Indian Custom’s department & their role in fighting counterfeits

1. Who are customs authorities? What do they do and What does it mean for India?

Customs is an authority or agency in a country responsible for controlling the flow of goods, including animals, personal and/or hazardous goods etc. into and out of a country. Each country has its own laws and regulations for the import and export of goods into and out of a country, which its customs authority enforces. The import or export of some goods may be restricted or forbidden.

India being a cost/bargain driven economy suffers greatly from the problem of counterfeit goods and many such illegal goods find themselves being imported into Indian territory every year. National Customs and Border Protection organizations and laws are initiated to ensure strict scrutiny of cross border movement of products and stop the circulation of counterfeit goods outside the country’s borders. The Customs Act of 1962 prohibits the import of counterfeit goods within the Indian territory and in order to tighten the noose further, the Central Board of Excise and Customs, Department of Revenue and the Ministry of Finance passed the “Intellectual Property Rights (Imported Goods) Enforcement Rules” in 2007, wherein Intellectual Property right owners can register their IP with the Indian Customs department (also known as Customs Recordal) in order to protect themselves from alleged infringements arising from the import of illegal and counterfeit products.

2. How do brands register themselves with customs? How long does this validity extend to?

The process begins with the right holder of some IP or an agent on behalf of the right holder giving a written notice to the Commissioner of Customs seeking suspension of clearance for goods which the right holder suspects are counterfeit/infringing. The notice/application needs to be supplemented with proof of right holding (authorization from right holder in an agent’s case) and the requisite fee for the application.

The customs authorities, within 30 days of receipt of the notice, inform the right holder whether the application has been rejected or registered by the Customs Department. For applications which get registered, the Customs Department also notifies the right holder about the time period for which the registration is valid. The validity of a registered application is also subject to the right holder executing a bond with the Customs Commissioner for an amount including surety and security, as deemed appropriate by the commissioner, undertaking to protect the importer, consignee, owner of goods, and the concerned authorities against all liabilities as well as bearing any costs incurred in the destruction or detention of infringing goods. The right holder must also execute an indemnity bond indemnifying the Customs authorities against all liabilities and costs incurred during the suspension of alleged infringed goods.

The Customs authorities (on intimation from the right holder or on their own accord) will suspend clearing goods, which they suspect of being counterfeit or infringing goods and will notify both, the right holder and the importer, about the suspension of clearance of the goods in concern.

If registration is granted, its validity period, would be indicated and the same shall normally be 5 years (unless the right holder wants it for a lesser period subject to minimum validity for one year). After the grant of the registration of the notice by the Commissioner, the import of allegedly infringing goods into India shall be deemed as prohibited within the meaning of Section 11 of the Customs Act, 1962.

3. How can brands use customs as an extended arm for tackling counterfeiters?

While criminal sanctions exist and anti-counterfeiting action can be taken through the police raids once the goods are in the country, what if you could stop them before they got in! The IPR (Imported Goods) Enforcement Rules, 2007 in conjunction with the Customs Act do offer IP holders the rights to register their intellectual property with the customs houses to stop the import of infringing products.

Developing relationships with customs official can be a particularly a cost-effective solution, especially when customs are educated and understand how to identify infringing goods. In this regard, maintaining a constant channel of communication and providing guides, manuals and educational resources to facilitate the identification of counterfeit products is an important component to a successful anti-counterfeiting program.

4. Limitations of Customs if any?

When it comes to monitoring goods, which enter and leave the country, the Indian Customs is the nodal and primal authority in detaining suspected goods. They are not limited by any rules or regulations while, there are guidelines which they follow. They can be regarded as the ultimate authority for any object leaving or entering the country.

5. What are the consequences in case of a false alarm and the goods tampered with turn out to be original goods of some other brands?

In such a case, the right holder would have to pay as reimbursement to the party (whose goods have been wrongfully destroyed) an equal sum of the cost of the destroyed goods.

6. Are the individuals behind the unlawful import/export activity susceptible to legal action?

Yes. The customs may also detain a portion of the goods as a proof of infringement which should be later presented in the respective court of Indian law.

7. What happens once the customs has confiscated fake goods and the original brand owner does not respond to customs calls?

(1). Where upon determination by the Deputy Commissioner of Customs or Assistant Commissioner of Customs , as the case may be, it is found that the goods detained or seized have infringed intellectual property rights, and have been confiscated under section 111 (d) of the Customs Act, 1962 and no legal proceedings are pending in relation to such determination, the Deputy Commissioner of Customs or Assistant Commissioner of Customs , as the case may be, shall, destroy the goods under official supervision or dispose them outside the normal channels of commerce after obtaining “no objection” or concurrence of the right holder or his authorized representative:

Provided that if the right holder or his authorized representative does not oppose or react to the mode of disposal as proposed by the Deputy Commissioner of Customs or Assistant Commissioner of Customs , as the case may be, within twenty working days after having been informed, or within such extended period as may have been granted by the Commissioner at the request of the right holder, not exceeding another twenty working days, he shall be deemed to have concurred with the mode of disposal as proposed by the Deputy Commissioner of Customs or Assistant Commissioner of Customs , as the case may be:

Provided further that the costs toward destruction, demurrage and detention charges incurred till the time of destruction or disposal, as the case may be, shall be borne by the right holder.

(2) There shall not be allowed the re-exportation of the goods infringing intellectual property rights in an unaltered state.

(3) The Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, may on his own, or at the request of the right holder, retain samples of goods infringing intellectual property rights prior to their destruction or disposal and provide the same to the right holder or importer if such samples are needed as evidence in pending or future litigation’s.

8. What happens when the customs receive a tip off from an anonymous source regarding fake products shipment?

The custom authorities would (in case of no deception by the front-line custom officials) detain those goods and would notify the respective right holder for validation before consigning them for destruction.

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