1977 (10) TMI 43 - HC - Customs

Summary

Issues Involved:
1. Interpretation of the term 'manufacture' under the Drugs and Cosmetics Act.
2. Validity of the seizure and subsequent penalty under the Customs Act.

Summary:

Issue 1: Interpretation of 'Manufacture'
The petitioner firm imported "Chloramphenical Capsules USP" from Nepal without an import license, relying on Rule 176 of the Import Trade Control Hand Book of Rules and Procedures, 1969, which exempts goods produced or manufactured in Nepal from import license requirements. The Customs Department seized the goods, arguing they were not of Nepalese manufacture and thus the import was unauthorized. The petitioner contended that the processes carried out in Nepal, including filling the powder into capsules, constituted 'manufacture' as defined u/s 9(f) of the Drugs and Cosmetics Act, 1940. However, the court held that the term 'manufacture' must be given its common meaning, implying a change or transformation resulting in a new and different article. The court concluded that mere capsuling did not amount to manufacture for the purposes of the Imports and Exports (Control) Act or the Treaty of Trade and Transit, and thus the import was unauthorized.

Issue 2: Validity of Seizure and Penalty
The petitioner argued that the notice for seizure u/s 110 of the Customs Act was issued beyond the six-month period, thus invalidating any order of confiscation or penalty. The court clarified that the liability to confiscation u/s 111(d) and the imposition of penalties u/s 112 of the Customs Act do not depend on the actual confiscation but on the liability of the goods to be confiscated. The court cited precedents (Collector of Customs and Central Excise v. Amrutalakshmi, AIR 1975 Mad. 43 and Munilal v. Collector, Central Excise, Chandigarh, AIR 1975 Punj. and Haryana 130) to support this interpretation. Consequently, the court upheld the penalty imposed on the petitioner despite the procedural lapse in issuing the seizure notice.

Conclusion:
The court dismissed all writ petitions, affirming the Customs Department's interpretation of 'manufacture' and the validity of the penalty imposed despite the delayed seizure notice. The petitioner was ordered to bear the costs, with counsel's fee set at Rs. 300/- one set.