2019 (6) TMI 1278 - HC - Customs

Confiscation of imported goods - cosmetic goods - improper importation - it was alleged that goods imported or brought within Indian customs waters contrary to the prohibition imposed by law - HELD THAT - So far as cosmetics are concerned, their importation into India cannot be made except through the points of entry specified under Rule 43-A. Rule 43-A contains restrictions in respect of drugs to be imported into India. It specifies the places, through which alone drugs can be imported into India by rail, road, sea or air. By virtue of Rule 133 of the Rules, the restrictions as to the points of entry specified under Rule 43-A have been made applicable to all cosmetics imported into India. Rule 132 gives exemption to cosmetics specified in Schedule D. Cosmetics specified in Schedule D are cosmetics which are imported for manufacture and export by units situated in Special Economic Zones as mentioned by Government of India (Item 6 of Schedule D); cosmetics generally cannot be said to be entitled to exemption as substances not intended for medicinal use (Item 1 of Schedule D). Once it is held that the import of goods by the Respondent is contrary to the prohibition contained in Rule 133 of the Rules, it is a foregone conclusion that the goods are improperly imported, and are liable to be confiscated under Clause (d) of Section 111 of the Customs Act, 1962. The action of the Commissioner in confiscating the goods, accordingly, cannot be faulted. Appeal allowed - decided in favor of Revenue.

Summary

Issues:
1. Confiscation of cosmetic goods imported improperly.
2. Interpretation of Rules 132 and 133 of the Drugs and Cosmetics Rules, 1945.
3. Exemption of cosmetics under Schedule D.
4. Application of Rule 133 to imported cosmetics.
5. Proper point of entry for importing cosmetics.
6. Tribunal's misdirection in considering the nature of imported goods.

Confiscation of Cosmetic Goods:
The judgment concerns the confiscation of cosmetic goods imported improperly, contrary to the law. The Customs Appeal challenges the order of the Tribunal regarding the confiscation of cosmetic goods imported by the Respondent. The Commissioner of Customs ordered the absolute confiscation of the goods as they were not imported through specified points of entry, as required by Rule 133 of the Drugs and Cosmetics Rules, 1945.

Interpretation of Rules 132 and 133:
Rules 132 and 133 of the Drugs and Cosmetics Rules, 1945, were central to the dispute. Rule 132 provides exemption for cosmetics specified in Schedule D from certain provisions of the Act and rules. On the other hand, Rule 133 mandates that no cosmetic shall be imported into India except through specified points of entry. The conflict arises when determining the applicability of these rules to the imported cosmetic goods.

Exemption of Cosmetics under Schedule D:
Schedule D lists substances not intended for medicinal use that are exempt from certain provisions of the Act and rules. The Respondent argued that the imported goods qualified as substances not intended for medicinal use and were therefore exempt from the restrictions on point of entry. However, the Tribunal's decision was based on a misinterpretation of the Schedule and the nature of the imported goods.

Application of Rule 133 to Imported Cosmetics:
The key question revolved around whether Rule 133, which restricts the import of cosmetics to specified points of entry, applied to the goods imported by the Respondent. The Tribunal's decision favored the Respondent's argument that the goods were exempt, leading to the appeal by the Commissioner of Customs challenging this interpretation.

Proper Point of Entry for Importing Cosmetics:
The judgment clarified that cosmetics, as defined under the Act, must be imported through designated points of entry specified in Rule 43-A. The Respondent's argument that the goods were exempt from this requirement due to Schedule D was deemed incorrect, as the goods did not fall under the specified category.

Tribunal's Misdirection:
The Tribunal was found to have misdirected itself by focusing on whether the imported goods were medicinal rather than determining if they were cosmetics subject to the restrictions of Rule 133. The judgment emphasized that the nature of the goods as cosmetics, not intended for medicinal use, was the crucial factor in deciding the case.

In conclusion, the High Court upheld the appeal, ruling in favor of the Appellant Commissioner of Customs. The Tribunal's order was set aside, confirming that the imported goods were improperly imported and subject to confiscation under the Customs Act, 1962.