Custom, Excise & Service Tax Tribunal
Max Overseas vs Commissioner Of Customs, Marmagoa on 23 December, 2009
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI
Appeal No. C/1228/09 - Mum
(Arising out of Order-in-Original No. 15/2009 dated 18.11.2009 passed by the Commissioner of Customs, Marmagoa)
For approval and signature:
Honble Shri Ashok Jindal, Member (Judicial)
1. Whether Press Reporters may be allowed to see : No
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 : Seen
of the Order?
4. Whether Order is to be circulated to the Departmental : Yes
authorities?
MAX OVERSEAS
:
Appellants
Versus
Commissioner of Customs, Marmagoa
Respondents
Appearance Shri S.N. Kantawala, Advocate for Appellants Shri T.Tiju, SDR for Respondents CORAM:
Honble Shri. Ashok Jindal, Member (Judicial) Date of Hearing : 17.12.09 Date of Decision :.
ORDER NO.
Per : Ashok Jindal This appeal is directed against the order of Commissioner of Customs, Marmagoa absolutely confiscating the goods imported by the appellant.
2. Brief facts of the case are that the appellant sought clearance of imported Cosmetics described as Shower Gel, Roll on, Shampoo / Conditioner Shampoo, Shaving Gel, Hair Cream, Body Cream and Scented Spray and filed Bill of Entry. The appellant sought assessment of the above said goods as cosmetics under Chapter 33 of the Customs Tariff Act, 1975. A show cause notice was issued stating that in terms of Rule 133 of Drugs and Cosmetics Rules, 1945, import of cosmetics is allowed only through the points of entry specified under Rule 43-A of Drugs and Cosmetics Rules. The appellant had violated the said provisions. Accordingly, the goods were absolutely confiscated. Aggrieved by the same the appellant is before me.
3. Shri. S.N. Kantawalla, learned Advocate appeared on behalf of the appellant submitted that prior to this, consignments of similar / identical goods have been unconditionally assessed and released by the Goa Customs House. He further submitted that in the case of Gujarat State Export Corporation Ltd. vs. Union of India 1984 (17) ELT 50 (Bom.), it was held that where previous consignments were released by the Customs House for several years and it was a long standing practice of the Customs House to release similar goods, the Customs authorities could not say that the import was in contravention of Section 111 (d) of the Customs Act, 1962. He further submitted that the show cause notice is completely vague and does not disclose any material on the basis of which the show cause was issued. The Honble Bombay High Court in exercise of Writ jurisdiction can quash the show cause notice as held by the Honble Bombay High Court in the case of Royal Oil Field Private Ltd. Vs. Union of India 2006 (194) ELT 385 (Bom.). He submitted that the notice completely mis-leading the provisions of Rule 133 of the Drugs and Cosmetics Rules, 1945 wherein it is laid down that no cosmetic shall be imported into India, except through the points of entry specified at Rule 43 A does not apply to the appellant. He submitted that the imported goods are popularly known as toiletries / cosmetics and they are not intended for medicinal use. Hence the goods are covered under Item 1 of Schedule D of Rule 132 of Drugs and Cosmetics Rules, 1945. He further submitted that the Commissioner has not followed principle of natural justice. He further submitted that the Commissioner also has not followed the Boards instructions as well as jurisdictional precedents. In the case of Union of India vs. Kamalakshi Finance Corporation Ltd. 1991 (55) ELT 433 (SC) the Honble Apex Court has laid down that orders of higher authorities are to be followed unreservedly by all lower authorities. The Honble Apex Court in the case of Collector vs. Dhiren Chemical Industries 2002 (143) ELT 19 (SC) has further clearly laid down that the Boards instructions have to be followed in letter and spirit. He further submitted that the Commissioner had traveled beyond the show cause notice and relying on adjudication order of Tuticorin Customs House, which was not supplied to the appellant, and passed the order of confiscation. He further submitted that absolute confiscation of goods under Section 111(d) of the Act is against the mandate of Section 125 of the Customs Act, 1962. He further submitted that the Commissioner disregarded the DGFT opinion. He further submitted that the appellant obtained the information under RTI Act and as per the information received under RTI, the Custom House Tuticorin mentioned that import of the item in question is covered under Rule 132, Schedule D of the Drugs and Cosmetics Rules, 1945. He further submitted that the evidence in the form of clarifications issued by DGFT, Custom House, Faridabad clearly proves that the appellants goods are covered under Rule 132 and describes cosmetics allows clearance at any port. He further placed reliance on CC (A), Mumbai vs. Alfred Menezes 2009 (242) ELT 334 (Bom.) wherein the Honble High Court held that in view of the language of provisions in Section 125 of the Customs Act, a discretion vests with the adjudicating authority to redeem the goods even though the said goods are liable for absolute confiscation as the importation of said goods are prohibited and it was further held that the Tribunal was justified in holding that though the goods are liable for confiscation, the same can be released on payment of fine. In view of the above submissions, he submitted that the impugned order be set aside and appeal be allowed.
4. On the other hand the learned SDR appearing on behalf of the Revenue has submitted that in this case the brief question is that -
(a) whether cosmetics can be imported via Goa Port as per the Drugs and Cosmetics Act and
(b) whether the Customs can absolute confiscate the goods in case of violation of any provisions of Drugs and Cosmetics Act.
