Rules for Confiscation does not attract If Export is not Prohibited: CESTAT [Read Order]

The Hyderabad bench of the CESTAT comprising Mr. P.K. Choudary, Member (Judicial) and Mr. P. Venkata Subba Rao, Member (Technical)has held that if the export is not prohibited, even if there are some other violations of Act or Rules or regulations or restrictions such goods are not covered by section 113(d). The appellant manufactures bulk drugs and semi-finished formulations. After investigation, DRI found that the appellant had exported Sibutramine through four shipping bills after the issue of notification prohibiting the manufacture, sale, and distribution of the drug under Section 26A of the Drugs and Cosmetics Act, 1940. Therefore, it appeared that the goods that were exported in violation of prohibition imposed under the Drugs and Cosmetics Act, 1940 were liable for confiscation under Section 113(d) of the Customs Act, 1962. The appellant challenged the order before the Tribunal. Allowing the appeal, the Tribunal found that Salbutramine hydrochloride was not covered in the notification dated 10.2.2011 at all. “Further, the notification does not prohibit the 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 the prohibition of exports. The scope of the drugs and Cosmetics Act, 1940, as can be seen from the preamble, also does not extend to the prohibition of exports,” the Tribunal said. “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 the prohibition of export, export of sibutramine hydrochloride is not prohibited by the notification. We cannot read anything into the law let alone read so much into all these provisions,” the Tribunal added. While granting relief to the appellants, the Tribunal held that; Notification GSR 82(E) 10.2.2011 issued by the Ministry of Health and Family Welfare under section 26A does not prohibit export of disputed drug because it neither included Salbutramine hydrochloride or salts of Salbutramine. It also did not prohibit export but only prohibited manufacture, sale and distribution.The Drugs and Cosmetics Act, 1940 does have any provision to prohibit or regulate exports under any section including section 26A.Sibutramine hydrochloride exported by the appellant is not ‘prohibited good’ as per Section 2(33) of the Customs Act because it is not liable for confiscation under section 113(d).If the export is not prohibited, even if there are some other violations of Act or Rules or regulations or restrictions such goods are not covered by section 113(d).Section 113 provides for confiscation of only export goods, i.e., goods which are to be exported and not goods which have already been exported.f) Confiscation of the goods under section 113 by the impugned order cannot therefore, be sustained.The amounts paid by the appellant through a Pay Order during investigation cannot be confiscated under section 121 of the Customs Act.The penalties under section 114 (i) and 114AA need to be set aside. Support our journalism by subscribing to Taxscan AdFree. Follow us on Telegram for quick updates.

Rules for Confiscation does not attract If Export is not Prohibited: CESTAT [Read Order]

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Rules for Confiscation does not attract If Export is not Prohibited: CESTAT [Read Order]

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