CHENNAI, AUG 22, 2016: APPELLANT imported a drug,Tranexamic Acid declaring the consignee as M/s. Antoine & Becourerel Organic Chemical Co. for which the payment was made from the ICICI Bank account of the appellant-importer. Upon investigation, which was triggered by a suspicious application by DHL Logistics seeking to be treated as the importer, the customs found that similar goods were imported from china by the importer appellant in previous year. The said goods were drugs and require a form 10 license under the Drugs and Cosmetics Act, 1945 which the importer failed to obtain. Though the appellant stated that the goods were not drugs, appellant failed to establish the same. However, to reduce litigation, appellant considered it proper to send back the goods to the exporter. Customs also agreed for such export on payment of redemption fine and penalty, which is under challenge in the Appeal.

Appellant contended that the drug was tested and found to be not of questionable nature, because of which it was re-exported. Only reason for the appellant to be liable is because they failed to obtain the license under form 10. Further contended that the reason for re-export was to avoid litigation. Appellant submitted that the revenue misconstrued the Act by overlooking sub-rule (2) of Rule 41 of the Drugs and Cosmetics Rules, 1945. The exemption does not require license for import of drug. The rule does not permit any harsh action against the importer.

Revenue submitted that M/s Antoine &Becouerel Organic Chemical Co., was the real importer and cannot escape the compliance of law, regardless of being on the record from the date of negotiation with the bank. As per Rule 24A, it is necessary for an exporter to be registered in India. The appellant was aware of the provisions of Drugs and cosmetics Act, 1945 and yet knowingly imported the prohibited goods. Appellant cleverly was named as the buyers in all documents that came to India from the exporting country and failed to establish the use for which the drug was imported. The Drugs and Cosmetics Act clearly declares that prohibited goods which are imported are liable to be confiscated. Re-export of the goods does not ipso facto grant immunity to the appellant from redemption fine and penalty. As the appellant is a habitual offender, it does not deserve leniency.

After hearing both sides, the Tribunal held:

++ When the material evidence established fraud against Revenue white collar crimes committed under absolute secrecy shall not be exonerated from penal consequence of law. An act of fraud on Revenue is always viewed seriously. “Fraud” and collusion vitiate even the most solemn proceedings in any civilized system of jurisprudence. It is a concept descriptive of human conduct either by letter or words, which includes the other person or authority to take a definite determinative stand as a response to the conduct of the former either by words or letter. Penalty of confiscation is a penalty in rem which is enforced against the goods. In such case, it is not necessary for the Customs authorities to prove that any particular person is concerned with their illicit importation or exportation. It is enough, if the Department furnishes prima facie proof of the offending goods being smuggled one. The second kind of penalty is one in personam which is enforced against the person concerned in the smuggling of the goods. In such case, the Department has to prove further that the person proceeded against was concerned in the smuggling.

++ The smuggling racket perpetuated smuggling in the past as is revealed from their conduct. Evidence gathered by Revenue unambiguously proved that both the appellants were contributory to the fraud committed against Customs and they made an organized bid to be enriched at the cost of the nation. It is established principle of law that fraud and justice are sworn enemies. When the collusion and fraudulent design of the exporter, importer-appellant, DHL surfaced, the impugned goods that came to India, became no man’s property and confiscation being an action in rem, the dubious claim of ownership of the goods at different point of time calls for absolute confiscation thereof without any leniency for redemption and re-export of the same. Accordingly, the order of the adjudicating authority requires to be set aside on such count and absolute confiscation of the impugned goods is hereby ordered. In the course of hearing, Revenue informed that the impugned goods have already left India on payment of redemption fine. Therefore, it is left to the Chairman of the CBE&C to deal this matter and to protect interest of Revenue since the action of redemption of the goods and re-export has caused detriment to interest of justice.

(See 2016-TIOL-2143-CESTAT-MAD)