Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
Corporate News *  The GSTN has issued an Advisory dated 21.04.2026 about the introduction of an Offline Tool for the Invoice Management System (IMS)  *  CBIC extends due dates for filing of FORM GSTR 3B  for the month of April 2026 *  Interest cannot be imposed in adjudication order, if not demanded/quantified in show cause notice : Allahabad HC *  Wheelchairs with toileting facility eligible for exemption: CESTAT affirms customs duty exemption to importer *  Industries urge GST council to allow inverted duty refunds on input services *  Tamil Nadu GST dept introduced virtual hearing facility for GST appeals under under section 107 of the TNGST act: detailed guidelines  *  CIC urges authorities to implement GST evasion complaint tracking system *  Even if the assessee opts "NO" for personal hearing in form DRC-06 ,The mandatory requirement under section 75(4) to grant opportunity of hearing cannot be waived:Gujarat High Court  *  Glufosinate imports curbs imposed by govt *  Government extends Re-import period for exported cut & polished diamonds *  CIC flags lack of tracking system for tax evasion complaints,urges GST authorities to improve transparency *  No Custodial Interrogation needed in GST fraud case based on documentary evidence already in Department's Possession : Chattisgarh HC *  Orders under section cannot be sustained if passed without considering the taxpayer's objections and without granting a personal hearing:Gujarat High Court *  Mere cancellation of supplier's registration cannot,by itself,justify denial of ITC or cancellation of the recipient's registration:Bombay High Court *  High Court sets aside GST notice citing factual errors and natural justice violations *  Provisional Bank Attachment under Section. 110 of Customs Act Unsustainable Beyond Statutory period without Extension order: Bombay HC orders to defreeze accounts *  Post Clearance MRP Alteration by Distributor Does not attract Differential Customs Duty: CESTAT *  DGFT Expands scope of 'Screws' classification under RoDTEP Scheme  *  E-way bills surze to all time high of 140.6 million in March *  GST Exemption Allowed on Pure Labour Services for Standalone Houses: AAR  *  GST Payable Only on Margin in Second-Hand Car Sales, Subject to Strict Conditions and No ITC Claim: AAR *  DGFT rolls out procedure for allocation of calcined coke *  GST portal update : Pre-deposit amount now editable in Appeals *  J&K HC declared TMT scrap a 'Specified Good' eligibile for GST refunds under Support Scheme  *  Pigmy agents are employees of banks; no GST can be levied on commission  paid to them : Karnataka HC *  DGFT Revises HS Code Description for Screws Under RoDTEP *  GST Registration Cancellation Invalid Without Proper Service of Notice: Allahabad High Court. *  Bengaluru CGST | GST Backlog Appeals Deadline Fixed at June 30, 2026 *  No Time Bar on Refund of Service Tax for Services Not Rendered: CESTAT  Remands Indiabulls Case for Unjust Enrichment Check. *  Supreme Court Holds Renewable Energy Incentive Must Benefit Generators, Not Be Adjusted in Tariff
Subject News *   Delhi HC Quashes Order, Says Reminder Cannot Validate Improperly Served GST SCN *  KARNATAKA HIGH COURT REMANDS GST SHORTFALL MATTER DUE TO ABSENCE OF PERSONAL HEARING   *  CESTAT cancels confiscation and penalties on imported computer cabinet cases: Custom duty restricted to 111 surplus units *  Deposit of tax during search or investigation cannot be treated as 'Voluntary Payment' : Bombay High Court *  Section 76 of the CGST cannot be invoked where the tax has already been duly deposited, even if through another registration of the same entity: Madras High Court *  Sec 74 allows use of material regardless of source; illegality or flaws in section 67 search do not vitiate valid adjudication: HC *  Inter-State transfer of ITC on Amalgamation permissible as given under section 18(3) read with rule 41 of the CGST rules, 2017: Gujarat High Court *  HC: No GST on commisson paid to Pigmy Agents *  IGST refund denial on illegible bill of lading invalid absent chance to furnish docs; merit reconsideration in appeals directed: HC *  ITC is not admissible on GST paid on leasehold rights of land used fpr setting up an air seperation plant: AAAR,Tamil Nadu *  GST: No penalty under Section 74 after voluntary ITC reversal due to non-existent supplier : High Court *  TN AAAR denies GST ITC on Land Lease under Sec. 17(5)(d) for setting up plant and machinery *  GST proceedings quashed as notices sent to old address, despite updated address in registration *  Importer Can’t Be Penalised for Alleged IGCR Procedural Lapses Without Evidence of Departmental Error: CESTAT *  Structured Healthcare Training Not ‘Charitable Activity’, 18% GST Payable: AAR  *  CESTAT As The Appellate Authority For Central Sales Tax Disputes: A Paradigm Shift Under Finance Act, 2023 *   Rs. 25K Cost Imposed On SGST Joint Commissioner for Attaching Bank  Accounts Without Forming Mandatory “Opinion”: Bombay HC *   Ex-Parte GST Order Without Hearing Violates Natural Justice: Karnataka  High Court Quashes Adjudication and Bank Attachment.  *   Retrospective GST Cancellation Can’t Invalidate Genuine Transactions:  Jaipur Commissioner (Appeals) Quashes Rs. 95,670 ITC Demand. *   GST Pre-Deposit Non-Compliance: Allahabad High Court Allows Appeal  Subject to Rs. 30 Lakh Balance Deposit, Recognises Offline Filing. *  Documentary Nature of Evidence: Allahabad High Court Grants Bail in Rs. 32.66 Crore Fake ITC Fraud Case *  Supreme Court Flags Systemic Bias in Army’s Permanent Commission Process for Women Officers *  Re-Determination of Land Compensation Can Be Based on Appellate Court Awards, Clarifies Scope of S. 28-A: Supreme Court. *  Supreme Court Imposes Rs. 5 Lakh Costs On Rent Authority Officer For Acting Beyond Jurisdiction. *  DGGI Meerut | Court Denies Bail to Accused in Claiming Fake ITC And Export Refunds *  Denial of GST Rate Revision Benefit to Contractor Violates Article 14: Rajasthan HC *  GST Registration Cancellation for Non-Filing of Returns: Gauhati High Court Directs Restoration on Compliance. *   Supreme Court Quashes FEMA Adjudication Orders, Revives Proceedings at  Show Cause Stage. *   Higher Rank, Harsher Punishment Justified: Supreme Court Restores Dismissal  of Bank Manager in Misappropriation Case. *   Limitation for Export Refund to Be Counted from Foreign Exchange Realisation,  Not From Export Invoices Issuance: CESTAT  

