2013 (1) TMI 119 - HC - Customs

Court upholds exemption under Rule 43 for drug importation, emphasizing statutory rules over executive circulars.

The Court upheld the learned Single Judge's decision, dismissing the appeal and confirming that the first respondent qualified for exemption under Rule 43 ... Importing drug Benfotiamine - allowing the importer to use the provision of Rule 43 of the Rules there is a possibility of spurious drugs being circulated to the human use which will be neither allowable nor permissible - mere fact that the consignment label carries stamping given by the importer, it is not for medicinal use itself is not sufficient - licence in Form 10 or Form 10A should have been obtained or NOC from the authority competent - Held that:- Circular on Import of drugs having dual use and drugs which are used as a raw material for the manufacture of other drugs by the actual users only shows that the department has taken a view that giving blanket exemption from the applicability of Chapter III of the Drugs and Cosmetics Act, would cause harm to the public interest and therefore to have a supervision over the use of the said drugs, the importer must be directed to obtain licence in Form 10. The said circular even though is stated to have been issued by taking note of the public interest, after consulting the various Ministries, cannot attempt to take away and supersede the statutory provisions contained in Rule 43 of Rules as extracted above. As correctly found by the learned Judge, the department is not left in lurch, in the event of any of the unscrupulous importer attempted to use or sell the above said drugs for medicinal purpose. A joint reading of the above said provision categorically shows that the exemption granted to the importer from the applicability of Chapter III is available, only when the conditions contemplated under Rule 43 read with schedule D of the Rules is fulfilled scrupulously. If only the department comes to a conclusion on evidence and proof that there is breach of such condition of Rule 43 of Schedule D, the moment it is proved, the importer loses his right of exemption under Chapter III of the Act. Certainly, the authority in such circumstances would have a right to interfere for insisting necessary licence or make necessary search and enforce the provision under Section 13 of the Act for any violation. When such powers are available to the authorities, it is not known as to how the appellant is repeatedly referring to the word 'public interest'. Simply because the authorities who are expected to enforce the law are unable to enforce effectively, it does not mean that the statutory provision must be given a go bye and such a construction would be antitheses to the concept of rule of law. Issues Involved:1. Applicability of Rule 43 of the Drugs and Cosmetics Rules, 1945.2. Requirement of importer's license in Form 10 or Form 10A for importing 'Benfotiamine'.3. Public interest concerns regarding the distribution of spurious drugs.4. Authority of executive circulars versus statutory rules.5. Enforcement powers of authorities under the Drugs and Cosmetics Act, 1940.Detailed Analysis:1. Applicability of Rule 43 of the Drugs and Cosmetics Rules, 1945:The first respondent, an importer of 'Benfotiamine', claimed exemption under Rule 43 of the Drugs and Cosmetics Rules, 1945, which exempts certain drugs from the provisions of Chapter III of the Drugs and Cosmetics Act. The learned Single Judge accepted this argument, holding that 'Benfotiamine', being a synthetic supplement not intended for medicinal use, falls under the exemption provided in Rule 43 read with Rule 123 of Schedule D of the Rules. The Court emphasized that the exemption applies as long as the conditions specified in Schedule D are met, such as labeling the containers to indicate non-medicinal use.2. Requirement of importer's license in Form 10 or Form 10A:The appellant department argued that the first respondent should obtain an importer's license in Form 10 or Form 10A to prevent the circulation of spurious drugs. However, the Court found that since 'Benfotiamine' is exempt under Rule 43, the requirement for such a license does not arise. The Court noted that the first respondent had complied with the conditions for exemption, such as certifying that the substance was imported for non-medical uses and labeling the containers accordingly.3. Public interest concerns regarding the distribution of spurious drugs:The appellant contended that allowing the import without a license could lead to the distribution of spurious drugs, posing a risk to public health. The Court acknowledged the importance of public interest but held that the statutory provisions already provide sufficient safeguards. The authorities have the power to take action under Section 13 of the Act if any misuse is detected. The Court reiterated that the exemption is conditional and can be revoked if the conditions are violated.4. Authority of executive circulars versus statutory rules:The appellant relied on a circular issued by the Directorate General of Health Services, which suggested that exemptions under Rule 43 should not be granted without scrutiny. The Court held that executive circulars cannot override statutory rules. The statutory rule, being a product of the Government's rule-making power under Section 12(2)(o) of the Act, prevails over any executive instructions. The Court cited the Supreme Court's decisions in K.Kuppusamy and Priya Blue Industries Limited to support this principle.5. Enforcement powers of authorities under the Drugs and Cosmetics Act, 1940:The Court emphasized that the authorities are not powerless. They can enforce the provisions of the Act and take appropriate action against any misuse. The learned Single Judge had already clarified that if the imported substance is used for purposes other than those declared, the authorities could proceed against the importer in accordance with the law. This ensures that public interest is protected without undermining the statutory exemptions.Conclusion:The appeal was dismissed, upholding the learned Single Judge's decision that the first respondent was entitled to the exemption under Rule 43 of the Drugs and Cosmetics Rules, 1945. The Court reiterated that statutory rules cannot be overridden by executive circulars and that the authorities have ample power to enforce the law and protect public interest.