Custom, Excise & Service Tax Tribunal
Coral Healthcare Pvt. Ltd vs Commissioner Of Customs(Imports), ... on 24 December, 2014
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. II APPEAL NO. C/86780/14-MUM [Arising out of Order-in- Appeal No. 521/(Gr. II H-K)2014/ (JNCH) /IMP- 486 dtd. 26/2/2014 passed by the Commissioner of Customs (Appeals), JNCH, Sheva Mumbai-II] For approval and signature: Honble Mr Ramesh Nair, 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?
=======================================================
Coral Healthcare Pvt. Ltd.
:
Appellant
VS
Commissioner of Customs(Imports), Nhava, Sheva
:
Respondent
Appearance
Shri. J.C. Patel, Advocate for the Appellant
Shri. Ahibaran, Addl. Commissioner(A.R.) for the Respondent
CORAM:
Honble Mr. Ramesh Nair, Member (Judicial)
Date of hearing: 24/12/2014
Date of decision: 24/12/2014
ORDER NO.
Per : Ramesh Nair
The appeal is directed against Order-in- Appeal No. 521/(Gr. II H-K)2014/ (JNCH) /IMP- 486 dtd. 26/2/2014 passed by the Commissioner of Customs (Appeals), JNCH, Sheva Mumbai-II, wherein the Order-in-Original No. 2122/2013 AM(I) dated 2/5/2013 passed by the Commissioner of Customs(Imports), Mumbai-II was upheld and appeal of the appellant was rejected. The fact of the case is that the appellant filed bill of entry no. 6543636 dated 16/4/2012 for clearance of the goods declared as Latex Prophylactic Condoms classified under CTH 40141010. The bill of entry was facilitated under RMS with order Assessment and examination has not been prescribed for the B/E subject to ADC NOC. RSS Sample of all the 04 batches covered under the bill of entry were forwarded to ADC, ADC allowed the release of 03 batches of the said consignments bearing batch no. 12N314 for 1500 gross, 12N315 for 1945 gross and 12N316 for 1500 gross. Remaining one batch no. 12N313 for 1500 gross was not given ADC NOC as it was not of standard quality. Since the ADC NOC for the impugned goods was not given it was contended that there is violation of the provisions of Drug and Cosmetics Act, 1940 and Rules hereunder. Accordingly, it was proposed that the goods valued Rs. 4,83,740/- is liable for confiscation under Section 111(d) of the Customs Act, 1962 and appellant is liable for penalty under Section 112(a) of the Customs Act, 1962. The adjudicating authority confiscated the goods and given an option for redeem and re-export of the goods on payment of redemption fine of Rs. 80,000/- and penalty of 40,000/- was also imposed on the appellant under Section 112(a) of Customs Act, 1962. Aggrieved by the Adjudication order, the appellant approached the Commissioner of Customs (Appeals). The Ld. Commissioner (Appeals) upheld the order of the lower authority on the following ground:
I find that the appellant filed Bill of Entry No. 6543636 dated 16/4/2012 for clearance of item declared as Latex Prophylactic Condoms and was facilitated under RMS with order-Assessment and examination has not been prescribed for thisB/E subject to ADC NOC. RSS of all the 04 batches were forwarded to ADC. One batch No. 12N313 for 1500 gross was not given ADC NOC as it was not of standard quality. Since ADC NOC for the impugned goods batch No. 12N313 of 1500 gross was not given, violated the provisions of Drug and Cosmetics Act, 1940 and rules there under. The adjudicating authority confiscated the impugned goods having assessable value of Rs. 4,83,740/- under Section 111(d) of the Customs Act, 1962. However, an option to redeem the same was given under Section 125 on payment of Rs. 80,000/-. Penalty of Rs. 40,000/- was also imposed on the appellant under Section 112(a) of the Customs Act 1962.
8. I find that in the instant case, the Bill of Entry was filed under RMS subject to ADC NOC. Since ADC NOC for the impugned goods were not given as it was not confirming to the standard quality and violated the provisions of Drugs & Cosmetics Act, 1940 and Rules there under. The adjudicating authority rightly confiscated the impugned goods. The appellant view that the Test Report was forwarded by the foreign supplier and appellant had no role in the violation of the Provisions does not absolve from levy of fine and penalty. The fine and penalty are leviable even when no mens rea is involved. Honble CESTAT in the case of Sundaram finance Vs. Commissioner of Customs, Chennai[2012(279)E.L.T. 220(Tri-Mad)] has held that mens rea is relevant only for quantum of fine and penalty, and not for liability to confiscation or penalty. Honble Madras High Court have in their decisions in Bansal industries 2007(207) ELT 346(mad) has held that mens rea is not required for imposition of penalty under Customs Act. Under the facts and circumstances of the case and respectfully relying on the above quoted decision of Honble CESTAT and High Court, I hold that the appellant is liable for fine and penalty under the Customs Act, 1962.
Aggrieved by the aforesaid order of the Commissioner (appeals), the appellant is before me.
