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NavIn Chemicals Manufacturing Vs. Collector of Customs - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Mumbai
Decided On
Reported in(1983)LC911DTri(Mum.)bai
AppellantNavIn Chemicals Manufacturing
RespondentCollector of Customs
Excerpt:
.....dated 17-2-1983 of the addl.collector of customs, bombay, confiscating 10 kgs. of crude emetine valued at rs. l,25,176/- and allowing the same to be redeemed on payment of a fine of rs. 10.000/-. at the outset, the learned departmental representative. shri krishan kumar has objected to the appeal being heard and decided on merits by me, on the ground that it involves a question relating to rate of duty of customs, and therefore, in terms of section 129-c(3) of the customs act the same should be heard by the special bench. shri daya sagar, who appeared on behalf of the appellants stated that the appeal was filed by the appellants with the special bench at delhi, and in column no. 8 of the prescribed proforma the appellants have stated that the order-under-appeal involves.....
Judgment:
1. This is an appeal under Section 129-A of the Customs Act filed by M/s. Navin Chemicals Mfg. &. Trading Co. Ltd., New Delhi against the-order No. S/16-DEEC-154/81/S/10-8/83, dated 17-2-1983 of the Addl.

Collector of Customs, Bombay, confiscating 10 Kgs. of Crude Emetine valued at Rs. l,25,176/- and allowing the same to be redeemed on payment of a fine of Rs. 10.000/-. At the outset, the learned departmental representative. Shri Krishan Kumar has objected to the appeal being heard and decided on merits by me, on the ground that it involves a question relating to rate of duty of Customs, and therefore, in terms of Section 129-C(3) of the Customs Act the same should be heard by the Special Bench. Shri Daya Sagar, who appeared on behalf of the appellants stated that the appeal was filed by the appellants with the Special Bench at Delhi, and in column No. 8 of the prescribed proforma the appellants have stated that the order-under-appeal involves the rate of duty matter. But according to his information, the papers had been submitted to the Sr. Vice-President, and the appeal had been transferred to the West Regional Bench at Bombay under the order of the Sr. Vice-President, as the matter did not come within the jurisdiction of the Special Bench. In view of these clarifications I reserved my order on the objection raised by the learned departmental representative regarding the jurisdiction and agreed to hear the appeal subject to- my decision on the above aspect. The learned Counsel for the appellants explained that they have imported Crude Emetine for the purpose of refining it to pharmacopoeial standard. On analysis by ITALAB done at the request of the Custom House, the goods were found to contain 81.85% emetine hydrochloride and remaining 18.15% being moisture and other impurities. The Custom House had accordingly held that their licence No. 2940081, dated 9-3-1981 for 10 Kgs. crude emetine was not valid. The learned Counsel stated that the licence in question was issued on 9-3-1981 and the amendment in question was obtained on 19-2-1982 after the Managing Director of the appellants' firm had visited U.S.A. for negotiating the import of crude emetine.

The, present import had thereafter taken place in October, 1982.

However, the Addl. Collector has held that the licence was available for crude emetine, while the goods imported were emetine hydrochloride, and therefore, the licence was not valid. He explained that emetine was an unstable compound and it could be stored only as an acidic salt, base salt or as sodium salt. The conversion of crude emetine hydrochloride into pharmacopoeial grade which was required to be produced and exported would involve a further step in the conversion process, and therefore it was not in the appellants' interest to import crude emetine hydrochloride. So far as crude emetine and crude emetine hydrochloride are concerned, they are the same substances and in support of this contention the appellants have submitted a certificate dated 14-2-1983 of Dr. Nityanand, Director, Central Drug Research Institute. This certificate states that crude emetine should be considered to cover emetine base and crude emetine hydrochloride both.

