1. M/s. Yogesh Brothers have tiled this appeal to the Tribunal against the order No. S/10-1011/86/ACC(1) dated 27.6.1986 of the Collector of Customs, Air Cargo Complex, Bombay confiscating absolutely a consignment of two cartons containing Laminaria Sea Tangle Tents and Golden Cardboard boxes non sterile imported by air and sought to be cleared under B/E No. 3927 dated 9.4.1986 for the reason that the import of the goods in question was not covered under the OGL in Appendix 6 SI. No. 34(iii) of the Import Policy 1985-88. The facts of the case are that the appellants imported the aforesaid goods by air and sought their clearance under the OGL claiming their release as Intra Uterine Contraceptive device. The Customs authorities held that the goods in question were not intra uterine contraceptive devices falling under OGL in Appendix 6 SI. No. 34(iii) but they were Sea Tangle Tents used for terminating pregnancy. In the show cause notice issued to the importer it was further alleged that the import of the goods was not covered by the Drugs Act and that the import did not have the permission of the Drugs Controller of India as envisaged in the OGL. The Collector of Customs, Airport held the adjudication proceedings, considered the written explanation of the appellants and the oral submissions made by Dr. Kantawala and thereafter passed the impugned order confiscating the goods absolutely for contravention of the import Trade Regulations.
2. On behalf of the appellants Dr. Kantawala referred to the provisions of the OGL as set out in Ex. F to the appeal. He also drew our attention to the description of the goods as contained in the relative B/E and in the invoice. He argued that both the B/E declaration and the invoice described the goods as Intra Uterine Contraceptive devices. But their clearance under the OGL was objected on two grounds ; firstly that the goods were not contraceptive and secondly they were not approved by the Drugs Controller of India. Dr. Kantawala contended that the second condition of obtaining the approval of the Drugs Controller of India was not capable of enforcement. Instead the Technical Officer in the office of the Asst. Drugs Controller had approved the import of the goods in question in terms of the OGL and accordingly, the requirements of the OGL had been satisfied. For these reasons, Dr.
Kantawala contended that the objection taken by the Collector against the clearance of the goods was not correct. As an alternative argument, Dr. Kantawala contended that the basis of the allegations made in the show cause notice that Laminaria Sea Tangle Tents and their use was for terminating pregnancy, was not furnished to the importers and hence on this ground also the Collector's order of confiscation was not tenable.
Dr. Kantawala referred to the Asstt. Collector's letter dated 20.6.1986 addressed to the Asstt. Drugs Controller, New Customs House, Bombay and the latter's reply in his letter dated 23.6.1986. He stated that copies of these letters were made known to the importers only during the course of the proceedings before the High Court and hence in arriving at the aforesaid conclusion, confiscating goods absolutely, the Collector relied on material which was not disclosed to the appellants.
Hence, Dr. Kantawala contended that his letter was not valid. Reverting to the first aspect of his contention that the condition in the OGL was not capable of implementation, Dr. Kantawala explained that in the opinion of the Asstt. Drugs Controller, the goods in question were not covered under the Drugs and Cosmetics Act, 1940 and hence the Drugs Controller would not have any jurisdiction of saying whether the import was approved or not. However, the Asstt. Drugs Controller had not denied that the goods were contraceptive. However, the importers withdrew the W.P. agreeing with the Collector adjudicating the case.
Thereafter the Collector passed the impugned order confiscating the imported 'consignment. Dr. Kantawala contended that since the import policy in this matter was not capable of being implemented the same should be treated as ambiguous and the benefit of ambiguity should be given to the importers. In this behalf he relied on two decisions reported in 1980 ELT 717. Explaining the alternate argument, Dr.
Kantawala contended that the Assistant Drugs Controller was exercising the delegated functions on behalf of the Drugs Controller of India. The Technical Officer in the Drugs Controller's Office had permitted the import and his endorsement in the B/E should be taken as the permission of the Drugs Controller in terms of the OGL. There was thus substantial compliance with the requirements of the OGL. In this behalf he relied on the judgment of the Supreme Court in the case of K. Kamaraj Nadar AIR 1958 S.C. 687. He read out para 31 of the judgment in support of his contention. Relying on the ratio of this decision Dr. Kantawala contended that the Technical Officer's endorsement should be taken as substantial compliance with the requirements of the OGL. He further relied on the Supreme Court's decision reported in AIR 1970 S.C. 765.
