9911796707
TMI Blog1984 (8) TMI 335X X X X Extracts X X X X X X X X Extracts X X X X ..... 1, dated 5-9-1981 which they acquired as Registered Exporters. The Customs, however, did not permit clearance on the ground that the goods were found to be Diethylene Diamine Hexahydrate of Pharmacopoeia grade, which were canalised items as per the Import Policy for the year 1982-83 (hereinafter to be referred to as 'the Policy'). A show cause notice was issued to the appellants as to why the two consignments should not be confiscated and why penalty should not be imposed. In their reply, the appellants disputed that the goods are Piperazine Hexahydrate of pharmacopoeia grade. They contended that the imported goods are not Diethylene Diamine Hexahydrate or Diethylene Diamine Anhydrous and that they are not banned items and further contended the goods were not a drug but drug intermediate used for the manufacture of Diethylene Diamine Anhydrous or Hexahydrate and being Registered Exporters they are governed by para 185 of the Import Policy and therefore they are entitled to import the goods under OGL against their licences. The Additional Collector of Customs after affording a personal hearing to the appellants and after consideration of the materials placed before him recorded a fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ug are misconceived and have no meaning. The Additional Collector failed to appreciate that the sample drawn from the imported goods indicated that the goods were in lumps as opposed to the sample of Piperazine Hexahydrate produced by the appellants at the personal hearing on 11-8-1983, which was in crystals. The mere comparison of the two samples would have satisfied, that the imported goods was not Piperazine Hexahydrate or Piperazine Anhydrous. The Additional Collector failed to consider that Section 10 of the Drugs and Cosmetics Act, 1940 prohibited import of drugs which are not of standard quality. As per Section 8 of the said Act, standard quality means that the drug should satisfy the standard set out in 2nd Schedule to that Act and the standard specified in the 2nd Schedule is with regard to identity, purity and strength as specified in Indian Pharmacopoeia and if that drug is not specified in Indian Pharmacopoeia then it should satisfy standards of identity, purity and strength specified in the Pharmacopoeia of any other country. Having regard to the provisions of Sections 8 and 10 of the Drugs and Cosmetics Act even the canalising agency cannot import as drug any substa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omplies with BP, USP 80 but in so far as Column 7 is concerned, his certificate is silent. Further, the Chief Chemist has not given the melting and boiling points. Therefore comparative study is not possible. As per the Pharmacopoeia, percentage of Piperazine would be 98% in anhydrous and 44% in Hexahydrate, but the percentage found by the Chief Chemist in one sample is 73.6% and in another 80.6% and, therefore, the imported goods is neither anhydrous nor hexahydrate. It could only be a drug intermediate or raw material for the manufacture of a drug and not a drug. In the policy, two items of Piperazine are canalised, viz., Piperazine Anhydrous and Piperazine Hexahydrate and therefore, if the imported goods is not anhydrous or hexahydrate the import cannot be objected to on the ground that they are canalised. Being Registered Exporters, and having obtained the necessary endorsements on the REP licences, the appellants were entitled to import drugs and drug intermediates by reason of item 52 list 8 of appendix 10. All the test reports, including Chief Chemist's certificate disclosed that the imported goods had water contents varying from 19.3% to 55.66% and therefore the imported ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an independent authority and the certificate issued by him prevails over all other certificates. Piperazine as a drug is marketed only in the form of Anhydrous or Hexahydrate or in the form of its salts like Piperazine Citrate, Piperazine Adipate and Piperazine Phosphate. The substance Diethylene Diamine Technical is unknown to the trade and it is neither found in the Chemical Dictionary nor in any pharmacopoeia. The import under OGL would be subject to the conditions specified in Appendix 10 and therefore the items canalised under Appendix 9 cannot be imported under OGL. 6. In reply, Shri C.R. Patel, the learned Advocate for the appellants contended that the imported goods is a drug intermediate and therefore cannot find place either in a Chemical Dictionary or in any Pharmacopoeia. If the intention of the Policy makers was to canalise Piperazine in any form, the intention should have been made clear in the policy and the two items canalised are anhydrous and hexahydrate and not all hydrates. 