Comments

Print   |    |  Comment

PJ/Case Laws/2012-13/1177

Goods imported with label will consider as Beverage Grade and not for use in drugs and medicines.
Case:-   D.K. ENTERPRISES VERSUS COMMISSIONER OF CUSTOMS (IMPORT)

Citation: - 2012 (281) E.L.T. 391 (Mad.)

Issue: - Goods imported with label will consider as Beverage Grade and not for use in drugs and medicines.

Brief fact: - The petitioner in W.P. No. 14248 of 2011 is an importer of L-Leucine and L. Valine, which according to the writ petitioner are not for Pharma and drug use. In addition to that, the following items which are also stated to be used as Pharmaceuticals or drugs.

S. No. Name of Goods Bill of Entry No. Date of Bill of Entry
1 L-Leucine & L. Valine (not for pharma and drug use) 548872 24-6-2010
2 L-Creatine & L-Taurine (not for Pharmaceutical and drug use) 548873 24-6-2010
3 D-Calcium Pentothenate (not to use in drugs and medicine)  548874 24-6-2010
4 Suphadiazine (not for medical use)
 
548875 24-6-2010
 












Likewise, the petitioner in W.P. No. 14535 of 2011 relates to importer of Siliybum which is stated to be Beverage Grade material not for medicinal use covered under the Bill of Entry No. 548876 dated 24-6-2010. As it is stated in W.A. No. 1559 of 2011, the prayer is similar and the writ petitioners have not only prayed for quashing of the direction issued by the drug authorities for the production of Form 10 licence of the Act, but also for a direction to release the goods without imposing any condition.
The learned Judge by disagreeing with the decision of the learned Single Judge of this Court in W.P. No. 4841 of 2010 [2010 (255) E.L.T. 17 (Mad)] and relying upon a report of the Central Drug Laboratory, Kolkata, has doubted about the labels affixed on the containers and found that an appropriate investigation must be done and in the event of a finding that they are drugs to be used for human being, necessary licence in a particular form is to be directed to be obtained. It is with that view, the learned Judge has directed the respondents in the writ petition to adjudicate the issue based on the impugned notice issued. It is against the said order, the importers have filed the present appeals on the ground which are similar to that of the grounds taken by the first respondent in W.A. No. 1559 of 2011.

