2015 (3) TMI 468 - AT - Customs

Waiver of pre deposit - Imposition of penalty - Confiscation of sale proceeds of goods - Ban on manufacture of goods - Non given for export - whether the appellant is required to deposit penalties imposed - Held that - appellant has a prima facie case, because subsequently, NOCs have been issued by the Drug Controller for exports and even if confiscation is sustainable, penalty may not be sustainable. Therefore, we consider that appellant has made out a prima facie case for waiver of predeposit of penalties and stay against recovery during the pendency of appeal. Accordingly, the requirement of predeposit of penalties is waived and stay against recovery is granted during the pendency of appeal. - Stay granted.

Issues:
1. Export of prohibited bulk drug under Notification No. G.S.R. 82(E) dated 10.02.2011.
2. Confiscation of sale proceeds under Section 121 of the Customs Act 1962.
3. Imposition of penalties on the appellant.
4. Clarification by Drug Controller regarding the ban's applicability.
5. Consideration of waiver of predeposit of penalties and stay against recovery during appeal.

Issue 1: Export of prohibited bulk drug under Notification No. G.S.R. 82(E) dated 10.02.2011.
The appellant, a manufacturer of bulk drugs, exported Cisapride Monohydrate BP despite it being prohibited by a Ministry of Health and Family Welfare notification. The appellant exported 22 consignments during the ban period, leading to confiscation of the sale proceeds under Section 121 of the Customs Act 1962. The appellant argued that they were unaware of the ban and that subsequent clarifications by the Drug Controller allowed exports, indicating a prima facie case for waiver of penalties.

Issue 2: Confiscation of sale proceeds under Section 121 of the Customs Act 1962.
The consignments were held liable for confiscation, and since the goods were not available, the sale proceeds were confiscated under Section 121 of the Customs Act 1962. The appellant contended that the Drug Controller's subsequent NOC for exports, along with the approval by Central Excise and Customs Officers during the relevant period, indicated that the confiscation may not be sustainable. The tribunal found merit in the argument and granted a stay against recovery during the appeal.

Issue 3: Imposition of penalties on the appellant.
In addition to confiscation, penalties were imposed on the appellant. The appellant argued that the subsequent issuance of NOCs by the Drug Controller for exports and the approvals by other regulatory authorities indicated a lack of fault on their part. The tribunal considered these arguments and waived the requirement of predeposit of penalties, granting a stay against recovery during the appeal.

Issue 4: Clarification by Drug Controller regarding the ban's applicability.
The Drug Controller clarified that the ban applied only to activities within India and not to exports. This clarification was crucial in establishing the appellant's case for a waiver of penalties and a stay against recovery during the appeal.

Issue 5: Consideration of waiver of predeposit of penalties and stay against recovery during appeal.
The tribunal, after considering the submissions and circumstances, found that the appellant had a prima facie case for waiver of predeposit of penalties and granted a stay against recovery during the pendency of the appeal. The tribunal emphasized the subsequent NOCs issued by the Drug Controller and the approvals by other regulatory authorities as supporting the appellant's case for relief.

This judgment highlights the importance of regulatory compliance, the impact of subsequent clarifications by authorities, and the discretion of tribunals in granting relief based on prima facie cases presented by appellants.

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