TMI Blog2020 (12) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... urposes other than medicinal use or is of commercial quality - If rule 43 read with Schedule D exempting the substance not intended for medical use are applied to the instant case, it is clear that the fourth respondent had imported the above quantity of Inositol NF 12 mentioning that it is Not for Medicinal Use from the Overseas supplier and their sale in favour of the petitioner also indicates that it was not intended for medicinal use. Thus, a reading of Rule 43 of the DC Rules along with Schedule D shows that where the substance is not intended for medicinal use, which was imported in bulk, the importer shall certify that the substance is imported for non-medicinal use. The requirement of an import licence in Form 10-A assumes importance depending on the usage for which the imported item is intended for. In the instant case, after this Form 15 was issued to the petitioner, the fourth respondent also had applied to the Drug Authorities seeking Form 10-A exemption. However, the same was rejected as the fourth respondent had already parted with the imported goods or sold the goods to the petitioner, without mentioning whether the import of Inositol NF 12 is exempted or not - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the fourth respondent, which had admittedly imported the product from China vide Sales Invoice No.000342 dated 20.04.2019 for a valid consideration of ₹ 1,20,73,170/-. After the purchase, the goods were reached the warehouse of the petitioner on 20.04.2019. The fourth respondent had imported the quantity of 36,000 kgs., from a manufacturer at China which were cleared from the Bangalore ICD Customs, after the customs officials have properly assessed the Bill of Entry No.2693971, dated 03.04.2019 filed by the importer - the fourth respondent and thereafter, the major portion of the said imported goods was sold to the petitioner based on the purchase order. 2.2. The first and second respondents, during the course of the investigation/examination and inspection conducted at the warehouse of the petitioner concern, had issued Form 15 dated 25.04.2019 under Rule 54 and 145-C of the Drugs and Cosmetic Rules, 1945 (hereinafter referred to as DC Rules ) read with Section 22(1)(c) of the DC Act restraining the petitioner from anyway dealing with the said goods, i.e., the petitioner was restrained from selling, distributing and disposing of the said stock in their possession. Thou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te of receipt of a copy of the said order and furnish the copy of the report to the petitioner. 2.6. On 15.10.2019, the petitioner had attached the copy of the order passed by this Court and also gave an undertaking that the goods, which were locally purchased by them, would be sold/supplied only to the non-pharma industries, namely, food, neutraceutical, beverage, etc., and would not be sold to any pharmaceutical industries, while also giving an another undertaking that it would also produce the account details in respect of transaction held in respect of the sale of the subject goods made to such buyers and also would submit the periodic reconciliation data in respect of all such transactions carried out in respect of dealing/sale of the subject goods. One more reminder was also sent by the petitioner on 02.01.2020. The petitioner sent one another representation on 13.01.2020 seeking the copy of the test report and also release of the goods based on the test report. 2.7. The petitioner having purchased the goods locally for a valid consideration by making huge investment has filed this writ petition seeking for a direction for release of the goods, in view of the limi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the material imported is Inositol NF 12 only. 3.2. An additional counter affidavit was also filed by the very same deponent on 19.02.2020, in which, it is stated that the first respondent had received a request dated 16.09.2019 from the fourth respondent on 17.09.2019 to issue NOC for the imported Inositol NF 12. The same was replied by the first respondent on 02.01.2020 vide reply Letter No.70-212/SZ/2019/3658 stating that Inositol NF 12 imported by the fourth respondent under Bill of Entry 2693971, dated 03.04.2019 has already been sold to M/s.Kawarlal Co., Chennai-the petitioner herein and hence, NOC cannot be granted at that juncture. On 12.02.2020, the second respondent had also delivered one copy of all the three test reports to the petitioner and another copy to the fourth respondent. 3.3. There is yet another counter affidavit filed by the very same deponent on behalf of the first and second respondents on 21.08.2020 reiterating the very same averments. 4. The third respondent, who is the Assistant/Deputy Commissioner of Customs, Bengaluru, has also filed an affidavit in response to the petitioner's case. The said affidavit is filed by the Assistant Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lphin Chem International, Bengaluru, who had placed the Purchase Order dated 03.01.2019 ; (iii) as per the Purchase Order, the goods ought to have been delivered on or before 10.03.2019 ; (iv) As the goods were only arrived on 03.04.2019 and the same have been cleared from the Bangalore ICD customs on 19.04.2019, the Purchase Order was cancelled ; (v) Thereafter, the petitioner had also placed the Purchase Order vide Invoice dated 20.04.2019, referring the goods to be of non-medicinal use for a valid consideration of ₹ 1,20,73,170/- and the goods were also delivered to the petitioner's warehouse on 20.04.2019 ; (vi) On 25.04.2019, Form 15 was issued for the reason that Form 10/NOC was not obtained by the fourth respondent. 