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2020 (12) TMI 66 - HC - CustomsRestraint from dealing of imported goods - import of 35,900 kilograms (kgs.) of Inositol NF 12 (Not for Medicinal Use) - restraint from selling, distributing and disposing of the said stock in their possession - it is stated that the petitioner was intimated that the respondents 1 and 2 had reason to believe that the said goods in the possession of the petitioner concern had contravened the provisions under the DC Act - applicability of Rule 43 of the DC Rules. HELD THAT - A perusal of Schedule D at Sl.No.1 mentions that the substance not intended for medicinal use are exempt from all provisions of Chapter III and Rules thereunder, subject to the condition that if the substance is imported in bulk, the importer shall certify that the substance is imported for non-medicinal use, and if imported otherwise than in bulk, each container shall bear a label indicating that the substance is not intended for medicinal use or is intended for some other purposes other than medicinal use or is of commercial quality - If rule 43 read with Schedule D exempting the substance not intended for medical use are applied to the instant case, it is clear that the fourth respondent had imported the above quantity of Inositol NF 12 mentioning that it is Not for Medicinal Use from the Overseas supplier and their sale in favour of the petitioner also indicates that it was not intended for medicinal use. Thus, a reading of Rule 43 of the DC Rules along with Schedule D shows that where the substance is not intended for medicinal use, which was imported in bulk, the importer shall certify that the substance is imported for non-medicinal use. The requirement of an import licence in Form 10-A assumes importance depending on the usage for which the imported item is intended for. In the instant case, after this Form 15 was issued to the petitioner, the fourth respondent also had applied to the Drug Authorities seeking Form 10-A exemption. However, the same was rejected as the fourth respondent had already parted with the imported goods or sold the goods to the petitioner, without mentioning whether the import of Inositol NF 12 is exempted or not - Considering the fact that the even the test reports indicated that the samples of standard as defined under the DC Act and the Rules framed thereunder stating that the samples conform the USP and when the provisions and the rules of the DC Act and Rules provide for efficient protection in the matters of import, obtaining of Form 10-A in terms of Rule 23 need not be insisted upon. The petitioner was constrained to move this Court even for getting the reports of the lab test conducted in this regard, as he was issued with Form 15. When the fourth respondent is entitled for import without a licence by reason of exemption granted under the Rules and the DC Act, the import being one for manufacture and use of non-medicinal substances, by way of retaining the same for the purpose of penalty on the ground that the import is not supported by licence under Form 10A is unsustainable - the plea of the respondents that the fourth respondent had imported Inositol NF 12 without Form 10A licence and consequently, retaining the goods in the premises of the petitioner, who is a subsequent purchaser, is patently erroneous cannot be accepted. The respondents 1 and 2 are directed to release the goods, which were locally procured by the petitioner, namely, Inositol NF 12 (Not for Medicinal Use), after obtaining necessary undertaking, within a period of two weeks from the date of receipt of a copy of this order - Petition disposed off.
Issues Involved:
1. Legality of import and sale of Inositol NF 12 without Form 10/NOC. 2. Applicability of Rule 43 of the Drugs and Cosmetics Rules, 1945. 3. Compliance with the Drugs and Cosmetics Act, 1940. 4. Delay in testing and release of the goods. 5. Petitioner's entitlement to relief. Issue-wise Detailed Analysis: 1. Legality of Import and Sale of Inositol NF 12 without Form 10/NOC: The petitioner purchased 35,900 kgs of Inositol NF 12 from the fourth respondent, who imported it from China. The first and second respondents issued Form 15, restraining the petitioner from dealing with the goods, citing a contravention of the Drugs and Cosmetics Act (DC Act) due to the absence of Form 10 or No Objection Certificate (NOC). The respondents argued that the import required an import license under Section 10(c) of the DC Act, and the petitioner also violated Section 18 by purchasing without the necessary documentation. 2. Applicability of Rule 43 of the Drugs and Cosmetics Rules, 1945: Rule 43 states that drugs specified in Schedule D, including substances not intended for medicinal use, are exempt from the provisions of Chapter III of the DC Act, subject to certain conditions. The court noted that the petitioner and the fourth respondent had indicated that the Inositol NF 12 was "Not for Medicinal Use," aligning with the exemptions provided under Rule 43. The court emphasized that the import was for non-medicinal purposes, such as food, nutraceutical, and beverage industries, and thus did not require Form 10. 3. Compliance with the Drugs and Cosmetics Act, 1940: The court examined whether the petitioner and the fourth respondent complied with the DC Act and Rules. It was determined that the import and sale of Inositol NF 12 for non-medicinal use were exempt under Rule 43, negating the need for Form 10. The court referenced previous judgments, including S.Kesarimal V. Commissioner of Customs (Imports), which supported the exemption for non-medicinal imports. 4. Delay in Testing and Release of the Goods: The petitioner faced significant delays in getting the goods tested and released. Despite a court order on 10.10.2019 directing the respondents to test the goods within two weeks, the process was delayed, causing financial and operational hardships for the petitioner. The court acknowledged the petitioner's efforts to comply with all requirements and the undue delay by the respondents in providing the test reports and releasing the goods. 5. Petitioner's Entitlement to Relief: The court concluded that the petitioner was entitled to relief based on compliance with Rule 43 and the non-medicinal use of the imported goods. The court directed the respondents to release the goods upon obtaining necessary undertakings from the petitioner, ensuring that the goods would not be used for medicinal purposes and providing periodic reconciliation data. Conclusion: The court ordered the respondents to release the goods, Inositol NF 12, to the petitioner within two weeks, subject to the petitioner providing necessary undertakings. The court emphasized that the import for non-medicinal use was exempt under Rule 43, and the petitioner's compliance with the DC Act and Rules warranted the release of the goods. The court also referenced previous judgments that supported the petitioner's case and highlighted the undue delay caused by the respondents.
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