the Customs Act, 1969. I, therefore, find the impugned order as correct warranting no interference. The appeal being devoid of merits is dismissed accordingly.

HBT/158/Tax(Trib.)Appeal dismissed.