1992 (2) TMI 234 - SC - Customs

Whether the Cloves imported by the appellant fall within Item 169 in List 8 of Appendix 6 or fall within Paragraph 167 of Chapter XIII of the Import and Export Policy April 1990 - March 1993? Held that - In agreement with the view taken by the High Court that in the common parlance as well as in trade and commerce, clove is treated as spice and not drug. It is a matter of common knowledge that the cloves are sold in a Kirana shop and not in the shop of a chemist or druggist. Thus, we find no error in the view taken by the High Court and this appeal having no force is dismissed

Summary

Issues:
Interpretation of Import Policy regarding classification of cloves as Drugs/Drug intermediates or spices.

Analysis:
The appeal in question challenged the judgment of the Bombay High Court regarding the classification of cloves imported by the appellant. The central issue revolved around whether the cloves fell under Item 169 in List 8 of Appendix 6 as Drugs/Drug intermediates or under Paragraph 167 of Chapter XIII of the Import and Export Policy April 1990 - March 1993 as spices. The appellant obtained an Import Licence for the import of cloves, claiming it fell under Item 169. However, the Customs Authorities relied on Para 167 which specified the import of spices against specific licenses. The High Court held that the cloves did not qualify as Drugs/Drug intermediates and could only be imported against specific licenses for spices. The appellant argued that cloves were used as both spices and drug intermediates, citing historical classifications and medicinal uses of cloves for various ailments.

The appellant contended that cloves were considered as crude drugs in previous Import Policies and had medicinal properties, justifying their classification as Drugs/Drug intermediates under Item 169. Various sources were cited, including the Indian Materia Medica and the Indian Pharmaceutical Codex, highlighting the medicinal uses of cloves for digestive issues, nausea, and tooth problems. The appellant emphasized that cloves were recognized as a drug intermediate and should be allowed for import under the relevant policy provisions.

On the contrary, the Respondent argued that cloves were traditionally regarded as spices in common parlance and trade practices, not as drugs or drug intermediates. It was asserted that the Import Policy specifically outlined the requirement of licenses for importing spices like cloves under Para 167, negating the applicability of Item 169 for Drugs/Drug intermediates. The Respondent emphasized the distinction between spices and drugs in commercial usage, stating that cloves were commonly sold in spice shops, not pharmacies.

The Supreme Court analyzed the provisions of the Import Policy for the relevant period, noting that cloves were explicitly included under the category of spices in Para 167, requiring specific licenses for their import. The Court emphasized that the specific provision for cloves under the spice category governed their import, rendering the general classification under Item 169 irrelevant. The Court concurred with the High Court's view that cloves were commonly perceived as spices in trade and commerce, affirming that they were not considered drugs. Therefore, the appeal was dismissed, upholding the decision that the appellant's license was not valid for importing cloves, and no costs were awarded.

In conclusion, the judgment clarified the classification of cloves under the Import Policy, highlighting the distinction between spices and drugs, and emphasizing the specific licensing requirements for importing cloves as spices. The decision underscored the importance of interpreting policy provisions in line with their explicit terms and prevailing trade practices.