8. Since an explanation has been given to both the importer - the respondent and the petitioner stating that the petitioner herein would use the imported goods for non-medicinal purposes only, whether Rule 43 of the DC Rules would be attracted in this case has to be seen. Rule 43 deals with import of drugs which do not require licensing. The said provision reads as follows : The drugs specified in Schedule D shall be exempt from the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exemption under Rule 43. Therefore, when a particular substance is imported not for the purpose of use and manufacture of a drug, but to be used only in the process of food, neutraceutical, beverage, etc., Rule 23 of the DC Rules has got no relevance, as Rule 43 exempts such import. 11. The requirement of an import licence in Form 10-A assumes importance depending on the usage for which the imported item is intended for. In the instant case, after this Form 15 was issued to the petitioner, the fourth respondent also had applied to the Drug Authorities seeking Form 10-A exemption. However, the same was rejected as the fourth respondent had already parted with the imported goods or sold the goods to the petitioner, without mentioning whether the import of Inositol NF 12 is exempted or not. Besides, the petitioner also has given an undertaking after the report indicates that the goods, which were locally purchased by them, would be sold supplied/sold only to other non-pharma industries, namely, food, neutraceutical, beverage etc., while giving further undertaking that it would also produce the account details in respect of transaction held in respect of sale of the subject good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edings of the respondents dated 24th August, 2009, as disclosed in the typed set of papers filed by the third and fourth respondent, the fact that the import is not for the manufacture of the drugs but for use in the manufacture of food supplement, when the Rules themselves contemplate sufficient protection in matters of import of an item which is capable of multivarious uses, the insistence on obtaining Form 10-A in terms of Rule 23 does not appear to be a correct approach and the same is contrary to the Rule and the understanding of the respondents as disclosed in the letter dated 24th August, 2009 found in the typed set of papers filed by the third and fourth respondents. Thus, going by the Rules, which provide for exemption from going for licence in Form 10-A depending on the purport for which the import is made, it is difficult to accept the plea of the respondents solely on the basis of the earlier undertaking given by the petitioner or for that matter, the possibility of using the imported items contrary to the disclosed purpose. With the power of inspection available to check any possible abuse, the view of the respondents that the imported items is capable of being used in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner is entitled to remove the goods imported without getting a licence in Form-10-A as provided under Rule 23 of the Act. Consequently, the Writ Petition stands allowed. 22. It is hereby made clear that if the authorities come across any material that the imported substance cleared as an exempted item is not for the declared purpose, it is always open to the respondents to proceed against the petitioner in accordance with law. 15. The appeal taken up against the said order of this Court by the Drug Authorities in W.A.No.1559 of 2010 also failed and a Division Bench of this Court vide order dated 23.02.2012 rejected all the contentions raised by them. Though the authorities filed SLP No.1519 of 2013, recording the fact that the goods have since been cleared, the said petition was dismissed on 01.12.2014. 16. A learned Single Judge of Delhi High Court in Chemical Centre (India) V. Commissioner of Customs, 2011 (264) ELT 325 (Del.) went to the extent of directing the authorities to undertake surprise checks at the premises of the purchasers, to whom, the petitioner therein sold the drugs. The following observations and directions were made in the said order : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lete list of all the purchasers of the CAM imported by it under the consignments in question. 18. It is clarified that it would be open to the Respondents to undertake surprise checks at the premises of the purchasers as disclosed by the Petitioner and further proceed in accordance with law, if it is found that the imported CAM purchased from the Petitioner by such retailers is in turn sold to others who use it for medicinal purposes......... 17. If the case on hand is considered with the principles stated in the judgments rendered in Kesarimal and Chemical Centre (supra), it is amply clear that the petitioner is entitled for the relief sought for in this writ petition. 18. In the result, as the first limb of the prayer has already been complied with, the remaining part of the prayer sought for in this writ petition is ordered. The respondents 1 and 2 are directed to release the goods, which were locally procured by the petitioner, namely, Inositol NF 12 (Not for Medicinal Use), after obtaining necessary undertaking, as indicated above, within a period of two weeks from the date of receipt of a copy of this order. However, there shall be no order as to costs. - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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