2013 (11) TMI 1352 - AT - Customs

Confiscation of goods - Export of restricted goods without license - Violation of provisions of Rule 31 of the Standards of Weight and Measures (Packaged Commodity) Rules, 1997 - Held that - There is no evidence that such medicine was bared. In such scenario, the provisions of Rule 31 of the Standards of Weight and Measures (Packaged Commodity) Rules, 1997 cannot said to have been violated - Rule 31 of the Standards of Weight and Measures (Packaged Commodity) Rules, 1997 was deleted from the statute book with effect from January, 2007 onwards. The show cause notice was issued on 19.9.2007 when admittedly Rule 31 was not on statute book - when rule lapses on repeal of that rule without saving a clause, section 6 of the General Clauses Act does not apply to the same and proceedings already initiated under that provision of law cannot be continued - Even show cause notice was not issued upto 13.1.2007 when said rule was omitted. As such reference to the said rule in the show cause notice issued on 19.9.2007 when the said rule was not in existence and is against the settled principle of law, cannot be appreciated and impugned order cannot be upheld - Decided in favour of assessee.

Summary

Issues:
1. Confiscation of allegedly illegal exported products and imposition of penalties.
2. Compliance with laws and regulations in the country of export.
3. Prohibition on the export of unapproved drugs.
4. Validity of the impugned order based on legal provisions.

Analysis:

Issue 1: Confiscation of allegedly illegal exported products and imposition of penalties
The appeal was against the order of the Commissioner confiscating products valued at Rs.32,44,004/- and imposing a redemption fine of Rs.10 lakhs. The products were already exported, making confiscation impractical. Additionally, a penalty of Rs.5 lakhs was imposed, along with confiscation of Rs.39,068.24 as sale proceeds of smuggled goods to the USA.

Issue 2: Compliance with laws and regulations in the country of export
The appellants were engaged in exporting Sidenafil Citrate and Tadafil tablets to the USA. The officers found that the drugs did not require a license under the NDPS Act but were seized under the Drugs & Cosmetics Act, 1940. The export packages were required to comply with the laws and regulations of the destination country, as per Rule 31 of the Standards of Weight and Measures (Packaged Commodity) Rules, 1997.

Issue 3: Prohibition on the export of unapproved drugs
The Revenue authority argued that the drugs exported by the appellants were not approved in the USA, violating the United States Federation Food, Drug and Cosmetic Act. The Act prohibits the importation of unapproved new drugs, making the export of such drugs illegal. This violation was cited as the basis for initiating proceedings against the appellants.

Issue 4: Validity of the impugned order based on legal provisions
The impugned order relied on the assumption that the drugs exported by the appellants were prohibited under the United States Federation Food, Drug and Cosmetic Act. However, upon inquiry, it was found that there was no specific legislation barring the medicines in question in the USA. Moreover, Rule 31 of the Standards of Weight and Measures (Packaged Commodity) Rules, 1997, which formed the basis of the order, had been deleted from the statute book effective January 2007. The Tribunal held that the order was based on assumptions and lacked legal basis, ultimately setting it aside and providing relief to the appellants.

This detailed analysis of the judgment highlights the issues of confiscation, compliance with export regulations, prohibition on unapproved drugs, and the validity of the impugned order, providing a comprehensive understanding of the legal intricacies involved in the case.