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TMI Blog2022 (3) TMI 561X X X X Extracts X X X X X X X X Extracts X X X X ..... Health and Family Welfare under Section 26A of the Drugs and Cosmetics Act, 1940, whereby the manufacture, sale and distribution of certain drugs for human use including Sibutramine and R-Sibutramine and their formulations was prohibited. Directorate of Revenue Intelligence [DRI] received intelligence that the appellant had manufactured and exported Sibutramine in violation of the aforesaid notification dated 10.02.2011. After scrutiny of documents, recording statements of the functionaries of the appellant and investigation, DRI found that the appellant had exported Sibutramine through four shipping bills after the issue of notification prohibiting manufacture, sale and distribution of the drug under Section 26A of the Drugs and Cosmetics Act, 1940. Therefore, it appeared that the goods were exported in violation of prohibition imposed under Drugs and Cosmetics Act, 1940 were liable for confiscation under Section 113(d) of the Customs Act, 1962. It also appeared that the sale proceeds of the exports were liable for confiscation under Section 121 of the Customs Act and the appellant was liable for penalty under Section 114(i) and 114AA of the Customs Act, 1962. Accordingly, a show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set aside. (vi) The appeal may, therefore, be allowed with consequential relief to the appellant. 3. Learned departmental representative reiterated the findings in the impugned order and asserted that it is proper and calls for no interference. 4. We have heard both sides and perused the records. The show cause notice is issued to the appellant on the ground that the appellant had exported Sibutramine Hydrochloride in violation of the notification issued by the Ministry of Health and Family Welfare vide GSR82(E) dated 10.02.2011. Accordingly, it was felt that the Sibutramine hydrochloride so exported was liable for confiscation under Section 113(d) of the Customs Act. The proposals for imposition of penalties under Section 114(i) and 114AA follow from this. Since the goods were already exported, the proposal in the SCN was to confiscate the sale proceeds of the exports. The relevant legal provisions of the Customs Act are as follows: Section 113: Confiscation of goods attempted to be improperly exported, etc.- The following export goods shall be liable to confiscation: ....... (d): any goods attempted to be ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch must be examined first is whether export of Sibutramine hydrochloride was prohibited by the Ministry of Health and Family Welfare Notification GSR82(E) dated 10.02.2011. We reproduce the entire notification below: MINISTRY OF HEALTH AND FAMILY WELFARE (Department of Health and Family Welfare) NOTIFICATION New Delhi, the 10th February, 2011 G.S.R. 82(E).---- Whereas the Central Government is satisfied that use of following drugs is likely to involve certain risks to human beings and whereas safer alternatives to the said drugs are available; And whereas the Central Government is satisfied that it is necessary and expedient to prohibit the manufacture, sale and distribution of the said drugs in public interest; Now, therefore, in exercise of the powers conferred by Section 26A of the drugs and Cosmetics Act, 1940 (23 of 1940), the Central Government hereby prohibits the manufacture, sale and distribution of the following drugs with immediate effect, namely;---- 1. Nimesulide formulations for human use in children below 12 years of age. 2. Cisapride and its formulations for human use. 3. Phenylpropanolamine and its formulations for human use, 4.&n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is its preamble as it lays down the scope of the Act. The preamble of this Act reads as follows: An Act to regulate the import, manufacture, distribution and sale of drugs and cosmetics. WHEREAS it is expedient to regulate the import, manufacture, distribution and sale of drugs and cosmetics; AND WHEREAS the Legislatures of all the Provinces have passed resolutions in terms of section 103 of the Government of India Act, 1935 (26 Geo. 5, c. 2), in relation to such of the above-mentioned matters and matters ancillary thereto as are enumerated in List II of the Seventh Schedule to the said Act: It is hereby enacted as follows: 10. Thus, the very purpose of the Drugs and Cosmetics Act, 1940 is to regulate import, manufacture, sale and distribution of drugs and cosmetics and NOT to regulate exports at all. The notification was issued by the Ministry of Health and Family Welfare of the Government of India exercising powers under section 26A of this Act. It reads as follows: "26A. Power of Central Government to prohibit manufacture, etc., of drug and cosmetic in public interest.