2002 (12) TMI 101 - HC - Customs

Summary

Issues Involved:
1. Confiscation of imported 'Oxytetracycline Hydrochloride' under Section 111(d) of the Customs Act read with Section 3 of the Imports and Exports (Control) Act, 1947.
2. Applicability of the Import & Export Policy April 1988-March 1991 (AM 91 policy) to the imported goods.
3. Interpretation of Para 22(4) of the AM 91 policy concerning salts of drugs.
4. Validity of import under Open General Licence (OGL) No. 1/88.
5. Importation of goods under additional licence acquired by the Petitioners.

Detailed Analysis:

1. Confiscation of Imported 'Oxytetracycline Hydrochloride':
The Customs authorities issued orders to confiscate the imported 'Oxytetracycline Hydrochloride' under Section 111(d) of the Customs Act, 1962, read with Section 3 of the Imports and Exports (Control) Act, 1947. The Petitioners were given an option to redeem the confiscated goods by paying a redemption fine of Rs. 1,65,000/-.

2. Applicability of the Import & Export Policy April 1988-March 1991 (AM 91 policy):
The Petitioners argued that 'Oxytetracycline Hydrochloride' is not covered under Sr. No. 80 of Appendix 2B of the AM 91 policy, which lists 'Oxytetracycline'. They contended that 'Oxytetracycline' and 'Oxytetracycline Hydrochloride' are distinct items and that the latter is not included in the policy's restrictions.

3. Interpretation of Para 22(4) of the AM 91 Policy:
The Customs authorities issued a supplementary show cause notice stating that Para 22(4) of the AM 91 policy includes salts of drugs listed in Appendices 2B, 3A, and 5. Therefore, 'Oxytetracycline Hydrochloride', being a salt of 'Oxytetracycline', is covered under Sr. No. 80 of Appendix 2B. The Court upheld this interpretation, stating that the policy's intent is clear that salts of listed drugs are included, making 'Oxytetracycline Hydrochloride' subject to the same import restrictions as 'Oxytetracycline'.

4. Validity of Import under Open General Licence (OGL) No. 1/88:
The Petitioners claimed that under OGL No. 1/88, they could import 'Oxytetracycline Hydrochloride' as raw material. However, the Court noted that the OGL order itself specifies that imports are subject to the conditions of the AM 91 policy, which includes restrictions on items listed in Appendices 2, 3, 5, and 8. Therefore, 'Oxytetracycline Hydrochloride', being covered under Appendix 2B, could not be imported under the OGL order.

5. Importation of Goods under Additional Licence Acquired by the Petitioners:
The Petitioners argued that they could import 'Oxytetracycline Hydrochloride' as a drug intermediate under an additional licence. However, the Court referred to the note appended to Appendix 6 List 8, which clarifies that items covered under Appendices 2B, 3A, and 5 cannot be imported under the additional licence. Since 'Oxytetracycline Hydrochloride' is included in Appendix 2B, it could not be imported under the additional licence either.

Conclusion:
The Court upheld the Customs authorities' decision to confiscate the imported goods, concluding that the importation violated the AM 91 policy. The Petitioners were allowed to redeem the goods by paying the redemption fine and interest. The petition was dismissed, and the Respondents were permitted to encash the bank guarantees provided by the Petitioners. The Court also directed the Revenue not to enforce the bank guarantee for eight weeks from the date of the judgment.