2. Shri. J.C. Patel, Ld. Counsel for the appellant submits that the representative samples were drawn and got it tested from the Central Drugs Testing Laboratory, Chennai and according to the test report the Revenue has contended that batch no. 12N313 is of below standard and therefore goods were confiscated. He submits that the testing has not been done as per the method prescribed under Drugs and Cosmetics rules. It is his submission that Rule 125 of Drugs and Cosmetics Rules, 1945 provides that the standards for mechanical contraceptives shall be such as are laid down in Schedule R. In the Schedule R, in respect of condoms as per the procedure prescribed under clause 4 B; sample condoms shall be tested for Bursting Volume and Pressure Test. Statistical sampling for this test shall be done in accordance with the plan set out in Annexure III to this Schedule. Schedule III, as per sampling plan for Bursting Volume and Pressure Test under Annexure III for batch size of 150001 lakhs to 5 lakhs the sample size should be 315 and when out of 315, if the rejection number comes to 11 or more, the batch shall be rejected. It is his submission that as per the test report it is apparent that the prescribed statutory sampling plan was not followed for the reason that test of 45 pieces was done as against prescribed number of 315. Therefore appellant has raised serious dispute as regards the test report and vide their letter dated 10/12/2012 addressing to The Assistant Drug Controller(India), Director General of Health Service, JNPT and copy to the Asst. Commissioner of Customs, JNPT requested for re-testing, however, the said letter was not considered nor re-testing was allowed. He submits that as per the test report of the supplier the goods were of standard prescribed. He also submits that when it was found that the goods is of sub-standard the appellant proposed the re-export of the goods and factually same was re-exported and for this reason also goods are not liable for confiscation and penalty. Ld. Counsel has placed reliance on the following case laws:
(a) [2008(232) E.L.T 527(Tri.-Mumbai)] Veenu Agency Vs. CC(Exports), Mumbai.
(b) [2007(208)E.L.T.535(Tri-Mumbai)] Garg Industries Ltd. Vs. CC of Ex. Mumbai
(c) [2010(262)E.L.T. 428(Tri Bang.) Terapanth Foods Ltd. Vs. CC, Mangalore He further submits that it was provided in Rule 141 of Drugs and Cosmetics Rules, 1945, that the appellant have option of re-shipment therefore when Drugs and Cosmetics Rules itself provides for re-shipment, the goods can not be confiscated. In support of his claim he placed reliance on the following judgments
(a) [2003(160) E.L.T. 1103(Tri-Del.)] Ind-Swift Ltd. Vs. CC, New Delhi
(b) [C-IV/1472/WZB/2003 dated 18/12/2003] M/s. Troikka Laboratories Vs. CC, Mumbai.
3. On the other hand, Shri. Ahibaran, Ld. Addl. Commissioner (A.R.) appearing on behalf of Revenue reiterates the finings of the impugned order. He further submits that per the test report given by the Central Drugs Testing Laboratory, Chennai giving its report that out of 4 specifications of goods 1 item was found as sub-standard and accordingly its import was not allowed. Therefore the lower authority has correctly held the goods liable for confiscation and the appellant is liable for penalty.
4. I have carefully considered the submissions made by both the sides and perused the records.
5. I have gone through various provisions of Drugs and Cosmetics Rules, 1945 as referred by the Ld. Counsel for the appellant, which are reproduced below:
Drugs and Cosmetics Rules, 1945
125. Standards for substances(other than food) intended to affect the structure or any function of human body-contraceptives-(1) The Standards for mechanical contraceptives shall be such as are laid down in Schedule R. Schedule R Procedure for sampling and testing of finished products by a manufacturer-
B. Bursting Volume and Pressure Test.- (1) Sample condoms shall be tested for Bursting Volume and Pressure Test. Statistical sampling for this test shall be done in accordance with the plan set out in Annexure III to this Schedule.
Annexure III Batch Size: 150001 lakhs to 5 lakhs Single Sampling Plan.
Sample Size 315 AQL-1.5 AC- 10 R- 11
On going through the above provision as regards the standard of goods i.e. condoms, it is provided that standard of mechanical contraceptives should be as provided under the Schedule R. According to which testing of Bursting Volumes and Pressure test should be done in accordance with plan set out in Annexure III to this Schedule. Annexure III prescribed that for batch size 150001 lakhs to 5 lakhs, the sample size should be 315 pieces and out of 315 pieces if the rejection number is 11 or more the batch is liable for rejection. As against the aforesaid method of testing provided under Drugs and Cosmetics Rules, 1945, it is observed from the test report given by Central Drugs Testing Laboratory, Chennai, the norms prescribed in Rules were not followed inasmuch as batch size taken 45 pieces, therefore the test carried out by the Central Drugs Testing Laboratory, Chennai can not be considered in accordance with law. On this serious discrepancy, the appellant pointed out to the authority and also requested the re-testing of the sample in accordance with the method prescribed under Drugs and Cosmetics Rules, 1945. The same was neither considered nor sample was re-tested. Therefore, I am of the view that subject goods was not liable for confiscation. I also agree with the Ld. Counsel that Rule 141 of the Drugs and Cosmetics Rules, 1945 provides for re-shipment of the goods and goods admittedly re-exported. For this reason also the goods are not liable for confiscation and also not liable for consequential penalty. The ratio of the judgments relied upon by the Ld. Counsel are squarely applicable in the present case. In view of the above discussions I find that orders of both the lower authorities are not sustainable, hence the same are set aside. The appeal is allowed with consequential relief, if any, in accordance with law.
(Dictated in court) Ramesh Nair Member (Judicial)) sk 8