7. Shri C.R. Patel, the learned Advocate who appeared for the appellants made it abundantly clear that the appellants do not require the matter being remanded because of the va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate". Paragraph 218(4) which has relevance to the issues involved reads : "In the case of drugs appearing in Appendices 3, 5 and 9, the names mentioned: - (i) refer to the respective active ingredients, or (ii) are as they are commonly known. Each entry includes the salts and esters of the same drug, if any." If entry 14 of Appendix 9 is read along with paragraph 218(4) of the Policy it becomes clear that what has been canalised is not only Piperazine anhydrous/Hexahydrate but also their active ingredients, salts and esters. It has been the contention of the appellants that what had been imported by them is not at all a drug and therefore not a canalised item and in any case it is neither Piperazine anhydrous nor Hexahydrate nor their active ingredients, salts and esters. They contended that the imported goods are Diethylene Diamine Technical, a product not conforming to any pharmacopoeial standard. It is a down-stream product coming last after products like Ethylene Diamine etc. are obtained. Their further contention was that Piperazine Anhydrous U.S.P. and Piperazine Hexahydrate B.P.C. and their salts like Piperazine Citrate, Piperazine Adipate and Piperaz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rated forms. Finally, Dr. Patwardhan certified that : "The sample does not confirm to Piperazine Hexahydrate BP 80 and Piperazine Anhydrous U.S.P. XX and therefore the same cannot be a Drug. Further, the sample definitely merits the classification as chemical compound because the same has specified melting point and the water of hydration is chemically bonded with Diethylene Diamine Molecule and the same is not a physical mixture of water and Diethylene Diamine." The Assistant Drug Controller, Bombay, in his letter, Exhibit 'D' had stated : "The sample on test by M/s. Chem. Med. Lab. Ltd., Bombay is found to be not (Diethylene Diamine) Piperazine Anhydrous U.S.P. or (Diethylene Diamine hydrate BP) Piperazine Hydrate BP. Copies of test report attached. It appears to be some impure Diethylene Diamine hydrate with moisture around 30.72% w/w/ and Melting point around 72C. The goods are also marked only as Diethylene Diamine Hydrate Tech. (63.9 to 68.6%) and no pharmacopoeial standards are claimed. In view of this, the item may not fall under the category of drugs but will qualify as chemical compound in the manufacture of Piperazine salts conforming to USP or BP standards. There i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmonia Complies with U.S.P. test. 9. Content of Piperazine (C4H10N2) 98.4% on anhydrous basis. (Limits : to 98.0% 101.0%) Opinion : In the opinion of the undersigned the sample referred to above IS NOT OF STANDARD QUALITY as defined in the Act and the Rules thereunder for the reasons given below. The sample does not comply with prescribed standards as per U.S.P. XX (WITH RESPECT TO MELTING POINT AND WATER)." (2nd certificate). "As per PIPERAZINE HYDRATE B.P. 1980 1. Description : White deliquescent crystals, having an ammoniocal odour. 2. Solubility : Complies as per B.P. requirements 3. Identification : B.P. Test 'A' 'B' and 'C' : Positive 4. Heavy Metals : Complies. (Limit: 20 parts per million maximum) 5. Primary Amines : Complies. 6. Sulphated Ash : 0.02% (Limit : 0.1% maximum) 7. Content of Piperazine Hexahydrate (C4H10N2HO) equivalent to 153.8% (Limit not less than 98%) (Since upper limit is not mentioned it is to be taken as equivalent of 100.5% as per B.P 1980 page : 5). OPINION : In the opinion of the undersigned the sample referred to above is NOT OF STANDARD QUALITY as defined in the Act and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtificates both dated 26-6-1984. In these certificates he had carried out XRD test and the result of XRD test is given by him as under : - "From XRD Analysis it is clear that the above sample does not conform to Diethylene Diamine (Piperazine) in anhydrous form, or in the hexahydrate form. This is evident from the fact that XRD plot shows number of peaks which do not correspond to D values as prescribed in ASTM standards. From the above results of Diethylene Diamine Hydrate (62-68%) technical, I certify as under :- (a) The sample does not conform to Piperazine Hexahydrates BP 80 and Piperazine Anhydrous USP XX therefore the same cannot be a drug." The appellants have produced a literature of the suppliers which we have marked for the purpose of identification as Exhibit 'M'. It reads as under :- "Piperazine 65 Technical Grade Formula (C4H10N2XH2) Molecular weight 86.14 (Anhydrous) Purity and properties : Appearance:white crystallic (fused) compound Melting properties rage : ca. 35-45oC Foreign amines : max 0.1% (G.L.C. peak area) sulphated ash: Max. 0.1% Assay : 65.0% (Perchloric acid titration) Action and use &ems ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t