In view of these submissions, Dr. Kantawala contended that the appeal should be allowed and the Collector's order should be set aside.
3. On behalf of the Collector, Shri Pal submitted the samples of the goods imported by the appellants. He explained that the samples had been drawn from the consignment and they were representative of the same. He further added that these were a type of Sea weeds meant for terminating pregnancy. On the other hand, to be eligible for clearance as a contraceptive under the OGL the goods imported should be used for preventing conception. The use of the imported goods for terminating pregnancy was not denied by the importers. Therefore, these goods were not contraceptive devices as claimed by the importers. After "no objection" had been given to the import of the goods by the Technical Officer of the Drugs Controller's Department, the importers approached the Bombay High Court and the appellants took the same contention before the Bombay High Court that the imported goods were contraceptive devices. But the High Court rejected their petition as having been withdrawn. In such circumstances, the Technical Officer's endorsement of "No objection" on the B/E was without any meaning. The Technical Officer was not competent to permit the import of the goods in question under the OGL. On the other hand, the Collector had made enquiry regarding the use of the goods from the Assistant Drugs Controller and the Assistant Drugs Controller's reply in his letter dated 23.6.1986 was very categoric. A copy of the letter making the query and copy of the letter answering this were given to the importers. The Assistant Drugs Controller's opinion had not been referred. The appellants had merely put forward the contention that the condition in the OGL was not capable of being implemented. This was on account of the fact that the imported goods were not drugs but only Sea Weeds and they could not be treated as drugs for the purposes of the import under the OGL. The condition of the OGL requires approval by the Drugs Controller and there was no ambiguity in the Policy in this behalf. The condition of the OGL was binding on the importers and the judgments relied upon by the learned advocate were therefore not relevant in the matter. Since the import of the goods was not permitted under the OGL, the Collector's order of absolute confiscation was fully justified particularly when the goods represented health hazard. Shri Pal, therefore, submitted that the Collector's order should be confirmed and the appeal should be rejected.
4. We have examined the submissions made on both the sides. The question which calls for determination is whether the import of the goods in question is permissible in terms of the OGL in Appendix 6 Sl.
No. 34(iii). This serial number covers family welfare equipments/instruments/appliances of the specific categories mentioned therein. The appellants claimed clearance of the goods in terms of sub-sl. no. (iii) under sl. No. 34 which covers Intra Uterine contraceptive devices as approved by the Drugs Controller (India) New Delhi. Therefore, the question which calls for determination is whether the imported goods can be treated as intra uterine contraceptive device for clearance under the aforesaid OGL. The appellants have made two-fold submissions in this behalf. Their first contention is that in the present case this condition is not capable of enforcement as the imported consignment does not fall within the jurisdiction of the Drugs Controller (India). Examining their contention it is seen on the basis of the allegation in the show cause notice and on the letter dated 23.6.1986 of the Assistant Drugs Controller, Bombay that the imported goods "Larninaria Sea Tangle Tents" are not considered as a drug as far as the provisions of the Drugs and Cosmetics Act, 1940 and the rules thereunder are concerned. He has quoted the letter dated 27.7.1983 of the Director General of Health Service in his letter. It is therefore, seen that the goods are not intra uterine contraceptive devices. This being so, the import falls outside the OGL in Appendix 6 sl. No.34(iii) of the Import Policy 1985-88. In that case the import is without any licence and therefore contravenes the Import Trade Control Regulations. The other alternate submission of the advocate is that the "no objection" certificate of the Assistant Drugs Controller should be taken as the permission on behalf of the Drugs Controller (India) as envisaged in the OGL. This alternate submission is exactly opposite with regard to the first contention of the advocate. In case it is held that the goods are not covered by the Drugs & Cosmetics Act, 1940, the endorsement of "no objection" given by the Technical Officer would be meaningless. He would not have authority to either permit or not to permit import of any goods in those circumstances. Even if it were to be considered for the purpose of argument that the Technical Officer had the authority to permit the goods it is seen that it is over-ruled by the Sr. Officer vide the letter dated 23.6.1986 of the Assistant Drugs Controller, Bombay. Therefore, any such permission given in terms of the OGL was revoked by the Sr. Officer's letter. It is further seen that the copies of the Assistant Collector's letter and the Assistant Drugs Controller's reply were furnished to the importers before the Collector passed the impugned order and the learned advocate was shown the originals of these letters when the personal hearing was granted by the Collector to the importers. There is, therefore, no denial of natural justice in this behalf as contended by the advocate. In the aforesaid view, we find that the goods are not Intra Uterine Contraceptive Devices as envisaged in the OGL. Their import is therefore clearly prohibited in terms of the Imports Control Order. In these circumstances, the Collector's order of absolute confiscation of the goods is correct. We confirm the same and reject the appeal.