In addition, the appellants cite the release of papaverine hydrochloride against their Licence No. 2940080, dated 9-3-1981 for 500 kgs. of papaverine crude. However, the appellants did not have any evidence to support their contention, as they had not brought the same from Delhi, except the photocopy of the supplier's certificate dated 12-10-1981 which has been annexed with the present appeal. They have also relied on the letter No. Import/c.c.f./2/AM-82/VI/CLA/4194, dated 26-3-1982 of the Jt. Chief Controller of Imports & Exports, New Delhi, under which their licence No. P/3/3058987, dated 16-5-1981 was amended and the letter No. Adv/llc/173/AM-81/Import/EP.II/681, dated 13-5-1982 of the Chief Controller of Imports & Exports addressed to the appellants to the effect that they should contact the Deputy Collector of Customs, Palam Airport, for clearance of the consignment of crude emetine hydro-chloride under their Customs CCP No. P/3/3058987, dated 16-5-1981. The learned Consultant has therefore submitted that the evidence tendered by him would show that crude emetine and crude emetine hydrochloride were one and the same and that the licence produced by the appellants should be considered as valid, and therefore, the Addl. Collector's order should be set aside. He has further clarified in answer to my query that the appellants did not apply for amendment of the licence or for a letter of recommendation in the present case, as the appellants had considered that the licence was valid to cover the import of the goods. The learned Counsel further pointed out that the Addl. Collector had not given any reasons why he discarded the certificate of Dr. Nityanand. The goods were covered by Sr. Nos. 17 & 18 of Notification No. 117-Cus., dated 9-6-1978 as amended, as reproduced in the Customs Tariff Working Schedule as corrected upto 16-8-1982. The Counsel further submitted that the Addl.

Collector had mentioned in his findings that he was taking a lenient view, which was not so as the appellants had lost the benefit of Notification No. 117-Cus., dated 9-6-1978 as amended.

2. The learned departmental representative has pointed out the requirements of Clause (3) of the Imports (Control) order under which the licence is required for the import of the goods. He has stated that the description in the licence given was correct. When the Managing Director had visited U.S.A. it was not conceivable that he would negotiate for an item which was different from that mentioned in the licence. He has drawn my attention to the export product mentioned as emetine HCL and the fact that the importers have imported the. same goods as the export produce. Since the licence was for crude emetine, he argued that crude emetine mentioned in the licence was different from crude export product mentioned in the licence. In this view it was not necessary to go into the details whether the end product would include crude emetine or its salt. The goods imported were crude emetine hydrochloride which was not covered by the description in the licence. This was detected on examination of the goods, and he drew my attention to the examination report oh reverse of the Bill of Entry. He also pointed out the description of the goods as mentioned in the Bill of Entry which was different from the labelling of the goods as found on examination. He further pointed that the invoice for the goods also described them as crude emetine. Crude emetine and emetine hydrochloride were two different chemicals and he drew my attention to the chemical report of ITALAB. He also relied on Chemical Dictionary which describes emetine. In reply to my query the learned departmental representative clarified that the Chemical Dictionary did not include emetine hydrochloride. There was no disagreement that emetine was an unstable compound. The question was whether the licence for crude emetine could be held as valid for the import of emetine hydrochloride.

He submitted that these substances were separate and that Dr.

Nityanand's certificate could not be authentic for the purpose of interpreting the licence description. The learned Departmental Representative has drawn my attention to page 199 of AM-81 Policy which says that in case clarification of the ITC Policy is required. D.G.T.D.should be approached for the purpose. As regards the letter No.Adv/llc/ 173/AM-81/Import/EP-II/681, dated 13-5-1982 of the C.C.I. & E.which was in respect of CCP No. P/J/3058987, dated 16-5-1981, he has drawn my attention to para 142 and argued that this letter in respect of import licence cannot be held good for clarification in respect of the advance licence and therefore the appellant was not entitled to draw any benefit from the C.C.I's clarification. The present import was not on advance licence. They could have approached the C.C.I. either before or after the import of the goods to get the description amended, and he drew my attention in this behalf to the amendment endorsement obtained on C.C.P. No. 3058987, dated 16-5-1981 which had been made valid for the goods shipped or arrived. He thus pointed out that no efforts had been made to get the licence description amended. As regards the release of papaverine hydrochloride against licence for crude papaverine, the departmental representative stated that no evidence had been submitted by the appellants in support of their contention. In this view, the licence for crude emetine could not be held as valid for emetine hydrochloride which was a separate substance.

Accordingly, he submitted that the order of the Addl. Collector of Customs was correct. He -further pointed out that the importer could have obtained a specific licence. Finally he drew my attention to para 322 of AM-81 Handbook on Import-Export Procedure to say that the licence was not valid and that the appeal should be dismissed.

