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Sun Export Corporation Vs. Collector of Customs - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Mumbai
Decided On
Reported in(1983)LC869DTri(Mum.)bai
AppellantSun Export Corporation
RespondentCollector of Customs
Excerpt:
.....a distinct article, but is derived by solution of sorbitol in water etc. he has submitted that the entry sorbitol at sr. no. 392 of appendix 5 is generic and it would cover all grades, formulations, salts, etc. of the substance. he has further stated that if enquiries were made in the market, the person answering the query will have to ask for clarification as to whether sorbitol powder was required or sorbitol solution. therefore, sorbitol was a generic term and it would cover all its grades. the quotations relied on by the appellants would confirm this position.they are for the solution and not for powder. this being the position, the import of solution cannot be permitted under o.g.l. vide appendix 10 sr. no. 1. the import under o.g.l. is subject to the restrictions under chapter 5.....
Judgment:
1. This is an appeal under Sec. 129-A of the Customs Act filed by M/s.

Sun Export Corporation against Orders No. S/10-83/81 dated 6-11-81 of the Deputy Collector of Customs and No. S/49-76/82-L dated 30-9-82 of the Appellate Collector of Customs under which a fine of Rs. 15,000 has been levied in lieu of confiscation of the consignment of 20 steel drums of Sorbitol 70% USP valued at Rs. 28,985 imported under Bill of Entry IGM No. 962 item No. 280 Ex. s.s. LENINO. The learned Advocate has contended that the orders of the lower authorities are based on mis-application of the Import Policy. They have held that the entry at Sr. No. 392 "Sorbitol" includes Sorbitol solution 70% USP which has been imported by the appellants. This is not correct as the two commodities are quite separate. The learned Advocate contended that the importers had submitted two licences which had been specifically endorsed with permission to import goods under O.G.L. The basic claim of the appellants was that the solution 70% USP was not covered under Sr. No. 392 of Appendix 5 and therefore, the same could be imported by them under Appendix 10 Sr. No. 1 as raw material etc. The department had taken the stand that Sorbitol solution was also covered by the entry 392 of Appendix 5. This stand of the department was not correct.

In support of his contention, the learned Advocate has relied on the U.S. Pharmacopeia. He has argued that sorbitol and sorbitol solution have different monograms at pages 573 and 574 of U.S. Pharmacopeia.

Copies of these monograms have also been submitted in support of the contention. The Advocate has further argued that the Customs Authorities consider Sorbitol as a drug and on import it is not charged to c.v. duty as the same is exempt under Notification No. 55/75, dt.

1-3-75. On the other hand the practice of the Customs House is to charge c.v. duty on the import of Sorbitol solution 70% USP as it is considered as a pharmaceutical. The Advocate had also submitted extracts from Remingtons Pharmaceuticals Sciences to show that Sorbitol and Sorbitol solution were quite distinct from each other. Extracts from this have also been submitted. Continuing his arguments, the learned Advocate has further pointed out that whenever the Import Control Authorities have the intention to extend the scope of any item, this intention was clarified in the policy itself by necessary additions, explanations, etc. In support of his contention he has referred to ammonia (liquor) at Sr. No. 29 of Appendix 3, hydrochloric acid at Sr. No. 259 of the same Appendix; anylene/anylene oil and salts at Sr. No. 49 of Appendix 3. The learned Advocate has argued that the entry of ammonia (liquor) does not cover ammonia gas and the same could be imported under O.G.L. Similarly, the entry under hydrochloric acid would not cover hydrogen-chloride gas and the same could also be imported under O.G.L. As per this pattern followed in making the entries in the ITC policy, the entry for Sorbitol would have been amplified by inclusion of this solution also if the intention was to cover solution under the parent item. The Advocate has also drawn our attention to the entry at Sr. No. 696 of Appendix 3 to show that the intention of the import policy makers is always clarified by such entries. He has emphasised that Sorbitol powder and Sorbitol solution 70% USP are not of the same nature and hence, the entry for Sorbitol would not cover the solution. The Deputy Collector had not accepted the analogies or the illustrations mentioned by the Advocate on the ground that the illustrations referred to chemicals, while the goods under import were drugs. The Deputy Collector had also referred to the condensed Chemical Dictionary to say that the two articles were the same. The relevant extracts from the condensed Chemical Dictionary have been submitted and it has been pointed out that Sorbitol solution is a grade of Sorbitol and hence a different commodity. Apart from the chemical literature which distinguishes between the two substances the chemical parlance also makes distinction between the same. The Advocate has stated that if one were to ask for quotations for Sorbitol, vendors will not give quotation for the solution or vice versa. In support of his contention, he has relied on two quotations from M/s. National Overseas Corporation and M/s. Voltas Ltd., to prove his point that the quotations are for Sorbitol 70% solution USP. The Advocate has therefore, submitted that the two commodities being separate, the orders of the lower authorities were incorrect and the same should be set aside and the fine paid should be refunded.

2. The learned S.D.R. has opposed the submissions. He has argued that it is necessary to know what the imported article is. He has pointed out that Sorbitol is inorganic chemical and it can be of different grades like any other organic chemical. Referring to the Deputy Collector's findings and the extracts from the Chemical Dictionary submitted by him, he has pointed out that the solution is mentioned only as a grade of Sorbitol. It is therefore not a distinct article, but is derived by solution of Sorbitol in water etc. He has submitted that the entry Sorbitol at Sr. No. 392 of Appendix 5 is generic and it would cover all grades, formulations, salts, etc. of the substance. He has further stated that if enquiries were made in the market, the person answering the query will have to ask for clarification as to whether Sorbitol powder was required or Sorbitol solution. Therefore, Sorbitol was a generic term and it would cover all its grades. The quotations relied on by the appellants would confirm this position.

