2010 (4) TMI 471 - HC - Customs

Drug Import- it is stated that as the importer had not submitted the required import drug licence, the subject goods were not permitted for clearance. Hence, the goods were liable to be confiscated under Section 111(d) of the Customs Act apart from the importer liable to penalty under Section 112(a) of the said Act. The petitioner was issued a show cause notice dated 10-3-2010 calling upon the petitioner to place its objections. Held that- proceedings for confiscation or penalty not applicable and goods ordered to be released. Plea on availability remedy rejected in view of facts. Impugned goods not being meant for manufacture of drug, covered by exemption from import licence.

Issues Involved:
1. Constitutionality and legality of the communication dated 22-2-2010.
2. Requirement of import licence in Form-10A for Benfotiamine.
3. Applicability of Rule 43 read with Schedule-D and Rule 123 read with Schedule-K of the Drugs and Cosmetics Rules, 1945.
4. Detention and confiscation of the consignment.
5. Alternative remedy and show cause notice.

Detailed Analysis:

1. Constitutionality and Legality of the Communication Dated 22-2-2010:
The petitioner sought a writ of certiorarified mandamus to declare the communication dated 22-2-2010 by the second respondent as unconstitutional and ultra vires the Drugs and Cosmetics Act, 1940, and the rules framed thereunder. The court found that the insistence on obtaining Form-10A for the import of Benfotiamine was contrary to the rules and the understanding of the respondents as disclosed in their previous communications.

2. Requirement of Import Licence in Form-10A for Benfotiamine:
The petitioner argued that under Rule 43 read with Schedule-D and Rule 123 read with Schedule-K of the Drugs and Cosmetics Rules, 1945, there was no requirement to obtain an import licence in Form-10A for Benfotiamine, as it was intended for non-medical use. The court agreed, noting that the import was for manufacturing dietary supplements, not drugs, thus falling under the exemption provided by these rules.

3. Applicability of Rule 43 Read with Schedule-D and Rule 123 Read with Schedule-K:
The court emphasized that Rule 43 and Rule 123, along with their respective schedules, provide exemptions for substances not intended for medical use. The petitioner had certified that Benfotiamine was for non-medicinal purposes, aligning with the conditions specified in the rules. The court found that the respondents' insistence on a Form-10A licence was not justified under these rules.

4. Detention and Confiscation of the Consignment:
Respondents 1 and 2 argued that the goods were liable to confiscation under Section 111(d) of the Customs Act due to the absence of an import licence. However, the court held that since the import was for non-medicinal use, the detention and potential confiscation were not warranted. The court also noted the petitioner's willingness to furnish an end-user bond, which would safeguard the respondents' interests.

5. Alternative Remedy and Show Cause Notice:
The respondents contended that the petitioner should respond to the show cause notice issued on 10-3-2010. While the court usually would defer to the availability of an alternative remedy, it decided to intervene due to the clear applicability of Rule 43 and 123 and the established practice of allowing imports with appropriate labeling. The court thus rejected the respondents' plea for an alternative remedy and quashed the proceedings dated 22-2-2010.

Conclusion:
The court allowed the writ petition, quashing the communication dated 22-2-2010, and ruled that the petitioner could import Benfotiamine without obtaining a Form-10A licence. The court underscored that if the authorities found any misuse of the exemption, they could proceed against the petitioner as per the law.

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