- Without prejudice to any other provision contained in this Chapter, if the Central Governme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted drugs from India. As per guidelines issued and Rule 94 of Drugs and Cosmetics Act, 1940, a manufacturer holding valid license copy in Form-25 and Form-28 is required to obtain 'No Objection Certificate' from Zonal/Sub-Zonal Officers of Central Drugs Standard Control Organization (CDSCO) for export of banned/prohibited drugs in India. M/s Nosch has not made any application for the four consignments exported after the imposition of prohibition on manufacture/ sale/ distribution as per the stated guidelines and provisions of the Drugs and Cosmetic Act, 1940. In the absence of any application submitted by M/s Nosch Laboratories Ltd., for 'No Objection Certificate' from Zonal/Sub Zonal Officees of Central Drugs Standard Control Organization (CDSCO) for export of banned/prohibited drugs in India, no permission or 'no objection certificate' was issued by the competent authority for export of banned/prohibited drugs from India. 7. A letter F.No.VIII/48/10/2011 dated 14.09.2011 was addressed to the Deputy Drugs Controller, Central Drugs Standard Control Organization, Hyderabad by this Regional Unit of Directorate of Revenue Intelligence requesting for details of "No Objection Certific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bear a code number as approved by the Licensing Authority mentioned in Rule 21. Provided further that where a drug classified as Narcotic Drug or Psychotropic Substance is to be exported under a code number, the same may be permitted by the said licensing authority on the following conditions, namely:- (i) Each consignment of export shall be accompanied with requisite import license from the importing country; (ii) The applicant shall obtain a no objection certificate from the Drugs Controller, India for manufacture of such formulations to be exported with code number against each export order along with certificate from the regulatory authority of the importing country controlling Narcotic Drugs and Psychotropic Substances that they do not have any objection for the import of the drug with code number; (iii) The State Licensing Authority shall issue the manufacturing license for these formulations on each export order on the basis of a No Objection Certificate from Drugs Controller, India; (iv) A no objection certificate shall be obtained from the drugs Controller, India for export of each consignment; and (v) A no objection certificate s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven if there are violations of guidelines. 18. Thus, we find that Salbutramine hydrochloride was not covered in the notification dated 10.2.2011 at all. Further, the notification does not prohibit export of any of the drugs mentioned in it. Section 26A of the Drugs and Cosmetics Act under which the notification was issued does not envisage prohibition of exports. The scope of the Drugs and Cosmetics Act, 1940, as can be seen from the preamble, also does not extend to prohibition of exports. 19. Unless 'salts of Salbutramine' or 'Salbutramine hydrochloride' is read into the notification, prohibition of export is also read into the notification and prohibition of export is also read into Section 26A of the Drugs and Cosmetics Act, 1940 and its preamble is also read so as to enlarge its scope to include prohibition of export, export of salbutramine hydrochloride is not prohibited by the notification. We cannot read anything into the law let alone read so much into all these provisions. 20. The next question is whether Salbutramine hydrochloride is 'prohibited goods' in terms of section 2(33) of the Customs Act. According to Section 2(33), prohibited goods means an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... outside the territory of India. Section 1 of the Act, as applicable during the relevant period read as follows: Section 1. Short title, extent and commencement. - (1) This Act may be called the Customs Act, 1962. (2) It extends to the whole of India. (3) It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint. 24. In this case, the goods were already exported and hence they cannot be confiscated under section 113(d). For this reason also, the confiscation of the goods which have already been exported cannot be sustained. 25. The next question is can the amounts paid by the appellant through a Pay Order during investigation be confiscated under section 121 of the Customs Act? This section provides for confiscation of sale proceeds of smuggled goods. 'Smuggled goods' is not defined in the Customs Act but smuggling is defined as follows: (39) "smuggling", in relation to any goods, means any act or omission which will render such goods liable to confiscation under section 111 or section 113; 26. Since we have found that the Salbutramine hydrochloride exported by the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X
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