5. I entirely agree with Brother Dilipsinhji that the order of the Collector is to be confirmed and the appeal is to be rejected. But then, I would like to add my own reasons for the above conclusion : 6. Before proceeding to consider the contentions urged by Dr. Kantawala during the hearing of the appeal, I would like to refer to the grounds urged in the appeal memorandum. The ground (a) is very general in nature. The ground (b) reads : The appellants submit that the question of licences depends on whether the imported goods are, in fact contraceptives or not".
In terms of the ITC Policy, these goods would fail under Sl. No.34(iii) of the Appendix - 6 - provided they are approved by the Drugs Controller, New Delhi ]".
7. It is further stated in that ground "In fact all drugs and the like have to be so approved by the said Drugs Controller. Now, it is not possible for an importer to await such a clearance in respect of each consignment. Therefore, the said Drugs Controller has appointed Assistant Drugs Controller at various parts to grant such no objection, i.e., his approval for release. In the work they are assisted by Junior Officers who are designated as Technical Officers. Therefore, it is enough if such a Technical Officer issues a no objection. Such no objections are always construed as having been issued by the Drugs Controller (India). It is then stated that on reverse of the Bill of Entry 'no objection' has been endorsed by the Technical Officer and this endorsement is to be construed as an approval of the Drugs Controller. It was further alleged in this ground that the Drugs Controller is an Officer approved by the I.T.C. authorities to pass judgment with regard to the scope of particular entry of Appendix 6.
Relying on the decision of the Bombay High Court, in the matter of Lokesh Chemicals v. Union of India (1981 ELT 243) it was urged that the Customs Authorities have no jurisdiction to raise any question of policy or interpretation thereof as it is absolutely within the purview of the licensing authorities. It was then contended that in view of the delegated authority, the Drugs Controller becomes licensing authority himself. After referring to the correspondence that took place between the Assistant Drug Controller and the Assistant Collector, it was urged in the appeal memorandum that the exchange of correspondence revealed the pre-determined attitude of the Collector and therefore the personal hearing granted to the appellant was in the nature of a mere formality.
8. During the hearing of the appeal, Dr. Kantawala urged three more contentions. Firstly, the Collector had relied on material which was not disclosed to the appellant. Secondly, that according to the letter of the Assistant Drugs Controller, the goods imported, namely, Sea Tangle Tents is not a drug and therefore not covered by the Drugs and Cosmetics Act, and as such, the Drugs Controller would not have any jurisdiction to give his approval. If the Drug Controller has no jurisdiction to accord approval according to Dr. Kantawala that part of the requirement in the Policy becomes unenforceable. Thirdly, since the Technical Officer had said 'no objection' and since the Assistant Drugs Controller did not opine that the goods in question is not a contraceptive, the Collector's order has become bad in law.
9. From the grounds taken in the appeal memorandum, it is clear that the appellant had rightly understood the scope of the Policy. That apart, there is no ambiguity also in the Policy. The Intra Uterine Contraceptive Devices allowed for import under OGL under item 34(iii) are those approved by the Drugs Controller, New Delhi. In the appeal memorandum, it was contended that there was such an approval of the Drugs Controller. The contention was that the Drugs Controller had delegated his powers to Assistant Drugs Controllers at various Ports and that there are Junior Officers designated as Technical Officers to assist the Asstt. Drugs Controller and the Technical Officer had endorsed no objection for clearance of the goods in question, and therefore, it was urged that there was approval by the Drugs Controller. The appellants have not chosen to produce any evidence to support their contention that the Drugs Controller had delegated his powers to the Asstt. Drugs Controller. Further, there is also no evidence that the Technical Officers were appointed to assist the Assistant Drugs Controller. Even assuming that the Technical Officers were appointed to assist the Assistant Drugs Controller and further assuming that the powers of the Drugs Controller had been delegated to the Assistant Drugs Controller, no objection endorsed by the Technical Officer under no stretch of imagination can be considered as an approval either by the Assistant Drugs Controller or by the Drugs Controller. It is settled law that a delegatee cannot further delegate.