page 78 'Anhydrous' is described as : "Anhydrous (CHEM) being without water, especially waier of crystallization." At page 773, "Hydrate is described as : "Hydrate (CHEM) A form of a solid compound which has water in the form of H2O molecules associated with it; for example, anhydrous copper sulfate is a white solid with the formula CuSO4 but when crystallized from water a blue crystalline solid with formula CuS02.5H2O results, and the water molecules are an integral part of the crystal." At page 1220, Piperazine is described as : "Piperazine (ORG CHEM) C4H10N2. A cyclic compound; colourless, deliquescent crystals, melting at 104-107oC; soluble in water, alcohol, glycerol, and glycols ; absorbs carbon dioxide from air; used in medicine. Also known as diethylenediamine; ethyleneamine; piperazidine." Piperazine Hexahydrate (ORG CHEM) C4H10N2.6H2O. While crystals with a melting point of 44oC; soluble in alcohol and water; used for pharmaceuticals and insecticides." In Martindale, The Extra Pharmacopoeia, 28th edition, at page 103 the substance Piperazine Hydrate is described as : "Piperazine Hydrate (B.P., Eur. P.). Piperazine; Piperazini Hydras; Piperazidine, Diethylen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tandard quality" is defined for the purpose of import of drugs in Section 8. "Standards of quality. - (1) For the purposes of this Chapter, the expression "standard quality" means- (a) in relation to a drug, that the drug complies with the standard set out in the Second Schedule." Standards to be complied with by imported drugs is given in the Second Schedule, and the standard prescribed for Drugs not included in the Indian Pharmacopoeia but which are included in the Official pharmacopoeia of any other country are, "standards of identity, purity and strength specified for drugs in the edition of such official pharmacopoeia of any other country for the time being in force and such other standards as may be prescribed." 11. For the better understanding and appreciation of the contentions raised during the hearing of the appeals, we have in the preceding paragraphs set out in detail the evidence on record, technical authorities relied upon by the parties as well as the relevant provisions of the policy. With this we now proceed to answer the questions we have set out in paragraph 8 of this order. 12. Answer to Question No. 1 : On behalf of the appellants Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and consumables permitted under OGL (vide items 1 and 2 above) is allowed to Actual Users (Industrial) in accordance with the conditions laid down. However in respect of items other than those appearing in List 8 of this Appendix import under OGL can be made by Actual Users and others. This is with a view to facilitate supply of the required inputs for small industries through stock and sale." This condition puts an embargo for the import of items appearing in list 8 of Appendix 10 by others. Paragraph 183, enumerates the import facilities available to Export Houses. One of the facilities available to them is import replenishment (REP) licences transferred to them by others. Another facility allowed to them is to permit import of items placed on Open General Licence in the manner set out in paragraph 185. "185(1) provides `Export Houses would be allowed to import OGL items against REP licences issued in their own name or transferred to them by others. This facility will be available to them for the import of (a) Capital goods (listed in Appendix 2) (b) Raw materials, components, consumables and spares (excluding items covered by Appendix 5) which have been placed on Open Gene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see any reason to take a view different from the one taken in the above said appeals. We therefore reject Shri Jain's contention. Shri Patel for the appellants then contended that the imported goods are neither piperazine anhydrous nor hexahydrate. According to Shri Patel what had been imported was Diethylene Diamine Technical which is a down-stream product coming last, after the products like ethylene diamine etc. are obtained and it does not conform to any pharmacopoeal standard. In support of his contention that the imported goods is diathylene Diamine Technical, Shri Patel relied upon the literature supplied by the manufacturers and the certificates issued by Dr. Patwardhan. We have referred to this literature as well as the certificates. We cannot accept the literature supplied by the manufacturers, because it does not furnish any data, for describing their product as Diethylene Diamine Technical and that it is a down stream product coming last after the products like ethylene diamine etc. are obtained. Dr. Patwardhan has also certified that Diethylene Diamine Technical is a down stream product during the manufacture of Ethylene Diamine from ethylene dichloride and ammonia. D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd