2008 (3) TMI 258 - AT - Customs

Import - life saving drugs Drugs Control & Customs Authorities appears careless - no proper testing sale of untested/unchecked drugs - since goods have already been sold & samples also are not available, department s appeal for confiscation or redemption fine is rejected - This case should be an eye-opener for the authorities concerned to exercise proper control on the imported drugs drugs were provisionally released only for storage purposes not for sale, penalty is justified

Issues Involved:

1. Alleged misrepresentation by appellant importers regarding non-drawal of samples by Customs officials.
2. Appeal against the penalty imposed on the appellant importer.
3. Appeal by the department against the non-confiscation of goods and non-imposition of redemption fine.
4. Time-barred nature of the show cause notice.
5. Adequacy and procedure of sample drawal.
6. Previous practice of selling imported drugs without N.O.C.
7. Legal basis for penalty imposition.

Detailed Analysis:

1. Alleged Misrepresentation by Appellant Importers:

The applicant Commissioner claimed that the appellant importers misled the Tribunal by stating that Customs officials did not draw samples, which was factually incorrect. The samples were drawn in the presence of the authorized CHA and forwarded to the Assistant Drug Controller. The Commissioner emphasized the statutory obligation of Customs Authorities to ensure imported drugs comply with the Drugs and Cosmetics Act, 1940, and no clearance is allowed without following the procedure.

2. Appeal Against the Penalty Imposed on the Appellant Importer:

The appellant importer contested the penalty of Rs. 5.00 lakhs imposed under the impugned Order. The department's appeal sought confiscation of the goods and imposition of redemption fine. The Committee of Chief Commissioners summarized the facts, highlighting the importer's violation of the bond conditions by selling the drugs without the N.O.C. from the Drugs Control Authorities.

3. Appeal by the Department Against the Non-Confiscation of Goods and Non-Imposition of Redemption Fine:

The department argued that redemption fine is imposable even after the release of goods on execution of a bond, citing the Supreme Court decisions in Weston Components Ltd. v. CC, New Delhi and Jain Exports Pvt. Ltd. v. Union of India. The Tribunal noted that if the drugs did not meet the standards, they would have been absolutely confiscated. Since the goods were sold and samples were unavailable, the Tribunal did not impose redemption fine but emphasized the need for proper control over drug imports to avoid health hazards.

4. Time-Barred Nature of the Show Cause Notice:

The appellant importer argued that the show cause notice was time-barred. However, the Tribunal did not find merit in this argument, focusing instead on the substantive issues of compliance with statutory requirements and the conditions of the bond.

5. Adequacy and Procedure of Sample Drawal:

The appellant importer contended that adequate samples were not drawn, and they were not informed about the drawal of samples. The Tribunal observed that the procedural lapses by the Customs and Drugs Control Authorities contributed to the situation but did not absolve the importer of their responsibility to comply with the bond conditions.

6. Previous Practice of Selling Imported Drugs Without N.O.C.:

The appellant importer argued that they had previously sold imported drugs without receiving any N.O.C. from the authorities without objection. The Tribunal rejected this argument, stating that past inaction by authorities does not justify the violation in the current case.

7. Legal Basis for Penalty Imposition:

The appellant importer claimed that the Adjudicating Authority did not cite the legal provisions for imposing the penalty. The Tribunal found this objection without merit, as the Adjudicating Commissioner had clearly mentioned the relevant legal provisions in the Order. The Tribunal upheld the penalty of Rs. 5.00 lakhs, considering it justified given the value of the drugs and the seriousness of the violation.

Conclusion:

The Tribunal rejected both the appeals filed by the department and the appellant importer. The Miscellaneous Application filed by the department was also disposed of. The Tribunal emphasized the need for stringent control over drug imports to protect public health and upheld the penalty imposed on the appellant importer.

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