2014 (5) TMI 206 - AT - Customs

Levy of Duty - Re-import of 4-Amino-6 (Tri chloroethyl)-1, Benzene Di-sulphonamide - Notification of Duty free - Mis-declaration Held that - It is unable to agree with the contention of the Revenue that there was mis-declaration in the description - The chemical name of the drug was correctly written - It is just that the generic name was not mentioned, so this can be at the most a case of not writing the complete description - In fact, on the basis of the same description at the time of import, the Customs officials on their own sent the sample for clearance from the Assistant Drug Controller - In view of this position, there is no misdeclaration in the description of the goods. Prohibition relating to import - Held that - There is no prohibition under the Import Policy for the import of the said item is allowed to be imported freely - Letter of the Assistant Drug Controller, dated 27.7.2009, is based upon the assumption that the goods have been manufactured by the respondents - The fact is that the respondents have acted only as a trader in respect of the said goods and the goods were procured from another manufacturer as described earlier - The goods had come under ARE-1 Therefore, It cannot be said that the goods have been manufactured without proper licence. Offence of manufacturer u/s 18(c) punishable u/s 27(ii) of the Drugs and Cosmetics Act, 1940 Held that - Assistant Drug Controller s letter is based on the assumption that the goods have been manufactured by the respondents, which is not the case - Secondly, even if the manufacturer has committed an offence u/s 18(c) which is punishable u/s 27(ii) of the Drugs and Cosmetics Act, 1940, this would not imply that the goods imported are prohibited goods and are, therefore, imported in violation of Section 111(d) - In view of the above position, no infirmity in the impugned order Decided against Revenue.

Summary

Issues:
1. Duty-free clearance under Customs Notification
2. Confiscation of goods under Customs Act
3. Misdeclaration of goods as chemical instead of drug
4. Violation of Drugs and Cosmetics Act
5. Appeal against order of Commissioner (Appeals)

Issue 1: Duty-free clearance under Customs Notification
The case involved the re-import of certain goods claimed duty-free under Customs Notification No. 94/96. The goods were initially exported and then re-imported by the respondent. The Assistant Drug Controller opined that the goods were used for therapeutic purposes and could be produced under a proper drug license. However, it was found that the manufacturer did not have the required manufacturing license, leading to confiscation of the goods under Sections 111(d) and 111(m) of the Customs Act, 1962.

Issue 2: Confiscation of goods under Customs Act
The original authority confiscated the goods under Sections 111(d) and 111(m) of the Customs Act, while imposing a penalty on the importer and the director of the company. The Commissioner (Appeals) later allowed the appeal, stating that the goods were not misdeclared and could be freely imported as per the Import-Export Policy. The Revenue appealed this decision before the Tribunal.

Issue 3: Misdeclaration of goods as chemical instead of drug
The Revenue argued that there was misdeclaration as the goods were declared as chemicals but were actually drugs. The Assistant Drug Controller's presumption that the goods were manufactured by the respondent was disputed, as the goods were purchased from another manufacturer. The description of the goods was considered complete, and there was no misdeclaration found in the description.

Issue 4: Violation of Drugs and Cosmetics Act
The Revenue contended that the goods were prohibited for manufacture in India without a valid license, leading to a violation of the Drugs and Cosmetics Act. However, the Tribunal found that the goods were not prohibited for import as per the Import Policy, and the assumption that the goods were manufactured by the respondent was incorrect. The Tribunal concluded that there was no violation of the Drugs and Cosmetics Act or confiscation under Section 111(d) of the Customs Act.

Issue 5: Appeal against order of Commissioner (Appeals)
The Tribunal dismissed the appeal filed by the Revenue, stating that there was no misdeclaration in the description of the goods and no violation of the Drugs and Cosmetics Act or the Customs Act. The Tribunal upheld the decision of the Commissioner (Appeals) and ruled in favor of the respondent, concluding that the goods were not prohibited for import and there was no infirmity in the impugned order.

In summary, the Tribunal dismissed the Revenue's appeal, finding no misdeclaration in the goods' description, no violation of the Drugs and Cosmetics Act, and no grounds for confiscation under the Customs Act. The decision highlighted the importance of proper documentation and compliance with import regulations.