Cus - Once IMEI was mentioned on mobile handset & was declared then there is no chance of misuse & accordingly no threat to national security - luxury brand Mobiado embellished phones not prohibited from import under FTP: High Court
By TIOL News Service
NEW DELHI, JAN 09, 2015: THIS is a Revenue appeal before the Delhi High Court.
The following is what transpired before the lower appellate authority & the Tribunal in an appeal filed by the importer against an O-in-A passed by the Commissioner of Customs (Appeals) in the month of May, 2013.
Brief facts:
The appellant filed bill of entry for clearance of branded mobile phones (Mobiado). During examination, it was found that the International Mobile Equipment Identity (IMEI) numbers of phones were allocated to other brands like Nokia and Samsung and did not pertain to the declared brand.
The original adjudicating authority directed the appellants to re-export the goods on payment of Redemption fine of Rs.3 lakh and penalty of Rs.1 lakh. On appeal, Commissioner (Appeals) reduced the redemption fine to Rs.1.45 lakhs and penalty to Rs.80,000/-.
The Commissioner(A) while arriving at this decision inter alia observed -
…I find that as per the Foreign Trade Policy 2009-2014, import of Mobile handsets without International Mobile Equipment Identity (IMEI) is prohibited. It is true that the handsets imported by the appellant bearing the brand name (Mobiado) do have the identity numbers but on examination and verification it has been noticed that these IMEI numbers are allocated to another brand owner. Therefore the IMEI numbers of the subject goods are not licit hence can be considered as unavailable. Furthermore the matter is also fraught with security implications. Therefore the original authority has correctly disallowed home consumption of these goods and allowed re-export of the subject goods. This order of the original authority is legally correct and it is upheld except that Redemption Fine of Rs.1.45 Lakh and Penalty of 0.80 Lakh appears correct and appropriate as per facts and circumstance of the case. The appellant during the course of hearing had requested for drawl and retention of sample of the products considering the roadmap of litigation in this case. This request being reasonable is allowed.
Before the CESTAT the appellant submitted -
+ The said brand name (Mobiado) belongs to one M/s. Bonac Innovation Corporation, a company incorporated under the laws of Canada, for the distributorship and retail of mobile handsets under the name and style of Mobiado; that Mobiado is an international luxury brand which is retailed in various countries across different parts of the world.
+ The Mobiado brand embellishes the design of existing mobile handsets manufactured by Original Equipment Manufacturers (OEM) by using cutting edge engineering. There is no change whatsoever to mobile handsets manufactured by the OEM except for embellishment of the casting of the phone.
+ All the world renowned designers of mobile handsets, like Vertu, Tag heur, Porshe are also using the mobile handsets manufactured by original equipment manufacturer (OEM), like Nokia and Samsung. Even the mobile handsets of Vertu, Tag Heur etc. have IMEI numbers allotted to their respective original equipment manufacturer like Nokia, Samsung etc.
+ They also filed the said letter (which was submitted to Customs) along with copy of the photos of the mobile handsets of Vertu, showing its IMEI number on screen, which pertains to other brand Nokia.
The Single Member Bench of CESTAT extracted the notification No. 14/2009-2014 dated 14.10.09 issued by the Ministry of Commerce and Industries, Government of India wherein the requirement of having IMEI number on the Mobile equipment has been made essential and observed -
"…As is seen from the notification, 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. When viewed from the above angle, I find force in the appellants' contention that 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…"
In fine, the orders were set aside and the appeal was allowed with consequential relief.
We reported this order as 2014-TIOL-1441-CESTAT-DEL.
Against this order, as mentioned, the Commissioner of Customs is in appeal before the Delhi High Court and reiterates the stand taken in the proceedings before the lower appellate authorities.
The High Court while holding that it did not find any reason to interfere with the order passed by the CESTAT observed -
++ The admitted position was that the mobile handsets did have IMEI numbers. Once the IMEI number was mentioned on the mobile handset and was duly declared, then there is no possibility or chance of misuse and accordingly no threat to national security. IMEI number once embedded in the mobile phone becomes the identification code for the said mobile handset. There was no tampering with the said IMEI number. It has not been explained, how and in what circumstances that there was a security threat in the present case. The requirement that there should be an IMEI code identification was satisfied.
++ M/s Bonac Innovation Corporation had only done re-designing and embellishing the casing of the existing handset by using their cutting edge engineering technology. The aforesaid findings of fact are not disputed and under challenge. The fact that the phones did have IMEI number is not disputed.
Holding that there is no merit in the appeal, the same was dismissed.
(See 2015-TIOL-67-HC-DEL-CUS)