They are for the solution and not for powder. This being the position, the import of solution cannot be permitted under O.G.L. vide Appendix 10 Sr. No. 1. The import under O.G.L. is subject to the restrictions under Chapter 5 etc. Since Sorbitol is restricted, its import under O.G.L. is not permissible. The S.D.R. has also pointed out that in view of the foregoing facts, the endorsement of the licences for permission to import under O.G.L. in terms of para 85 of the policy was of no avail to the appellants. As regards the appellants argument that c.v.duty is not chargeable on import of Sorbitol as the same was treated as a drug. The learned Departmental Representative has pointed that even for the goods under import no c.v. duty has been levied and the same was held as exempt under Notification No. 55/75, dt. 1-3-75 as amended.

He has drawn our attention to the photocopy of the Bill of Entry filed by the appellants. He has also explained that the interpretation of the import policy is quite a separate matter from the classification of the article under the Indian Customs Tariff for the purpose or levying duty. Therefore, one could not be relied on to interpret the other. As regards the chemical composition of Sorbitol powder and Sorbitol solution, Shri Gidwani pointed out that both had the same chemical structure and composition. On the other hand, it was not so in the case of illustrations of chemicals cited by the learned Advocate for the appellants. He pointed out that the chemical formula for ammonia gas was NH3 while that for ammonia liquor was NH4OH. This indicated that it was not a simple solution of ammonia gas in water, but a different chemical compound. The same was the case with hydrochloric acid and hydrogenchloride gas. Hydrogen chloride gas dissolved in water would not result in hydrochloric acid. Both the chemicals had different properties. When the Import Trade Control Authorities had mentioned Sorbitol, their intention was to restrict the import of this commodity in all its forms and grades. Shri Gidwani also referred to the ITC Public Notice No. 46/80, dt. 1-12-80 and stated that the provisions of the Public Notice were fully applicable to the goods under import, as in this case, the goods had been shipped on 3-7-81 and therefore, the import would be governed by the provisions of this Public Notice as incorporated in the Policy Book for A.M. 82. Relying on the BTN, Shri Gidwani also submitted that the solution was the same as powder. The relevant extracts from BTN have also been submitted for record. Lastly, Shri Gidwani referred to the request of the appellants for grant of detention certificate. He explained that the detention certificate was issued by the Customs Authorities by way of a recommendation to the Port Trust for reducing or waiving the demurrage charges. This was not a matter falling within the Customs Act and therefore, it could not be a subject matter of appeal to the Tribunal. For the aforesaid reasons he pleaded that the appeal should be dismissed.

3. The learned Advocate, Shri Nankani in reply has stated that Notification No. 55/75, dt. 1-3-75 as amended covered drugs and Pharmaceuticals both, and therefore it was in this context that no c.v.duty was charged on the bill of entry for the import of Sorbitol 70% solution, as the same was treated as a pharmaceutical. Now this notification had been replaced by Notification No. 104/82, dt. 28-2-82 and in this notification the position was different. As regards the appellants' request for grant of detention certificate, he submitted that a direction can be given to the Customs Authorities for issue of the same as the Tribunal had inherent powers to pass orders not only in the matters falling within the Customs Act, but also in peripheral issues.

4. We have examined the submissions of the appellants and the respondent. The main question for determination is to interpret the entry Sorbitol at Sr. No. 392 of Appendix 5. We are in agreement on this point with the submissions made by the departmental representative. The chemical authorities cannot be relied upon to interpret the import policy. The entries in the import policy have to be understood in terms in which they are made. "Sorbitol" is a generic entry and therefore, all grades including salts and solution will be covered by this entry. The pharmaceutical and the chemical authorities cited by the appellants do not set out for a moment that the two substances are separate. On the other hand they point out that Sorbitol liquid is the solution of Sorbitol powder in water. Similarly, the authorities cited by Shri Gidwani leave no room for doubt that powder and solution are one and the same. The quotations referred to by the appellants do not justify the appellants' argument that solution is separate from Sorbitol powder, in the generic term. Hence we find that there is no justification for drawing the distinction between Sorbitol and Sorbitol solution 70% USP. As regards the further arguments of the Advocate by way of analogies of the entries of chemicals in the ITC policy, we find that they have been fully demolished by the counter argument of the departmental representative. Besides, the Advocate has not been able to substantiate his contention by submission of documentary evidence to show that the Custom House has permitted import of ammonia gas, hydrogen chloride gas etc. tinder O.G.L. as contended by the Advocate. Hence there is no warrant in treating the solution as separate from the Sorbitol powder. In this view we find that the licences are not valid for the import of the goods in question and that the Deputy Collector's order of levying fine is quite correct and legal. As regards the request of the appellants for issue of the detention certificate, we find that the same is not governed by the Customs Act and therefore, the grant or denial of such a certificate is not a decision or order under the Customs Act and the same cannot be a subject matter of the appeal to the Tribunal. It is for this purpose that this aspect is not included in the Deputy Collector's order or the order of the Appellate Collector of Customs. There is, therefore, no question of our taking note of this request in the appeal. In view of these facts, we confirm the orders of the lower authorities and dismiss the appeal.


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