2019 (3) TMI 964 - AT - Customs

Import of prohibited goods - import of drugs - Revenue entertained a view that the items in question being 'Homeopathic Medicines' are not permitted to be imported at Dadri - absolute confiscation - penalty - scope of SCN - Held that - Having seen the Tariff Heading which covers 'Dental Cement', there is no merits in the above allegation of the Revenue in holding Dental Cement as Homeopathic Medicines - In any case and in any view of the matter, the notice raised dispute only in respect of the goods falling under said Tariff Item i.e. Dental Cement. There was no allegation in respect of the other items so imported by the appellant. In spite of that, the Adjudicating Authority has ordered absolute confiscation of all the items. The notice proposed confiscation of the goods on the basis of the same being Homeopathic Medicines whereas the Adjudicating Authority has travelled beyond the show cause notice and has confiscated the goods by holding the same as Medical devices covered by the definition of Drugs. It is well settled law that show cause notice is the basis for initiation of proceedings and it is not proper for any Adjudicating Authority to travel beyond the allegations made in the notice - Having accepted that such goods are not Homeopathic Medicines which was the basic charge against the notice, the Adjudicating Authority should have vacated the proceedings instead of moving ahead for confiscation of goods on an altogether different ground. The denial of import of the same at ICD Dadri is not in accordance with provisions of Rule 43A, Drugs and Cosmetics Rule, 1945 - appeal allowed - decided in favor of appellant.

Summary

Issues: Classification of imported goods under Tariff Heading 30064000 as Homeopathic Medicines, confiscation of goods under Customs Act, 1962, imposition of penalty, violation of Drugs and Cosmetics Act, 1940, and Rules.

Classification of Goods: The appellant filed a Bill of Entry for clearance of imported goods, including Dental Cements under Tariff Heading 30064000. The Revenue officers alleged these goods to be Homeopathic Medicines, not permissible for import at ICD Dadri. However, the Tribunal found that the goods were declared as Dental Care Products, specifically Dental Cement used for creating artificial teeth. The Tribunal disagreed with the Revenue's classification of Dental Cement as Homeopathic Medicines, noting the absence of proposed classification change in the show cause notice.

Confiscation and Penalty: The Commissioner of Customs ordered absolute confiscation of all imported items, valuing ?1.76 crores, under Section 111(d) of the Customs Act, 1962. Additionally, a penalty equivalent to the goods' value was imposed under Section 112(a)(iv) of the Customs Act, 1962. The Tribunal observed that the notice only disputed the classification of Dental Cement, not other imported items, and deemed the confiscation of all items unjustified.

Violation of Drugs and Cosmetics Act: The Adjudicating Authority proposed to classify the goods as Medical Devices under the Drugs and Cosmetics Act, 1940, falling within the definition of Drugs. However, the Tribunal highlighted that not all medical devices are covered under the Act, only those specified by the Central Government. The imported goods did not align with the specified medical devices listed in the notification dated October 6, 2005, and thus, the confiscation based on this ground was deemed unjustified.

Procedural Irregularities: The Tribunal emphasized that the Adjudicating Authority exceeded the show cause notice's allegations by confiscating goods based on a different ground, Medical Devices, instead of Homeopathic Medicines. It reiterated that the notice solely raised concerns about Dental Cement classification, not other items. The Tribunal concluded that the confiscation of all items was unwarranted, as the other items were neither drugs nor specified medical devices under the Drugs and Cosmetics Act.

In conclusion, the Tribunal set aside the impugned order, allowing the appeal and providing immediate relief to the appellant. The judgment highlighted the importance of adhering to the allegations in the show cause notice, proper classification of imported goods, and the necessity for specified notifications under relevant Acts for confiscation decisions.