Import Of Counterfeit iPhones Dilutes Brand Equity, Affects Consumer Welfare: Delhi High Court In Customs Fraud Case

The Delhi High Court has expressed concern over alleged import of counterfeit iPhones, stating that such imports not only affect brand owners but also adversely affect consumer welfare— as old and used products could get re-branded as new ones.A division bench of Justices Prathiba M. Singh and Shail Jain thus observed,“Consumers in India may be made to pay more for used, second hand or counterfeit products under the impression that they are original branded products. Such imports also have an impact on the brand equity and goodwill of the original manufacturers in India.”In the case at hand, the license of Appellant who was engaged in Customs clearance through courier mode was cancelled, over misdeclaration of imported goods.It was alleged that Appellant mis-declared the quantity, value, description and classification of goods being imported.The mis-declaration was of the fact that these were merely parts of i-Phones, when rather, the goods were full iPhones which were being imported, by declaring them as spare parts. Appellant argued that the responsibility in such cases is that of the importers and the courier agency could not have been blamed. Hence, the revocation of its courier registration is untenable. Counsel for the Respondent urged that the Appellant is guilty of forgery of documents and was also connected to the importers and therefore, cannot claim to be innocent.At the outset, the High Court perused a letter given by Apple Inc., asserting that the goods were counterfeits. In this backdrop it observed,“...there is thus a clear misdeclaration as to the value of goods, nature of goods and also the fact that these are spare parts of i-Phones. Even the proof of delivery of goods would show that though the consignments were meant for different destinations, namely Nagpur and Calcutta, the Appellant had delivered the same to one individual. These facts, according to the CESTAT, confirms that the Appellant was complicit in the misdeclaration and the illegality committed by the importers…the final order passed by CESTAT dated 22nd March, 2024 does not deserve interference.”Nonetheless, the Court observed that revocation of courier registration for the entire period till 2031 is 'disproportionate' as though Appellant was complicit, it was not the ultimate beneficiary.As such, the Court directed that revocation of the courier registration shall be given effect from 18th August, 2023 till 1st September, 2025.Insofar as forfeiture of security is concerned, out of Rs.10 lakhs, a sum of Rs. 5 lakh shall stand forfeited and the remaining Rs. 5 lakh shall be treated as security for the purpose of allowing the Appellant to operate as a registered courier agency, Court said.It however upheld the penalty of ₹50,000 imposed by CESTAT.Appearance: Mr. Akhil Krishan Maggu, Mr. Vikas Sareen, Ms. Oshin Maggu, Ms. Maninder Kaur & Mr. Aryan Nagpal, Advs for Appellant; Mr. Vijay Joshi, SSC, CBIC with Mr. Shubham Chaturvedi, Adv for RespondentCase title: M/S ECG Easy Connect Logistics Pvt. Ltd v. Commissioner Of CustomsCitation: 2025 LiveLaw (Del) 1014Case no.: CUSAA 35/2024Click here to read order

Import Of Counterfeit iPhones Dilutes Brand Equity, Affects Consumer Welfare: Delhi High Court In Customs Fraud Case

Kapil Dhyani

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