He submitted that the substances not intended for medicinal use does not include cosmetics, the substance specifically used for drugs only. He further submitted that the exemption under Rule 132 is not applicable to the appellant as their goods are covered under Serial 6 of Class of Drugs in the said Rule. He further submitted that Rule 133 specifically says that No cosmetics shall be imported into India except through points of entry specified in Rule 43-A and Goa port is not covered under Rule 43A. He further submitted that the Commissioner of Customs has rightly confiscated the goods as the goods cannot be imported through Goa port which amounts to prohibition. In that case when goods cannot be imported through Goa port, the question of provisional release does not arise. With regard to the long standing known practice have been practiced, he said that if long wrong practices are going on does not mean to allow the prohibited goods to be imported through port. With regard to the principles of natural justice, he submitted that the appellant was given ample opportunity and the appellant filed replies and finally in the adjudication order, the Commissioner has referred the order of Tuticorin Custom House and after going through that order, the Commissioner came to the conclusion following the Drug Control Act, arrived at a decision that the goods cannot be allowed to be imported through Goa Port and opted to the appellant to take over their goods to some other port, which the appellant refused. To support the above contentions, he relied on the following case laws:-
(a) Leukoplast (India) Ltd. vs. State of Goa as reported in 1988 (36) ELT 369A (Bom.)
(b) Dr. Roshan Lal Aggarwal & Sons Pvt. Ltd. vs. C.C. ICD, New Delhi 2008 (226) ELT 624.
(c) HS Chopra vs. CC ACC, New Delhi 2002 (149) ELT 1140 (Tri-Del).
(d) Bala Krishna Pillai vs. CC Cochin 2003 (156) ELT 414 (Tri. Bang.)
5. Heard both sides.
6. In this case the main issue before me is that whether the appellant is entitled for exemption under Rule 132 of the Drug & Cosmetic Rules, 1945. If yes, whether the goods can be imported through Goa Port? If no, whether the goods be treated as restricted goods / prohibited goods and can be released on redemption fine or not? To arrive at a conclusion, I have to go through the Rule 132 read with Schedule D of Drugs and Cosmetics Rules, 1945, which is reproduced here as under:-
Rule 132 Schedule D Class of drugs Extent and conditions of exemption 1. Substances not intended for medicinal use
All provisions of Chapter III of the Act and Rules thereunder subject to the condition that if the substance is imported in Bulk, the importer shall certify that the substance is imported for non-medicinal uses, and if imported otherwise than in bulk, each container shall bear a label indicating that the substance is not intended for medicinal use or is intended for some purposes other than medicinal use or is of commercial quantity.
2.
3..
4..
5..
6. Drugs and Cosmetics imported for manufacture and export by units situated in Special Economic Zones as mentioned by the Govt. of India from time to time The provisions of Chapter III of the act and rules there under which require them to be covered by an import license, import registration and import through notified port of the entry subject to the conditions that these drugs and cosmetics shall not be diverted for sale in the country.
Provided that such imported drugs and cosmetics may be permitted to the domestic area if they meet the requirements of standard procedure for import and registration as required under Chapter III of the act and rules thereunder.
7. In this case the appellant is claiming Sl.1 of Class of Drugs of the Rule. As per Schedule D, Sl.1 of Class of Drugs - substances not intended for medicinal use. These are exempted from provisions of Chapter III and Item falling under this Entry are exempt and read with schedule D, they may be freely import from any port in India. The items at Sl. 1 rules as substances are not intended for medicinal use. The learned Counsel submits that the word substances used in this entry is only a part of an article which is used in the definition of cosmetics under Drug & Cosmetics Rules, 1945. Definition of Cosmetics is reproduced below here as under:-
Rule 3 (aaa) Cosmetics 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 cleansing, beautifying, promoting attractiveness, or altering the appearance, and includes any article intended for use as a component of cosmetics.
8. Now, I have to examine whether the items imported by the appellant are the substance not intended for medicinal use. The Commissioner has held that article is al-together different from substances and the appellant says that substances are part of articles. The items in question are the substance not intended for medicinal use. Apart from this, the Deputy Drug Controller opined vide letter dated 12.10.2009 that cosmetics as may be specified in Schedule D shall be exempted from the provisions of Chapter 3 of the Act and the rules made thereunder to the extent and subject to the conditions specified in that schedule and as per Rule 133 of the Drugs & Cosmetics Rules, no cosmetic shall be imported into India except through the points of entry specified in Rule 43-A.
9. I have gone through this clarification which exempts the cosmetics from the provisions of Chapter 3 of the Act & Rules on fulfilling the conditions specified therein. The learned Advocate has also submitted that, CBEC Circular No. F.No. 450/08/2007-Cus IV dated 22.01.2007 says that in order to have control over the quality of drugs, the D&C Act restricts the port entries for drugs under Rule 43 of D&C Rules. This Circular does not restrict the cosmetics and the Commissioner is bound to follow this Circular. The CBEC Circular No. 450/115/2003-Cus. IV dated 03.03.2004 is with regard to provisional release of the goods. Further, letter from Deputy Commissioner, Tuticorin also clarifies that toiletries and cosmetics can be imported freely from the Tuticorin Port. The order issued by the Asst. Commissioner, Faridabad clarifying that the items in question can be imported as per the procedure as prescribed in Foreign Trade Policy, 2009-14 and the Customs Act, 1962. Plain reading of the word substance is that substance is part of an article. The cosmetic is also a substance and we have to read the language as a whole. Substance not intended for medicinal use and the item in question to be imported by the appellant are viz. Shower gel, Roll on, shampoo / conditioner shampoo, shaving gel, hair cream, body cream and scented spray which are in the nature of toiletries and cosmetics which cannot be intended for medicinal use.
10. From the above discussion I find that the items in question are covered by Entry No.1 in Schedule D of Rule 132 of Drugs and Cosmetics Rules, 1945 and the appellant is entitled for exemption from the provisions of the Chapter 3 of the D&C Act and Rules. Accordingly, the goods in question can be imported freely from the Goa Port. With these findings, the impugned order is set aside and appeal is allowed with consequential relief (if any).
(Pronounced in Court on.) (Ashok Jindal) Member (Judicial) nsk 9