Custom, Excise & Service Tax Tribunal
Anirudh Singh, Proprietor vs Cc & Ce, Kanpur on 23 July, 2013
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST BLOCK NO.II, R.K. PURAM, NEW DELHI-110066.
DIVISION BENCH
Court No.3
Appeal No.C/487/2008-Cus
(Arising out of OIO No.02/Comm/Adj./07-08 dt.10.3.2008 passed by the CC & CCE, Kanpur)
Date of Hearing/Decision: 23.07.2013
For approval and signature:
Honble Mrs.Archana Wadhwa, Member (Judicial)
Honble Mr.Manmohan Singh, Member (Technical)
1
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3
Whether Their Lordships wish to see the fair copy of the Order?
4
Whether Order is to be circulated to the Departmental authorities?
Anirudh Singh, Proprietor Appellant
of M/s.Yatikaa Trading Co.Agra
Vs
CC & CE, Kanpur Respondent
Present for the Appellant: Shri Jatin Singhal, Advocate Present for the Respondent: Shri P.K.Sharma, DR Coram: Honble Mrs.Archana Wadhwa, Member (Judicial) Honble Mr.Manmohan Singh, Member (Technical) FINAL ORDER NO.57367/2013 PER: ARCHANA WADHWA The present appeal is against the impugned order of Commissioner vide which he has confiscated alleged illegal exported products totally valued at Rs.32,44,004/- with option to redeem the same on payment of redemption fine of Rs.10 lakhs. However, these products are not available for confiscation as having been already exported. In addition, he has imposed penalty of Rs.5 lakhs on the appellant and also confiscated an amount of Rs.39,068.24 being sale proceeds of smuggled goods to USA.
2. As facts on records, the appellants are engaged in the export of Sidenafil Citrate tablets and Tadafil tablets to their various customers located in USA. Their factory premises were visited by the officers on 20.03.2007. As the appellant could not produce licence for trading of drugs, the officers of the Drugs Control department were called, who confirmed that the said drugs do not come under the category of psychotropic drugs under NDPS Act and required licence. However, the said goods were seized by the officers of Drugs Control department under the provisions of Drugs & Cosmetics Act, 1940.
3. The statement of Shri Bhupender Singh, authorised representative of the appellant was recorded wherein it was deposed that he was doing packing of drugs and their exports to various customers under the direction of Shri Anirudh Singh, proprietor of the firm after procuring the orders through internet. The payment was also received through bank channels. In terms of provisions of Rule 31 of the Standards of Weight and Measures (Packaged Commodity) Rules, 1997, that every export package shall comply with laws and regulations in force in the country to which such package is intended to be exported.
4. Revenue authority has entertained a view that United States Federation Food, Drug and Cosmetic Act prohibits the interstate shipment (which includes importation) of unapproved new drugs. Thus, the importation of drugs that lack FDA approval, whether for personal use or otherwise, violates the Act and is illegal. Inasmuch as the drugs exported by the appellants were not approved in USA and its import is not allowed in USA being violative provision of Rule 31 of Standards of Weight and Measures (Packaged Commodity) Rules, 1997. If that be so, the goods have to be considered as prohibited goods and export of the same being prohibited.
5. On the above basis, the proceedings were initiated against the appellants for confiscation of already exported goods as also for sale proceeds of the said goods and for imposition of penalty which resulted in passing of the present impugned order. For appreciating the reasoning adopted by the Commissioner, we reproduce the relevant para of the impugned order which reads as under:-
M/s.Yatikaa Trading Co.,Agra is engaged in export of drugs to its customers residing in USA through FPO, Agra. The proprietor of the firm is Shri Anirudh Singh. The firm was engaged in procuring export orders over internet and illegally exporting drugs to its customers in USA and receiving payment through internet in their bank account with SBI, SB Branch, Agra. As per Rule 31 of the Standards of Weight and Measures (Packaged Commodity) Rules, 1997, every export package shall comply with laws and regulations in force in the country to which such package is intended to be exported The United States Federation Food, Drug and Cosmetic Act prohibits the interstate shipment (which includes importation) of unapproved new drugs. Thus, the importation of drugs that lack FDA approval, whether for personal use or otherwise, violates the Act and is illegal. Unapproved new drugs are any drugs including foreign including foreign made versions of U.S. approved drugs that have not been manufactured in accordance with and pursuant to an FDA approval. Thus, the export of packages of drugs of M/s.Yatikaa Trading Co. To USA violated the provisions of Rule 31 of the Standards of Weight and Measures (Packaged Commodity) Rules, 1997. As per section 2 of the Customs Act, 1962 any goods the import or export of which is subject to any prohibited goods. As per section 113 (d) of the Customs Act, 1962 any goods attempted to be exported or brought within the limits of any Customs Area for the purpose of being exported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force are liable to confiscation under this section. M/s.Yatikaa Trading Co., while exporting drugs under reference to USA has failed to comply the provisions of Rule 31 of the Standards of Weight and Measures (Packaged Commodity) Rules, 1997 and thereby contravened the provisions of section 113 (d) of the Customs Act, 1962. However, as the drugs under reference are not available for confiscation M/s.Yatikaa Trading Co.is liable to pay redemption fine in lieu of confiscation of the said goods. The sale proceeds of the drugs under reference amounting to Rs.32,44,004.00 which include Rs.39,068.24 lying freezed in account No.MCAB 575 No.789601/282002013 with SBI, Sanjay Place, Agra received against the payment of illegal export from the overseas buyers is liable to confiscation under section 121 to the Customs Act, 1962.
6. As is seen from the above, the adjudicating authority has observed that the United States Federation Food, Drug and Cosmetic Act prohibits the interstate shipment (which includes importation) of unapproved new drugs. However, reading from the above, we find nowhere any reference of any particular section of the Act, prohibiting Sidenafil Citrate tablets and Tadafil tablets being exported by the appellant.
7. On the last date of hearing a specific query was put to DR as to which provisions of the United States Federation Food, Drug and Cosmetic Act prohibits the medicines, in question. Ld.DR took sometime to find out the exact position. On matter being called, ld.DR agrees that he is not able to procure any specific legislation vide which medicines in question stands debarred in USA. As such, we find that the entire case of the Revenue is based on assumption and presumption. There is no evidence that such medicine was bared. In such scenario, the provisions of Rule 31 of the Standards of Weight and Measures (Packaged Commodity) Rules, 1997 cannot said to have been violated.
8. In view of above and in any case, we find that said Rule 31 of the Standards of Weight and Measures (Packaged Commodity) Rules, 1997 was deleted from the statute book with effect from January, 2007 onwards. The show cause notice was issued on 19.9.2007 when admittedly Rule 31 was not on statute book. Honble Supreme Court in the case of Kolhapur Canesugar Works Ltd. vs. UOI-2000 (119) ELT 257 (SC) has held that when rule lapses on repeal of that rule without saving a clause, section 6 of the General Clauses Act does not apply to the same and proceedings already initiated under that provision of law cannot be continued. In the present case, however, we find that even show cause notice was not issued upto 13.1.2007 when said rule was omitted. As such reference to the said rule in the show cause notice issued on 19.9.2007 when the said rule was not in existence and is against the settled principle of law, cannot be appreciated and impugned order cannot be upheld.
9. For all the above reasons, we set aside the impugned order and allow the appeal with consequential relief to the appellants.
(Pronounced in the open court)
(MANMOHAN SINGH) (ARCHANA WADHWA)
MEMBER (TECHNICAL) MEMBER (JUDICIAL)
mk
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