Import licensing limits and canalisation of Piperazine upheld, with redemption fine reduced on quantum grounds.

REP licences and OGL could not be used to import goods falling within Appendix 9 restrictions, because the policy limited the facility to items otherwise permissible under Appendix 10 and did not extend it to canalised goods. Piperazine was treated as a canalised entry covering the active ingredient and allied forms, including piperazine anhydrous, so the goods remained impermissible under the Import Policy despite variations in moisture content. Prior mistaken customs clearances did not create estoppel against enforcement, though they were relevant to quantum, and the redemption fine was reduced as excessive while confiscation was sustained.

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Issues: (i) Whether the REP licences and the Open General Licence provisions covered the import of the disputed goods and barred Customs from objecting to the import. (ii) Whether the imported goods were canalised Piperazine anhydrous or hexahydrate, or their covered active ingredients, so as to be impermissible under the Import Policy. (iii) Whether the redemption fine imposed was excessive and required reduction.

Issue (i): Whether the REP licences and the Open General Licence provisions covered the import of the disputed goods and barred Customs from objecting to the import.

Analysis: The relevant policy provisions permitted export houses to import only those OGL items that were otherwise permissible under the conditions of Appendix 10. The policy also excluded items falling in Appendix 9, and the special facility under the REP scheme did not enlarge the scope of import beyond those restrictions. The goods were sought to be cleared as a canalised item-free import, but the policy structure did not permit import of items covered by Appendix 9 through the relied-upon licence route.

Conclusion: The import was not protected by the licences and Customs was entitled to object.

Issue (ii): Whether the imported goods were canalised Piperazine anhydrous or hexahydrate, or their covered active ingredients, so as to be impermissible under the Import Policy.

Analysis: The policy treated the listed drug names in Appendix 9 as referring to the active ingredients and commonly known names, and the entry for Piperazine had to be read with the paragraph extending coverage to active ingredients, salts and esters. On the evidence, the samples were found to contain Piperazine with varying water content, while the Tribunal rejected the theory that the goods were a distinct chemical, drug intermediate, or chemical compound. The Tribunal further held that the policy did not confine the canalised entry to pharmacopoeial grade medicines only, and that Piperazine anhydrous was sufficient to attract the canalisation restriction notwithstanding the variation in moisture content.

Conclusion: The goods were held to fall within the canalised Piperazine entry and their import was impermissible.

Issue (iii): Whether the redemption fine imposed was excessive and required reduction.

Analysis: The Tribunal noted the earlier clearance of similar goods, but held that such past clearance did not create any estoppel against Customs. At the same time, that circumstance was relevant to the quantum of fine. Considering the facts, the Tribunal found the original fine too high and reduced it substantially.

Conclusion: The redemption fine was reduced from Rs. 2 lakhs to Rs. 75,000 per consignment.

Final Conclusion: The confiscation was sustained, the fine was reduced, and the appeals failed on merits with only partial relief on the quantum of redemption fine.

Ratio Decidendi: Where a policy entry canalises a drug by name, the coverage extends to its active ingredients and allied forms as expressly provided by the policy, and prior erroneous customs clearances do not create estoppel against enforcement of the import restriction.

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