TMI Blog2013 (3) TMI 166X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Rules. The term “Cosmetic” defined by Section 3(aaa) of the Drugs and Cosmetics Act, 1940 is altogether different goods from “drug” and “substance” in the eyes of law. As decided in Chimanlal Jagjivandas Sheth v. State of Maharashtra [1962 (9) TMI 34 - SUPREME COURT] the expression “substances” is something other than medicine but used for treatment. Such interpretation brings a significant different between “substance” and “Cosmetic”. Also interpreting meaning of the term “cosmetic” in the case of Puma Ayurvedic Herbal (P) Ltd. v. CCE (2006 (3) TMI 141 - SUPREME COURT OF INDIA) the cosmetic products are meant to improve appearance of person, that is they enhance beauty, whereas a medicinal product or medicament is meant to treat some medical condition. So another word “substance” used in the same legislation cannot be interpreted to mean “cosmetic” also. In Schedule “D” appended to Drugs and Cosmetics Rules, 1945 both the words i.e., “substance” and “cosmetic” appears under independent serial number bringing out significant difference between the two without being interchangeably used one for the other for their distinct character, nature and properties. So the argume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of adjudication is in conformity with law - redemption fine is reduced to Rs. 5,00,000 (Rupees five lakhs) and penalty is reduced to Rs. 1,00,000/- to prevent recurrence of contravention of the provisions of the law - partly in favour of assessee. - C/223/2012 - C/A/282/2012-Cus.(PB) - Dated:- 16-10-2012 - Shri D.N. Panda and Mathew John, JJ. Shri Manish Saharan, Advocate, for the Appellant. Shri Amrish Jain, DR, for the Respondent. ORDER The appellant having faced confiscation of 3,21,264 pieces of Z MAGNETISM FOR MEN DEODORANT BODY SPRAY imported into India from China under Section 111(d) of Customs Act, 1962 (hereinafter referred to as the Act ) and penalty under that Act for the contravention of the provisions of Rule 133 of the Drugs Cosmetic Rules, 1945 (hereinafter referred to as the Rules ) read with Rule 43A thereof came in appeal before Tribunal. Option was given to the appellants by the ld. Adjudicating Authority to redeem the goods on payment of redemption fine of Rs. 35 lakhs (Rupees thirty five lakhs) along with applicable Custom duty. So also penalty of Rs. 10 lakhs (Rupees ten lakhs) was imposed on the appellant under Section 112 (a) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their CHA was also apparently not aware; (b) that although the Customs department raised the issue orally, they allowed the goods to be stored in the warehouse by giving out of charge order and also drew samples of the goods for sending to the Drug Controller s office for testing; this shows that even the Customs officers were not sure about the importability of their goods through this port; (c) that only after the report was received from the Deputy Drug Controller, show cause notice was issued by the authorities; (d) that had the Customs department been clear about the fact that the goods imported by them are prohibited, goods would not have been allowed clearance for warehousing and samples would not have been drawn; (e) that the subject import is the result of the uninformed position of the rules. The said import is not with any deliberate intentions to circumvent, avoid compliance and/or with any view to violate the prohibition deliberately; (f) that is not true that particularly the second consignment has been imported even after having been informed about the provisions of law, which shows intention to deliberately flout the law; it is submitted that the second co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unds it was prayed that the goods may be allowed to go back to any other notified point of entry under the provisions of the Drugs Cosmetic Rules, 1945 and clear thereof may be ordered on payment of appropriate Customs Duty. 5.1 Ld. DR appearing on behalf of revenue submitted that the goods imported were Cosmetics as defined by Section 3(aaa) of the Drugs Cosmetics Act, 1940 and the term drug is defined by Section 3(b) of the Drugs and Cosmetics Act, 1940. Cosmetic does not fall within the ambit of substance as defined by Section 3(aaa) of the above Act for which cosmetics as such is a different from drug and substance as have different meaning as assigned to them under that law. Legislature consciously used these two different terms in entire Scheme of the Act differently at different places. Therefore, cosmetic should not be confused with drug and substance and vice-versa. 5.2 It was further submitted that Circular No. 8/2010-Customs, dated 26-3-2010 issued by C.B.E. C. clarified that the term cosmetic defined by Section 3(aaa) of the Drugs Cosmetic Act, 1940 does not include any substance , while substance is a member of family of drug u/s 3(b) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the consent of parties on the issue of consequence of confiscation. 