Canalised drug imports cannot escape policy control by being described as a chemical complex or intermediate.

Import policy treatment of tetracycline urea complex turned on whether the goods were a canalised drug or an open general licence importable raw material. The policy was construed as covering the drugs listed in Appendix 9 and their salts, esters and active ingredients; on the evidence, the imported product was treated as a no-bond inclusion complex of tetracycline and urea, not a distinct chemical compound and not a proven raw material for tetracycline hydrochloride. The import was therefore regarded as tetracycline with added urea to evade canalisation, and OGL coverage was rejected. Confiscation under Section 111(d) of the Customs Act, 1962 read with Section 3 of the Imports and Exports (Control) Act, 1947 was sustained.

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Issues: Whether the imported goods described as Tetracycline Urea Complex were a canalised item under Appendix 9 of the Import Policy A-M 1983, or a raw material permissible for import under Open General Licence under Appendix 10(1).

Analysis: The policy was construed as canalising only the drugs specified in Appendix 9, together with their salts, esters and active ingredients. On the evidence, the goods were found to be a no-bond inclusion complex made of tetracycline and urea, not a distinct chemical compound and not a raw material for manufacture of tetracycline hydrochloride. The Tribunal held that tetracycline was one of the canalised drugs and that the import was in substance of tetracycline with urea added as camouflage to avoid canalisation. The Tribunal also held that urea was not established to be a raw material for tetracycline hydrochloride and that the import could not be justified under OGL.

Conclusion: The imported goods were held to be banned and canalised under the policy, and the confiscation under Section 111(d) of the Customs Act, 1962 read with Section 3 of the Imports and Exports (Control) Act, 1947 was sustained.

Ratio Decidendi: Where the substance imported is, in commercial and functional reality, a canalised drug combined with an added innocuous material to evade the import policy, it remains within the canalised entry and cannot be imported under OGL merely because it is described as a complex or intermediate.

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