ORDER
P.G. Chacko
1. The brief facts of the case are as under :-
2. M/s Asia Overseas (appellants in Appeal No. C/129/01-NB(SM) filed Bill of Entry dated 30.9.2000 for clearance of a consignment of Dry batteries, R6 (UM-3) A size, supplied by M/s Shenzhen Golden Bell Battery Co. Ltd., [in short, M/s Shenzhen], China. On examination of the consignment, 15 lakh pieces valued at Rs. 8,31,280/- were found to be of “SONIC” brand. From a letter dated 23.8.2000 sent by M/s Sonic Battery Co. Ltd., [in short, M/s Sonic], Hong Kong to the Commissioner of Customs (ICD), Bombay (with copies to all other Commissioners of Customs), it appeared to the department that M/s sonic were owners of the trade mark “SONIC” and that M/s Shenzhen were manufacturing/selling the batteries under that trade mark without the assent of M/s Sonic. It further appeared to the department that the 15 lakh pieces of Dry batteries under import were branded with a falsified trade mark within the meaning of Section 77 of the Trade and Merchandise Marks Act, 1958 thereby attracting the prohibition for import under Notification No. 1-CUS dated 18.1.64 issued under Section 11 of the Customs Act, 1962 and, therefore, the goods were liable to confiscation under Section 111(d) of the Customs Act and the importer was liable to imposition of penalty under Section 112(a) of the Customs Act. Accordingly, a show-cause notice [scn] was issued to M/s Asia Overseas for confiscation of the aforesaid 15 lakhs pieces of Dry batteries and for imposition of penalty of them. The notice contested the SCN by submitting, inter alia, that Section 77 of the Trade and Merchandise Marks Act was not applicable to their case. They also submitted to the department a letter dated 28.11.2000 issued by M/s Sonic to M/s Shenzhen, which showed that the containers of the goods in question had been supplied by M/s Sonic only, thereby ruling out any violation of the Trade and Merchandise Marks Act. The dispute was adjudicated by the Additional Commissioner of Customs (ICD) Delhi who ordered absolute confiscation of the goods bearing brand name “SONIC” and imposed a penalty of Rs. 40,000/- on M/s Asia Overseas. In the appeal filed by the aggrieved party against the order of the adjudicating authority, the Commissioner (Appeals) upheld the confiscation of the goods under Section 111(d) of the Customs Act, but giving an option to the importer to redeem the goods on payment of a fine of Rs. 2.5 lakhs under Section 125 of the Act. he also reduced the penalty under Section 112(a) of the Act to Rs. 10,000/-. This order of the lower appellate authority is under challenge in the appeal filed by M/s Asia Overseas. The department, in its Appeal No. C/97/01, challenges the decision of the Commissioner (Appeals) granting option for redemption of the goods.
3. Heard both sides.
4. Ld. Advocate Sh. R. Krishnan submitted that the allegation of the department against the appellants in the show-cause notice was solely based on a letter dated 23.8.2000 received from M/s Sonic Battery Co. Ltd., Hong Kong. But the contents of that letter were never disclosed to the appellants. Though this grievance was placed before the lower appellate authority, it was not considered by that authority. Ld. Counsel submitted that the order of the Additional Commissioner in adjudication of the show-cause notice without disclosing the contents of the above letter dated 23.8.2000 of M/s Sonic violated even the elementary principles of natural justice and the order of the Commissioner (Appeals) upholding the adjudication order without applying mind to the appellants’ grievance required to be set aside. In this connection, ld. Counsel relied on the decision of Bombay High court in the case of Schanlal Kanshiram Vs. Union of India and Others [1980 ELT 144 (Bom.).]. Ld. Advocate further referred to letter dated 28.11.2000 of M/s Sonic addressed to M/s Shenzhen (copy available on record) which certified that the “R6 (UM-3) General Purpose “SONIC” batteries under Containers Nos. KNLU 3417555 and KNLU 3401754 are our stock lot goods in out old packing and are supplied by us”. The containers of the impugned goods were the same as the containers referred to in that letter. Therefore there was no question of M/s Sonic complaining against M/s Shenzhen, the appellants’ suppliers. Counsel also referred to an affidavit of the appellants submitted to the Additional Commissioner. That affidavit dated 22.12.2000 had contained references to similar proceedings initiated by the department against one M/s. Dipak Enterprises, which proceedings were also initiated on the basis of a complaint made by M/s Sonic. The show-cause notice to the present appellants were issued mechanically on the basis of the show-cause notice issued to M/s Dipak Enterprises. That affidavit further stated that Mumbai Customs had released batteries of the same make and brand (“SONIC”) imported by one M/s Orient Technologies, Delhi and that those batteries had also been exported by the same exporter namely, M/s Shenzhen. The appellants, in the light of the above facts, contended in their affidavit that there was no violation of trade marks law by M/s Shenzhen and, therefore, the proceedings against the appellants were nothing short of harassment and victimization. Ld. Counsel further submitted that evidence of the affidavit was not considered by the departmental authorities. It was his further argument that Section 77 of the Trade and Merchandise Marks Act, 1958 was not applicable to the facts of the case inasmuch as the provisions of the Act could not be made applicable to trade marks like “SONIC” registered outside India. Therefore, the goods did not offend the said provision of law as alleged in the show-cause notice. Ld. Counsel, therefore, prayed for setting aside the impugned order and allowing the appeal. Opposing the Revenue’s appeal, ld. Advocate submitted that since, on the aforesaid grounds, the imported goods were not liable to confiscation, there was no question of redemption fine or penalty. He further pointed out that the appellants had already suffered much loss on account of the illegal confiscation of the batteries and he prayed for an order for immediate release of the goods having regard to its short shelf life.
