1984 (1) TMI 324 - AT - Customs

Summary

Issues Involved:
1. Whether the imported goods, Tetracycline Urea Complex, is a canalised item under Appendix 9 of the Import Policy A-M 1983.
2. Whether the imported goods can be considered a raw material permissible for import under OGL (Open General Licence) under Appendix 10(1) of the Import Policy A-M 1983.
3. Whether the Customs Authorities correctly interpreted and applied the relevant import policies and circulars.
4. Whether the imported goods are a drug, an active ingredient, or a chemical compound.
5. Whether the burden of proof was discharged by the Department.
6. Whether extraneous matters were improperly considered by the Additional Collector and the Collector.
7. Whether the appellants were denied natural justice due to reliance on materials not mentioned in the show cause notices.
8. Whether past conduct of clearing similar imports should influence the decision.
9. Whether the ambiguity in the policy should benefit the appellants.

Detailed Analysis:

1. Canalisation of Tetracycline Urea Complex:
The primary issue was whether Tetracycline Urea Complex falls under the canalised items listed in Appendix 9 of the A-M 1983 Import Policy. The judgment clarified that under the A-M 1983 policy, canalised items included drugs specified in Appendix 9, their salts, esters, and active ingredients. The tribunal held that Tetracycline Urea Complex, being an inclusion complex, was not separately canalised under the 1983 policy but was included in the 1984 policy.

2. Import Under OGL:
The appellants argued that Tetracycline Urea Complex should be considered a raw material permissible for import under OGL. However, the tribunal found that the imported goods were essentially Tetracycline combined with Urea, forming an inclusion complex. Since Tetracycline is a canalised item, its import under OGL was impermissible.

3. Interpretation and Application of Policies:
The tribunal examined the interpretation of the import policies and circulars. It was noted that the Customs Authorities relied on the ITC Circular dated 3-1-1983, which included Tetracycline Urea Complex as a canalised item. The tribunal held that circular instructions could not override the policy and had no retrospective effect. The tribunal rejected the contention that the policy was ambiguous and found it clear and explicit.

4. Nature of Imported Goods:
The tribunal considered whether the imported goods were a drug, an active ingredient, or a chemical compound. It was determined that Tetracycline Urea Complex was not a chemical compound but an inclusion complex of Tetracycline and Urea. The tribunal concluded that the imported goods were essentially Tetracycline and Urea, not a separate commodity.

5. Burden of Proof:
The tribunal acknowledged that the burden of proof lay with the Department to establish that the imported goods were canalised. While the Department did not place sufficient material initially, the evidence adduced by both sides was considered. The tribunal found that the Department had sufficiently established that the imported goods were canalised items.

6. Consideration of Extraneous Matters:
The tribunal agreed with the appellants that the Additional Collector and the Collector improperly considered extraneous matters such as reports in the Chemical Weekly and the Times of India, and the effect of import on IDPL. These were not mentioned in the show cause notices and should not have influenced the decision.

7. Denial of Natural Justice:
The tribunal noted that the reliance on materials not mentioned in the show cause notices denied the appellants natural justice. However, the tribunal decided not to remand the matter but to consider the merits based on the existing record.

8. Past Conduct of Clearing Similar Imports:
The appellants argued that similar imports had been cleared in the past, and this should influence the current decision. The tribunal held that past conduct could not establish a right to continue importing under the same conditions if the policy interpretation had been improper. The tribunal emphasized that there could be no estoppel in such matters.

9. Ambiguity in Policy:
The appellants contended that any ambiguity in the policy should benefit them. The tribunal found no ambiguity in the policy and held that the items canalised were clearly specified. The tribunal rejected the contention that the appellants should benefit from any perceived ambiguity.

Conclusion:
The tribunal dismissed the appeals, holding that the imported goods were banned items under the A-M 1983 policy. The orders of confiscation and imposition of fines by the Additional Collector and the Collector were confirmed. The tribunal emphasized that the imported goods were essentially Tetracycline combined with Urea, forming an inclusion complex, and thus fell within the canalised items listed in Appendix 9 of the A-M 1983 policy.