1990 (6) TMI 177 - AT - Customs

Summary

Issues:
1. Validity of the order confiscating imported item under Sec. 111(d) of the Customs Act.
2. Interpretation of whether the imported item falls under canalised category or permissible for import under OGL.
3. Classification of the imported item as a drug or drug intermediate under the Policy.
4. Application of redemption fine and penalty under Customs Act.

Analysis:

Issue 1: Validity of Confiscation Order
The appeal challenged an Order-in-Original confiscating 16 drums of Diethylene Diaminc Tech 63.3% under Sec. 111(d) of the Customs Act. The appellants imported the item, claiming clearance under OGL, but faced objections as it was deemed canalised under Appendix 9 of the Import Policy AM 1982-83. The Chemical Examiner's report indicated the item was piperazine, not of pharmaceutical grade. The adjudicating authority upheld the confiscation order.

Issue 2: Interpretation of Canalised Category
The appellant argued that the imported item was not a drug as per the Policy, hence not canalised under Appendix 9. The Department contended that piperazine, though not of pharmaceutical grade, remained a drug, thus canalised. The Tribunal noted that the imported item was for preparing pharmaceutical products, indicating a drug connection, thereby upholding the canalised classification.

Issue 3: Classification as Drug or Drug Intermediate
The appellant contended that the item was a drug intermediate, permissible under OGL. However, the Tribunal found that the item, piperazine, fell under the drug category specified in the Policy, despite not meeting pharmaceutical grade standards. The Tribunal held that the presence of basic drug characteristics rendered it subject to canalisation.

Issue 4: Application of Redemption Fine and Penalty
The Tribunal reduced the redemption fine from Rs. 27,000 to Rs. 15,000, considering the appellants' status as industrial users and lack of grave mala fide intent. No penalty was imposed under Sec. 112 of the Customs Act. The Tribunal affirmed the confiscation but modified the redemption fine amount.

In conclusion, the Tribunal upheld the confiscation of the imported item under Sec. 111(d) of the Customs Act, based on its classification as a drug subject to canalisation. The Tribunal also adjusted the redemption fine but did not impose an additional penalty.