piperazine content to be 73.6% in one sample and 80.6% in another sample. Dr. Patwardhan also found 79.32% in one sample and 65.99% in another sample. The Chem-Med Laboratory found not less than 98% in anhydrous state. Italab found 67.2% and 69.10% and 70.19% in the 3 samples tested by them. Having regard to the variance in the contents of Piperazine, the manufacturer's certificate that their products contained approximately 65% cannot be true. The appellants then attempted to establish that the imported goods is a chemical or a drug intermediate. Dr. Patwardhan in his certificates dated 23-9-1983, Exhibit 'L' opined that Diethylene Diamine 62-68% technical in lump form merits the classification as chemical or drug intermediate and definitely not as a drug. He then stated that drug intermediate is a chemical which comes into existence in the process of manufacture of an end product. Thus drug is an end product while intermediate is not. Dr. Patwardhan is not certain whether it is a chemical or a drug intermediate. In his subsequent certificate dated 21-4-1984 Dr. Patwardhan opined that in his opinion, the sample is of Diethylene Diamine Hydrate (79.32%) technical grade and defi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompound. Neither Dr. Patwardhan nor the appellants have furnished the formula of the compound. If it is a chemical compound normally it should find place in any of the dictionaries dealing with chemicals. Compound is described in Hawley's The Condensed Chemical Dictionary, Tenth Edition, at page 268 as under : "Compound. - (1) A substance composed of atoms or ions of two or more elements in chemical combination. The constituents are united by bonds (q.v.) of valence forces. A compound is a homogeneous entity in which the elements have definite proportions by weight and are represented by a chemical formulat (q.v.) A compound has characteristic properties quite different from those of its constituent elements; it can be decomposed by energy in heat, or of an electric current Example, Water is a liquid formed by chemical combination of two gases; it can be separated into hydrogen and oxygen by an electric current (electrolysis); in certain reactions it is split into its constituent ions (H and OH) (hydrolysis); it is not chemically changed by heat or cold. See also mixture; homogeneous; reaction. (2) Loosely, a product formulat (often proprietary) of various types, e.g. pharmaceut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e not of standard quality. Shri Jain for the department on the other hand urged that import policy nowhere lays down that the drug permitted to be imported should be of standard quality. He urged that the policy permitted import of even drug intermediaries and substances containing drugs. We have referred to the definitions of the expression "Drug" given in clause (b) of Section 3 of the Act. It is an inclusive definition. It takes within its ambit 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 disease in human beings or animals. The definition of the expression of drugs would include not only medicines but substances intended to be used for or in the diagnosis, treatment, mitigation or prevention of diseases in human beings or animals. In our opinion, the policy did not intend to include only 'medicines' under the category 'drugs'. Any substance which could be used for the preparation of medicine are also included. For instance, in the policy, the intermediate of Doxicycline base has also been mentioned as one of the canalised items under the heading 'drug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emical cannot be accepted because no chemical dictionary contains Diethylene Diamine Technical. The Assistant Drugs Controller had stated that there is no objection to release the goods because the release does not contravene the provisions of Drugs and Cosmetics Act or the rules made thereunder. Apparently he meant that the imported goods are not of pharmacopoeial grade. This is also clear from the reference he has made to the test of the samples carried out by M/s. Chem-Med Analytical Laboratories. We have already held that for the purpose of ITC a drug need not be of pharmacopoeial grade. Therefore we need not attach any importance to the certificate of the Asstt. Drug Controller. The Chief Chemist has opined that the samples are not Diethylene Diamine Technical. He had found that active ingredient in the goods imported is entirely piperazine and samples are free from impurities. He however found that one sample contained 73.6% piperazins and the other 80.6%. His reports also do not indicate that he made any attempt to find out the content of piperazine in the anhydrous state. All the reports of all the analysts disclosed that the samples contained piperazine and water. The perc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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