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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
 
 
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