2023 (10) TMI 360 - AT - Customs

Confiscation of medicines which were being carried while travelling out of India - Penalty u/s 114 (i) of Customs Act - goods of commercial quantity or not - restricted goods - valuation of the goods - HELD THAT - The Appellant have attempted to export goods in commercial quantity, for which proper permission/ license is required from the Drug Control Authority. Further it is found that the goods under export are not prohibited, but restricted, requiring license. Thus, under such facts and circumstances, absolute confiscation is not called for. Accordingly, although the Order of confiscation upheld, the Order of absolute confiscation set aside. In such circumstances, the Appellant was entitled to redemption of the goods. However, it is informed by the Appellant that pursuant to the Order of confiscation, the goods were disposed of by the Customs Department - valuation has been done on higher side on the basis of MRP. Accordingly, the valuation adopted by Revenue is set aside and the same reduced to purchase price of Rs.16,62,083 plus 15% for trading profit and/or rounded off to Rs.19,00,000/-. It is observed that as a long time has passed since the date of seizure and confiscation, the goods have deteriorated in value and are no longer available for redemption. Taking notice that Appellant has already suffered loss due to confiscation of the medicines, the penalty imposed on the Appellant Mr. K. Raghavendra Reddy, reduced from Rs.2,50,000/- to Rs.50,000/- under Sec 114(i) of the Customs Act - appeal allowed in part.

Summary

Issues:
The judgment involves issues related to the confiscation of medicines being carried out of India without proper permission and the imposition of penalty under Sec 114(i) of the Act.

Summary:

Confiscation of Medicines:
The Appellant, a partner in a wholesale trade of medicines business, attempted to export Hepatitis C medicines to Vietnam without proper authorization. The medicines were intercepted from an individual traveling to Vietnam, who revealed that he was carrying medicines for the Appellant's company. The Appellant admitted to exporting medicines in commercial quantity without valid permission, violating drug distribution rules. The authorities issued a show cause notice proposing confiscation of the medicines and a penalty under Sec 114(i) of the Customs Act. The seized drugs were confiscated absolutely, and a penalty was imposed on both the individual carrying the medicines and the Appellant.

Appeal and Ruling:
The Appellant appealed, arguing that they had a valid IEC Code and exported medicines to help patients, not to evade duty. They contended that the absolute confiscation order was unjust as the medicines were not prohibited goods. The Commissioner (Appeals) upheld the adjudication, leading the Appellant to approach the Tribunal. The Tribunal dismissed Revenue's jurisdictional objection and proceeded with the appeal. Considering the circumstances, the Tribunal upheld the confiscation but set aside the absolute confiscation order. The valuation of the medicines was reduced to the purchase price, and the penalty on the Appellant was reduced from Rs.2,50,000 to Rs.50,000 under Sec 114(i) of the Customs Act. The Tribunal acknowledged that due to the passage of time, the goods were no longer available for redemption.

Conclusion:
The Tribunal found that although the Appellant breached licensing requirements, absolute confiscation was not warranted. The penalty imposed on the Appellant was reduced due to the loss suffered from the confiscation of the medicines. The Appeal was allowed in part, with the Tribunal making adjustments to the valuation and penalty amount.