It is not contended that the Assistant Drugs Controller had delegated his powers to Technical Officer. On the other hand, the letters relied on by the Department which form part of the paper book filed by the appellants to the Assistant Drugs Controller in his letter dated 23.6.1986 categorically stated that from the records available from his office the subject item has so far ,been not approved as a contraceptive by the Drugs Controller (India).
10. The above apart the power to approve Intra Uterine Contraceptive Devices was conferred on the Drugs Controller (India). The Policy did not authorise the Drugs Controller of India to delegate that power to any one of his subordinates. In any case, the appellants have not adduced any evidence to establish that the Drugs Controller had delegated his power of approval conferred on him under the Policy to any of his subordinates. Therefore, the contention of Dr. Kantawala that the no objection given by Technical Officer on the Bill of Entry should be treated as an approval by the Drugs Controller of India of the goods in question as Intra Uterine Contraceptive Devices cannot be accepted.
11. Since the appellants have failed to establish that the Drugs Controller had been authorised to delegate the power conferred on him under the Policy and since they had further failed to establish that in fact the Drugs Controller had delegated his power to the Assistant Drugs Controller, the contention based on the decision of the Bombay High Court in Lokeh Chemical case that the Customs authorities have no jurisdiction to raise which is within the purview of the licensing authorities loses its relevancy. The said contention would have had validity if the contention that the Drugs Controller had delegated his authority to the Assistant Drugs Controller and that the endorsement made by the Technical Officer appointed in the office of the Assistant Drugs Controller has the effect of granting the approval by the Drugs Controller has been accepted.
12. As regards the new contentions urged, the first of the contentions that the Collector had relied on materials which were not disclosed to the appellants has to be rejected firstly that it is factually incorrect and secondly the appellants themselves relied on those letters in support of their second contention. It may also be stated here that in the memorandum of appeal there was no contention that there had been denial of principles of natural justice. The contention on the other hand, was that there was a pre-determined attitude on the part of the Collector.
13. It is now well settled even if some materials are not disclosed in the show cause notice the adjudicating authority is not preclude from relying on those materials if during the adjudication proceedings the party who is going to be affected is given sufficient notice of those materials and given an opportunity to adduce evidence in rebuttal or to make effective representation against the use of such material. Dr.
Kantawala had admitted that during the adjudication proceedings, the Collector had shown the correspondence on which he based reliance. If the appellants had not objected to it that stage or in their appeal memo, they cannot be allowed to urge the ground at the hearing of the appeal.
14. Coming to the second of the grounds suffice it to say that the party who wants to take advantage of the facility granted in the Policy, cannot be allowed to challenge. The very policy on the ground that a particular part of which the party is not able to comply with is not capable of enforcement.
15. The above apart, there is also no substance in the contention of Dr. Kantawala that the Drugs Controller cannot approve of a contraceptive which according to Dr. Kantawala, was not a drug within the meaning of Drugs and Cosmetics Act. For the purpose of this appeal, one need not go into the question whether Sea tangle imported by the appellants in a drug within the meaning of that expression in the Drugs and Cosmetics Act. The Policy makers rightly or wrongly conferred the power of approval on the Drugs Controller. If an importer intends to import any Intra Uterine Contraceptive Devices he has to satisfy the Customs Authorities that that contraceptive device was approved by the Drugs Controller of India. It is only such of the Intra Uterine Contraceptive Devices which are approved by the Drugs Controller that are allowed to be imported under OGL. If the grievance of the appellant is that the power of approval should not have been given to the Drugs Controller but to some other agency, the authority before whom that grievance could be ventilated will not be either the Customs or the adjudicating authority or even the Appellate Tribunal.
16. For the purpose of this appeal, I need not consider the contentions urged by Shri Pal nor it is necessary even to go into the question whether the imported goods, namely, Sea Tangle Tents is or is not Intra Uterine Contraceptive Devices. It is not sufficient if the appellant establishes that the imported goods is an Intra Uterine Contraceptive Device. It is further necessary for the appellant to establish that the IUCD was approved by the Drugs Controller of India and no evidence was adduced to establish that the Drugs Controller had approved the goods in question as an IUCD.17. For the reasons stated above, agreeing with Brother Dilipsinhji, I confirm the order passed by the Collector and reject this appeal.