5. Ld. JDR, Sh. S. Kumar reiterated the findings of the adjudicating authority and the lower appellate authority.
6. Examined the submissions. From the records already referred to, it appears that the allegation in the show-cause notice is based on a letter dated 23.8.2000 of M/s Sonic Battery Co. Ltd., Hong Kong. According to the department, the said letter contained an allegation that M/s Shenzhen Golden Bell Battery Co. Ltd., China (who supplied the goods in question to the appellants) were manufacturing/selling batteries branded “SONIC” without the assent of the trade mark owners namely, M/s Sonic Battery Co. Ltd., Hong Kong. The department alleged that the import of the branded goods offended the prohibitory provisions of Notification No. 1-CUS dated 18.1.64 read with Section 77 of the Trade and Merchandise Mark Act issued under Section 11 of the Customs Act. It was no this basis that the department held that the imported goods were liable to confiscation under Section 111(d) of the Customs Act and that the importer was liable to penalty under Section 112(a) of the Act. On the other hand, the appellants would contend that “SONIC” branded batteries imported by the appellants from China were out of the stock supplied to M/s Shenzhen by M/s Sonic as evidenced by the letter dated 28.11.2000 issued by M/s Sonic to M/s Shenzhen. A copy of the said letter dated 28.11.2000 was placed by the appellants before the adjudicating authority. But the contents of the letter dated 23.8.2000 of M/s Sonic referred to in the show-cause notice were never disclosed to the appellants by the department. However, it appears, such a grievance was not raised by the appellants in their reply to the show-cause notice, though, later on, they chose to raise such a grievance in their appeal before the Commissioner (Appeals). The grievance has been reiterated by them in the present appeal as well. In the circumstances, I am of the view that the departmental authorities should be directed to furnish a copy of the letter dated 23.8.2000 of M/s Sonic to the appellants and adjudicate the matter afresh after giving an opportunity of personal hearing to the party. It further appears from the records that the evidence of the affidavit dated 22.12.2000 was not duly considered by the lower authorities. The appellants’ plea of inapplicability of Section 77 of the Trade and Merchandise Marks Act to their case, which was raised as early as in their reply to the show-cause notice, was also not properly examined by the adjudicating authority. The lower appellate authority has also failed to appreciate the grievances of the appellants. All these infirmities have got to be made goods by the authorities.
7. In the light of the findings recorded above, the orders of the lower authorities are set aside and the present appeals are allowed by way of remand. The matter is sent back to the adjudicating authority for fresh adjudication of all the issues in accordance with law, after supplying a copy of the letter dated 23.8.2000 of M/s Sonic (referred to in the show-cause notice) to the party and giving them a reasonable opportunity of personal hearing. The adjudicating authority shall, inter alia, examine the appellants’ affidavit dated 22.12.2000 as evidence in the case and shall also examine the applicability or otherwise of Section 77 of the Trade and Merchandise Marks Act, 1958. It will also be open to the adjudicating authority to consider the appellants’ plea for provisional release of the confiscated goods under bond and/or on such reasonable terms and conditions as the authority may deem fit in the circumstances of the case.