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TMI Blog2013 (9) TMI 319X X X X Extracts X X X X X X X X Extracts X X X X ..... 8-4-2009. The bills of entry were assessed as per the declaration given therein and the importer paid Customs duty of Rs. 5,24,536/- on 20-4-2009. As per the import policy in force the importer was required to produce a "No Objection Certificate" from the Drug Controller General of India and therefore, representative samples of the impugned goods were forwarded to the Assistant Drug Controller, Mumbai for obtaining NOC. On scrutiny of the documents, the Assistant Drug Controller, Mumbai, observed that bulk drug "prednisolone" of Chinese origin were supplied through M/s. Sinobright Development Ltd. Hongkong and as per the label and certificate of analysis, the subject drug is purportedly manufactured by M/s. Tianjin Tianyao Pharmaceutical Co. Ltd., China. Since the drug was not directly supplied from China and the importer failed to produce the CCPIT on demand, certified copy of the original label submitted at the time of registration of the product with the Drug Controller General of India was procured by the Assistant Drug Controller from the Registration holder M/s. Rumit International and compared with the label on the container. During the comparison of labels on 22-4-2009, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to them along with interest. The said refund claim was rejected vide order dated 29-6-2010 by the Assistant Commissioner of Customs on the ground that since the refund claim has been filed after a lapse of six months, the claim is time barred. Against this order, the appellant preferred an appeal before the lower appellate authority and the lower appellate authority vide a common order dated 21-1-2010 upheld the absolute confiscation of the goods and the imposition of penalty on the appellants and also rejected their refund claim. Hence, the appellants are before us. 3. The Ld. Counsel for the appellants makes the following submissions. 3.1 The lower appellate authority while rejecting their refund claim has not given any reasoning nor has he made any findings in respect of their claim that the payment of duty made by them should be considered as pre-deposit only and, therefore, the limitation of time prescribed under Section 27 of the Customs Act will not apply. Since the goods have been absolutely confiscated and they have not been given clearance they are not liable to pay any duty at all and, therefore, they are entitled for refund. As regards the imposition of penalty it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be considered as a pre-deposit and not as payment of duty. This contention of the appellant is incorrect. In the instant case, the appellant filed bill of entry on 18-4-2009 and declared the goods under importation and classified the same under Heading No. 29372900 and declared the applicable rate of Customs duty as 7.5% Basic Customs Duty, 2% Educational Cess CVD, 1% Higher Educational Cess on CVD, 2% Customs Educational Cess and 1% as Secondary Higher Educational Cess and 4% Special Additional Duty. they arrived at the total duty payable at Rs. 5,24,536/- and the duty was paid under the 'head 037 Customs - Import duty' on 20-4-2009. 5.3 As regards the assessment of duty, there are two methods followed by the Customs. One is the first appraisement method and the other is second appraisement method. In the case of first appraisement method, the goods are examined first and then they are assessed to duty and this is governed by the provisions of sub-section (2) of Section 17 of the Customs Act. The other is the second appraisement method. In this case, the imported goods, prior to the examination/testing thereof, is permitted by the proper officer to be assessed duty on the basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of before us, the importer has indulged in the import of impugned drugs without site registration system as required under Section 9B(e) of the Drugs and Cosmetics Act, 1940. The drugs imported without site registration shall be treated as "spurious drugs" and import of such drugs is "prohibited" under Section 10(bb) of the said Drugs and Cosmetics Act, 1940. Since the drugs are prohibited, they come under the definition of prohibited goods as defined in Section 2(33) of the Customs Act, 1962. Since the goods are prohibited, the importation thereof attracts the provisions of Section 111(d) of the Customs Act, and the goods becomes liable to confiscation. Once the goods are liable to confiscation, any person, who in relation to any goods does or omits to do any act which act or omission renders such goods liable to confiscation under Section 111 or abets to doing or omission of such act is liable to penalty under Section 112(a). In the instant case, the importer was required to obtain a NOC from the Drugs Controller prior to undertaking the imports. The importer failed to get a certificate; that was the reason why the samples of the goods were drawn and sent to the Assistant Drugs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions contained in clause (a) to (p) of Section 111. In the case under consideration, the goods were imported without a valid permission and therefore, they are liable to confiscation under the provisions of Section 111(d) of the Customs Act. 5.7 An identical issue was considered by the Hon'ble Apex Court in the case of UOI v. Security & Finance (P) Ltd., reported in 1983 (13) E.L.T. 1562 (S.C.). The Hon'ble Apex Court was considering the provisions of Sea Customs Act, 1878, which is the predecessor to Customs Act, 1962 and the Hon'ble Apex Court were considering the provisions