3. The learned Counsel for the appellants has stated 1.1 reply that in our country only, in view of the import restrictions, fine distinctions were being drawn between emetine and emetine hydrochloride. In the country of origin no such distinctions prevailed and the licence for crude emetine had been obtained for converting it into pharmacopoeial grade. It was not possible for the importers to obtain composition of crude emetine. Emetine hydrochloride is a specific compound and the analysis report of ITALAB stated that it had water and impurities to the extent of 1896. The impurities were required to be removed to bring the substance upto pharmacopoeial grade which was 99.5% pure. Hence both were under the same substances. The departmental representative's argument that the imported goods were the same as the export product as included in the licence, was not relevant, as the manufacturing process involved conversion of hydrochloride into various components before the pharmacopoeial product was obtained. The departmental representative had not disputed Dr. Nityanand's letter about the storage of emetine in the form of salt. Similarly, no objection had been raised by the Customs for the import of papaverine hydrochloride against the licence for crude papaverine. The Customs clearance permit No. 3058987, dated 16-5-1981 was got amended at the instance of the Drug Controller. The importers had not thought it necessary to get the present licence amended in view of the various instances of clearences of imports in the past. In view of these submissions, the learned Counsel requested setting aside the Addl. Collector's order and allowing the appeal.

4. Before I consider the argument on merits of the appellants and the respondent. I have to examine the jurisdiction of this Court in dealing with the appeal. The learned departmental representative has contended that since the Addl. Collector of Customs has held the licence to be invalid for the import of the goods, the goods in question have been denied the benefit of exemption from Customs duty under Notification No. 117, dated 9-6-1978 as amended. Therefore, this appeal involves determination of question relating to the rate of duty. The appellants had also filed the appeal before the Special Bench at New Delhi under the same impression and they have filled column 8 of the prescribed proforma of the appeal accordingly. The learned departmental representative has gone to the extent of saying that even though the Sr. Vice-President might have decided that the appeal should be transferred to the West Regional Bench, his decision to the effect is administrative and not "judicial, and therefore, the matter should be transferred to the Special Bench for obtaining a judicial verdict in the matter. In a sense, both the appellants and the respondent seem to be of the same opinion that the present appeal lies to the Special Bench, as it involves determination of rate of duty question. On examining the subject minutely, I find that I cannot agree with the aforesaid proposition. The order-under-appeal deals with the validity or otherwise of the licence' produced for the import of the goods in question. Nowhere has the adjudicating authority dealt with the question of the, rate of duty applicable to the case. There cannot, therefore, be any appeal in this behalf. The Addl. Collector's order is to the effect of levying a fine of Rs. 10,00.0/- on the goods imported by the appellants and the appellants have felt aggrieved with this order. It is this order which is in appeal before me, and the order nowhere touches the question of exemption under Notification No. 117, dated 9-6-1978. Though the assessment of the goods would depend on the validity or otherwise of the licence produced, the assessment question was not in consideration before the Addl. Collector, and therefore, it is not for consideration before me. Therefore the objection of the learned departmental representative cannot be accepted. In this view, I find that the appeal is within the jurisdiction of this Bench and I am proceeding to examine the same on merits.

5. The main submissions of the appellants are that crude emetine and emetine hydrochloride are one and the same. Except for Dr. Nityanand's certificate there is no other evidence to support this contention. Dr.

Nityanand's certificate has been given in the capacity as a pharmacist and this cannot be treated as valid for interpreting the import licence. It is seen on the basis of the Chief Controller of Import's letter dated 13-5-1982 that a recommendation had been made by him to the Deputy Collector of Customs, Palam Airport to clear the 2 consignments of emetine hydro-chloride against the Importer's CCP for crude emetine. The CCI has therefore held crude emetine and emetine hydrochloride as not one and the same. On the other hand they could have issued, a clarification to the effect. The letter dated 13-5-1982 from the CCI therefore shows that for the purposes of Import Control, the two substances are not identical. It is therefore not possible to accept that crude emetine and emetine hydrochloride are the same.

Similarly, there is no evidence produced to show that the Customs Authorities at Bombay have released papaverine hydrochloride against the licence of crude papaverine. The misdeclaration of the goods has come to light only on examination of the same. The invoice and the Bill of Entry would have escaped detection if the examining staff had not been alert. There is also no reason why an amendment should not have been obtained or why a letter of recommendation should not have been produced as sufficient time has elapsed since the import of the goods.

I am therefore, unable to accept the appellants' contention that the licence is valid for the goods under import. Accordingly, I confirm the Addl. Collector's order and reject the appeal.


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