7.3 In view of the above, the issue stated hereinbefore called for answer in this appeal in the light of the definition of the term drug and cosmetic as appearing in Section 3(b) and 3(aaa) of the Drugs and Cosmetics Act, 1940. According to Section 3(aaa) the term cosmetic reads as under : 3 (aaa) cosmetic means any article intended to be rubbed, poured, sprinkled or sprayed on, or introduced into, or otherwise applied to, the human body or any part thereof for cleaning, beautifying, promoting attractiveness, or intended for use as a component of cosmetic . [Emphasis supplied] Similarly the term drug defined by Section 3(b) of the Drugs and Cosmetics Act, 1940 reads as under : 3(b) drug include - (i) All medicines for internal or external use of human beings or animals and all substances intended to be used for or in the diagnosis, treatment, mitigation or prevention of any disease or disorder in human beings or animals, including preparation applied on human body for the purpose of repelling insects like mosquitoes; (ii) such substances (other than food) intended to affect the structur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been held by Hon ble Supreme Court that it would be seen from the definition of cosmetic that the cosmetic products are meant to improve appearance of person, that is they enhance beauty, whereas a medicinal product or medicament is meant to treat some medical condition. In the case of Ponds India Ltd. v. CIT - (2008) 8 SCC 369 = 2008 (227) E.L.T. 497 (S.C.) it has been held that whether a product would be a drug or cosmetic sometimes poses a difficult question and, thus, answer thereto may not be easy. For the said purpose, the court may not only be required to consider the contents thereof, but also the history of the entry, the purpose for which the product is used, the manner in which it has been dealt with under the relevant statute as also the interpretation thereof by the implementing authority. It was further held that Court must bear in mind the precise purpose for which the statute has been enacted. Parliament consciously has given a restrictive meaning to the term cosmetic while defining that term while an extensive meaning has been given to the word drug . In the Drugs and Cosmetic Act, 1940 the term cosmetic is defined and that term is used wherever such good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm drug under section 3(b) of the Act, but are being imported not for medicinal use or for some other purposes or are of commercial quality and are being labeled indicating that they are not for medicinal use. Accordingly , they had clarified that this exemption does not extend to other categories of products defined under the Act including cosmetics. For the purpose of import of cosmetics, provision of Rule 133 therefore remain applicable. 4. Accordingly, import of cosmetics at points of entry/places other than those specified under Rule 43A may not be permitted as per the provisions of the Drugs and Cosmetics Rules, 1945. The points of entry have been specifically mentioned in Rule 43A such as Chennai, Kolkata, Mumbai, Nhava Sheva, Chochin, Kandla, Delhi, Ahmedabad, Hyderabad and Ferozpur Cantonment, Amritsar, Ranaghat, Bongaon and Mohiassan Railway Station. If the imports are noticed through Customs stations, other than the one notified as mentioned above, then necessary action may be taken for non-compliance of the Drugs and Cosmetics Rules in respect of such imports . [Emphasis supplied] 7.8 Appellant s claim that the cosmetic imported by appellant shall fall in the cat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods are held to be liable to confiscation. However redemption fine is reduced to Rs. 5,00,000 (Rupees five lakhs) and penalty is reduced to Rs. 1,00,000/- to prevent recurrence of contravention of the provisions of the law. In the result appeal is allowed partly and to the extent indicated above. 9. [Per : Mathew John, Member (T)]. - While I agree with the decision in appeal made in the preceding paragraphs as above, further reasons which supports the decision is stated as hereunder : 10. An interpretation was canvassed by appellant submitting that if the container in which goods were imported when landed in a port notified under Rule 43A of the Rules, that is, Nhava Sheva, Mumbai and thereafter the container moved to Pithampur (which is not specified in Rule 43A) and bill of entry was filed at Pithampur, there is no contravention of Rule 43A because goods entered through Nava Sheva. Such a submission is to be outrightly rejected because restrictions under Rule 43A of the Rules is imposed to enable the Drugs Control Department having testing facilities at the specified places to test the goods for necessary customs clearance by the officers authorized at the permitted ports ..... X X X X Extracts X X X X X X X X Extracts X X X X
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