Per : Ashok Jindal
One of the appellants namely M/s Calyx Chemicals and Pharmaceuticals Ltd. (the Exporter) filed appeal against the confiscation and penalty of the impugned goods and M/s Deekay Shipping Services (the CHA), Shri Ketan Adhia, Jitendra Shah and Shri Shailesh Sawant have filed appeals against the imposition of penalties.
2. The facts of the case are that the exporter filed two shipping bills through their CHA for export of the goods viz. ZOLEDRONATE and it was alleged against the appellants that to export the said goods they require a No Objection Certificate issued by the Asst. Drug Controller of India permitting clearance for export. The goods were brought to the export shed. On scrutiny of the documents of export submitted by the appellants, it was observed that there was difference in the signature of the Asst. Drug Controller and it was found that the signature on the No Objection Certificate was forged. Accordingly, the goods were seized and confiscated. Redemption fine was imposed on the exporter and penalties were imposed on all the appellants. Aggrieved from the said order, the appellants are on appeal before me.
3. The learned Advocate for the exporter submitted that the impugned goods i.e. ZOLEDRONATE is not covered under Drugs and Cosmetics Act 1940 as the said goods do not qualify as drugs or medicine. He further submitted that the provisions of Drugs and Control Act, 1940 deals with the import and local manufacture and sale of the goods but does not deal with the Drugs and Cosmetics which are to be exported. In these circumstances, the exporter is not required No Objection Certificate from the Drugs Controller. When the NOC is not required, the goods cannot be confiscated as per the provisions of Section 113 of the Customs Act and penalties cannot be levied.
4. The learned Advocate for the CHA submitted that the work for clearance of the said consignment was ascertained to Shri Ketan Adhia. The CHA was not aware from where Shri Ketan Adhia obtained the NOC issued by the Asst. Drug Controller of India. Hence, no penalty can be levied on the CHA.
5. The learned Advocate for Shri Ketan Adhia submitted that the findings of the adjudicating authority that the signature of the Asst. Drug Controller of India are forged one but no expert opinion has been obtained by the Department as to whether this signature is forged or not? Without any corroborative evidence, the charge of forged signature cannot be established. In view of the above, the impugned order is to be set aside.
6. The learned Advocate for the Exporter has also submitted that in their earlier clearances for export, the Department did not ask for NOC. He also submitted that only in this case they were asked to furnish NOC from the office of the Drug Controller but in all other cases they have allowed to export freely. After holding this consignment, the Depart has cleared the impugned goods after the order of Sessions Judge.
7. On the other hand, the learned DR submitted that the impugned goods viz. ZOLEDRONATE is a drug as per Section 3(b) (iii) of Drugs and Cosmetics Act, 1940 wherein it is mentioned that ‘all substances intended for use as components of drug including empty gelatin capsules. Hence, these goods are prohibited goods and the appellants have violated the provisions of Customs Act. Hence, the impugned order is to be sustained. He also submitted that the appellants were not allowed to manufacture the impugned goods but only they were allowed to use the impugned goods for testing purposes.
8. Heard both sides.
9. In this case the appellants filed the shipping bills for export of the goods viz. ZOLEDRONATE. The said product can be used as drugs only after processing the same with the mixture of other chemicals. In these terms, I find that the impugned goods are covered under the definition of drugs as per Section 3(b) (iii) of the Drugs and Cosmetics Act, 1940. I do agree with the submissions of the learned Advocate that the Drugs and Cosmetics Act, 1940 deals with the import of the goods or local manufacture and sale of the goods but there is no provision for export of the impugned goods. Hence, the goods can be exported freely. Moreover, the department was allowing to export the impugned goods before this export consignment and after this also.
10. Hence, the No Objection Certificate from the Asst. Drug Controller is not required in the case of export of the impugned goods. In the show-cause notice allegation has been made against the appellant as hereunder:-
9. From the foregoing, it appears that the exporter had been issued with a license under Form 29 by the Joint Commissioner, Food and Drug Administration, Thane, which specified that the licence issued was for the purpose of examination, test or analysis of the product ‘Zoledronic Acid’. However, it appears they have manufactured ‘Zoledronic Acid’ and attempted to export the same inspite of knowing that they did not possess a valid Manufacturing and Sale Licence issued by the proper officer under the Drugs and Cosmetics Act, 1940 and that the export of the goods required NOC from office of the Asst. Drug Controller. Further, it appeared that as they could not obtain the necessary ‘No Objection Certificate’ from the office of the Asst. Drug Controller for the reason that they did not have a proper licence issued under the Drug and Cosmetics Act, 1940 for its manufacture and sale including export, the signature of the Technical Officer of the office of the Asstt. Drug Controller who issues such No Objection Certificate for such exports, was forged on the documents with the help of the CHA M/s. Deekay Shipping Services so as to pass of the goods authorised for export under the Drug and Cosmetics Act, and attempted to export the goods under such forged documents illegally. It further appeared that but for the detection by Customs Officers of the foregoing forgery of documents indulged in by them, the goods would have been exported illegally.
The allegation in the show-cause notice are that the exporter is required NOC from the Asst. Drug Controller to export the impugned goods and the NOCs obtained from the Asst. Drug Controller is the forged one.
11. As it is clear that to export the impugned goods, there is no prohibition as per the Drugs and Cosmetics Act, 1940. In such circumstances, the allegation that NOC required to export the impugned good, is not sustainable.
12. With regard to the forged signature of the Asst. Drug Controller, it is true that no expert opinion has been obtained to corroborate the allegation made against the appellants. In fact, the allegation of forged signature is a serious allegation which is to be dealt with severely but no efforts have been made to deal such allegations by the department and merely penalties were imposed on the appellants. Hence, the order confiscating the impugned goods is set aside. With regard to penalties, when the goods are not liable for confiscation, penalties on the appellants is also not leviable.
13. With these observations in the facts and circumstances of the case, the impugned order is set aside. Appeals are allowed with consequential relief.