Appellant Contention: -  The importer in his written submissions dated 26-7-2011 and during the PH conducted on 1-8-2011 has inter alia stated that the items in question are Ayurvedic Medicaments not falling within Schedule I of the Drugs and Cosmetics Act; that the basic require-ment under Section 3(a) to be classified as a 'drug' is that it should be covered by Schedule I of the Act; that since L-Leucine & L-Valine: D-Calcium Pantothenate; and Suphadiazine are not covered by Schedule 1 of the Act there is no reason or justification to treat the said materials as drugs falling within the goods under import are drugs the benefit of Rule 43 of the Drug Rules have to be extended to them since it squarely complies with the requirements of the said provisions; that additionally the above position of law has been admitted to by the Drug authorities before the Hon'ble Madras High Court in W.P. No. 4841 of 2010 (Vide Para 6) and as such, there was no reason to hold a different view; that the department has conducted an analytical examination of the samples of all the materials imported and obtained a report that these materials are 'not of standard quality within the meaning of the Act; that the material are not fit for manufacture of drugs and cannot therefore be treated as drugs and that the only consequence that follows is that they are only capable of use for other purposes; that the term 'not of standard quality' would only mean that they are not fit for use in the manufacture of drugs and that it cannot be taken to mean that the imported goods are not suitable for any other use or to treat their import as prohibited particularly when the notice itself admits that the substances are capable of use in the manufacture of beverages/Ayurveda medicaments; that the testing of the samples by treating them as 'P or P medicament' is contrary to the provisions of Section 8 read with the schedule mentioned therein; that the Drug Authorities having averred before the Delhi High Court that the No Objection prescribed is in respect of obtained substances which are pharma grade and which are capable of other uses also which stands against the application of the restrictions to the items imported which are admittedly non-pharma substances (vide para 8 of the Delhi High Court order), that Ayurvedic medicines are treated differently under the Drugs and Cosmetics Act under Chapter IV where there is no provision for treating them as 'not of standard quality'; that the whole case of the department being based on the report of the Assistant Drug Controller, Chennai Port which report has been made with full prejudice without taking note of the appropriate provisions of the law in spite of the authority going on record before the Hon'ble High Courts on the correct position of law cannot be relied upon in evidence and that the end use of the drugs according to the importers is not for manufacture of drugs and as such they are willing to provide any kind of evidence to the satisfaction of the department to show that they are not used in the manufacture of drugs."

Reasoning of Judgment: The legal position is very clear that inasmuch as under Rule 43 read with schedule D of the-said Rules, the petitioners are entitled for exemptions and there is absolutely no question of asking for licence in Form 10 and the finding in that regard, cannot be accepted. The impugned order relies upon an order passed in a batch of cases in the Delhi High Court and before the Delhi High Court certain conditions have been accepted by both the parties for the purpose of import. Recording the said conditions, orders have been passed in the writ petitions. Those were cases where the traders have accepted certain conditions in the form of suggestions which are as follows : "Import by Traders (other than Actual Users) It is proposed that the scope of the actual user may be extended to include the traders who sell the citric acid directly to the actual users. In this situation, the trader will have to comply with the following requirements :- (i) He will be required to submit a legal undertaking to the office of DCG (I) or to the Zonal Office or Sub Zonal Office or to the port office as the case may be that he will sell the consignment of citric acid to the actual user. (ii) The actual user will also have to furnish legal undertaking to the office of DCG (I) or to the Zonal office or Sub Zonal or to the port office as the case may be that he will be buying the consignment of citric acid from the trader. (iii) The seller and buyer have to maintain books and records of the trans-action so as to verify the same. (iv) They will allow the Drug Inspectors from the Central Drugs Standard Control Organization (CDSCO) to inspect the books and records as well as the actual usage of the
 
Decision: - Appeal allowed
 
 
Department News


Query

 
PRADEEP JAIN, F.C.A.

Head Office : -

Address :
"SUGYAN", H - 29, SHASTRI NAGAR, JODHPUR (RAJ.) - 342003

Phone No. :
0291 - 2439496, 0291 - 3258496

Mobile No. :
09314722236

Fax No. :0291 - 2439496


Branch Office : -

Address:
1008, 10th FLOOR, SUKH SAGAR COMPLEX,
NEAR FORTUNE LANDMARK HOTEL, USMANPURA,
ASHRAM ROAD, AHMEDABAD-380013

Phone No. :
079-32999496, 27560043

Mobile No. :
093777659496, 09377649496

E-mail :pradeep@capradeepjain.com