The advent of rapid technological growth and a manifold increase in the number of suppliers who make products and services available to consumers coupled with rising costs of such products and services has led to the birth of an alternate industry involved in bringing fake, illegal and counterfeit goods to the market. These goods are often similar in appearance and functionality to their original or legal counterparts yet are available at a fraction of their cost. This has led to a nearly 10000 percent growth in counterfeiting business in the last two decades.

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.

The key notion behind having IP right holders to register their rights with the Customs Office is to ensure that the right holders do not suffer on account of illegal import of counterfeit goods into India without their consent as well as to ensure that India, as a country, does not contribute to the proliferation of the counterfeit industry.

To understand how the process of custom Recordal functions, it is essential to first understand who a right holder is and what exactly comprises an infringement.

How the Custom Recordal procedure works

  • 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.
  • The right holder is then expected to join the proceedings within 10 days from the receipt of intimation of suspension (may vary with the nature of goods). If the right holder fails to join the proceedings within the stipulated time, the Customs department may clear the allegedly infringing goods, provided that all other conditions for import are met.
  • On joining the proceedings within the stipulated period of time, the right holder is permitted to examine the goods suspected of infringement in order to assess whether the goods are pirated/counterfeit. As a general right, both the right holder and the importer are permitted to request information pertaining to the name and address of the other party concerned and the Customs office has to provide this information without any bias to the protection of confidentiality.
  • Once the suspected goods have been examined by the right holder and are found to infringe the right holder’s intellectual property rights, the Customs department destroys or disposes (outside commercial channels) the goods under the right holder’s consent and under official supervision. As stated above, any costs incurred towards the destruction/disposal of infringed goods are borne by the right holder.
  • In order to reduce the proliferation of infringed goods in any market, the Customs department does not allow infringing goods to be re-exported to their port of origin even in an unaltered condition.

If required by the right holder as evidence for a lawsuit, the Customs department may retain samples of the infringing goods which can be presented as evidence.

Provisions for renewal of the Custom Recordal

  • Fees for renewal of Custom Recordal

The Government fees payable for renewal of a custom recordal as recorded with the Custom Authorities is INR 2000 per renewal.

  • Documents essential for filing of the renewal of the Custom Recordal

Following are the documents required to be filed with Customs Authority at the time of the renewal:

  1. Registration Certificates in respect of the IP right recordals that are required to be renewed
  2. The indemnity bond and general bond executed between right holder and the Custom authorities at the time of filing the recordal (if any).

Earlier, a right holder was required to execute the consignment specific bond at the specific port within a period of three days from the day the Customs Authority of that particular port suspended the clearance of goods. However, recently the Customs authorities have introduced a system wherein the right holder can execute a centralized bond of a value which the right holder feels would be sufficient for the allegedly infringing goods and security of 25% value of the bond, which shall be applicable for all ports. In case of interdiction of allegedly infringing goods, if the amount of Centralized Bond and the security are not sufficient to cover the value of the goods interdicted, then within three days of interdiction, the right holder would be required to execute a supplementary bond and furnish security for the corresponding amount.

Exceptions to the Customs Recordal Ambit

  • Goods that are not of a commercial nature included in personal baggage brought into the Indian territory i.e. goods which are bought by people during their visits outside India and are brought into Indian territory amongst personal baggage are exempted from being checked for IP right infringement.
  • In the case of small consignments shipped to an importer intended only for the personal use of the importer, the goods imported are not subject to scrutiny for IP rights infringement.