of Sections 20, 167(8) and 183 of the Sea Customs Act, 1878 corresponding to Sections 12, 111(d) and 125(1) of the Customs Act, 1962. The Hon'ble Apex Court held as follows :- "5. Does the order under Section 183 preclude him from levying duty under Section 20? This is the short issue before us. A close study of the scheme of the relevant provisions, powers and levies disclosers a clear dichotomy which has escaped the attention of the High Court. Import/export duty is an obligation cast by Section 20 of the Act. It is a tax, not a penalty : it is an innocent levy once the exigible event occurs; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In other words, the taxable event which attracted the duty liability has been completed and, therefore, the duty liability has been correctly discharged. The subsequent confiscation of the goods under the provision of Section 111(d) has no bearing whatsoever to the liability to pay duty which has been already assigned. 5.10 The appellant has relied on a few judgments of this Tribunal in the case of Ankit Pulps & Boards Pvt. Ltd., and the judgment of the Hon'ble High Court of Calcutta, in the case of Calcutta Chemical Co. Ltd. and ICI (I) Ltd. However, the Hon'ble High Court of Bombay in the case of CC (Imp) ACC, Sahar v. Wockhardt Hospital & Heart Institute reported in 2006 (200) E.L.T. 15 (Bom.) and in the case of Poona Health Services v. CC (Airport), Mumbai reported in 2009 (242) E.L.T. 335 (Bom.) held that even if the confiscated goods are not redeemed, the liability to pay duty arises on the importer. The decision of the Hon'ble High Court of Bombay, the jurisdictional High Court is binding on us. Applying the ratio of these judgments in the facts of the present case, we are of the view that the appellant is liable to pay duty notwithstanding the fact of absolute confiscation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted clearance for home consumption without payment of duty subject to fulfilment of the post clearance conditions set out in the exemption notification. If it is found that the post clearance conditions of the exemption notification are violated, then the goods cleared without payment of duty under Section 47 are liable to be confiscated under Section 111(o) of the Customs Act. In such cases, the duty becomes payable on confiscation because the benefit of exemption from payment of duty is lost on account of the violation of the post importation conditions set out in the exemption notification. In cases, where the goods are confiscated before clearance, the duty and charges become payable when clearance of the goods for home consumption are sought for under Section 47 of the Customs Act. In such cases, the duty on the confiscated goods become payable only when clearance of the confiscated goods is sought by exercising the option given under Section 125(1). Therefore, the legislature has appropriately used the word 'payable' in Section 125(2) so that the duty which becomes due and payable on confiscation, has to be paid on imposition of fine in lieu of confiscation and in all oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nfiscated and no clearance of goods were given to them they were not required to pay any duty at all and therefore the duty paid by them is sufficient to be treated as pre-deposit. Regarding imposition of penalty on importer, she submitted that the applicant is not responsible for the import of the spurious drugs as in the purchase order they had requested the indenting agent to supply the impugned goods manufactured by M/s. Tianjin Tianyao Pharmaceutical Co. Ltd. If any mistake has been made by the foreign supplier or any indenting agent they are not responsible for the same. She submitted that as rightly held by the Ld. Member (Judicial) that as no clearance has taken place for home consumption, the duty paid by the applicant is sufficient to safeguard the interest of the Revenue. 19. Ld. Addl. Commissioner (A.R.) appearing for the Revenue submitted that in this case the duty had been paid by them under Section 17(4) of the Customs Act which pertained to second appraisement and in case of second appraisement the imported goods were assessed by the proper officer on the basis of information given in the Bill of Entry and documents attached thereto and if after the assessment of g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y' on 20-4-2009. Therefore, it is not correct to say that duty paid by them was not the duty and could be treated as a pre-deposit. I also find that the applicant had filed application before the Asstt. Commissioner of Customs claiming refund of customs duty paid by them against the impugned Bill of Entry. Their refund claim was rejected by the Asstt. Commissioner of Customs. The order passed by the Asstt. Commissioner rejecting the refund claim is not part of present appeal. Therefore, at this stage, the contention of the applicant that the amount which was rejected by the Asstt. Commissioner can be treated as a pre-deposit in the present appeal against imposition of penalty is not acceptable. 22. Since the penalty of Rs. One lakh was imposed on the applicant by the Addl. Commissioner of Customs and the same was confirmed by the Commissioner (Appeals) in the impugned order, prima facie, the applicant is required to make pre-deposit of Rs. 50,000/- as ordered by the Hon'ble Member (Technical) in his order. I, therefore, agree with the Hon'ble Member (Technical)'s view that pre-deposit of Rs. 50,000/- towards penalty is required to be made by the applicant. The reference is accordi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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