Specialised drugs law controls import enforcement; customs cannot impose confiscation solely on its own classification view.

Customs enforcement cannot override a specialised drugs regulatory regime where import control is entrusted to the competent drug authority. Customs classification alone cannot be used to invoke confiscation under the Customs Act for an alleged breach of the Drugs and Cosmetics Act and Rules. Where the goods entered through a permitted port and were transhipped to the designated place with approval of the competent authority, the movement did not amount to an unauthorised import breach. For warehoused imports by a 100% export oriented unit, confiscation proceedings based only on an alleged prohibition were not sustainable absent a breach found by the drug regulator.

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Issues: (i) Whether customs authorities could invoke section 111(d) of the Customs Act, 1962 by applying the Drugs and Cosmetics Act, 1940 and the Drugs and Cosmetics Rules, 1945 on the basis of tariff classification and place-of-clearance restrictions; (ii) whether import of the goods through Nhava Sheva, followed by transhipment to the designated place on the basis of a no objection certificate issued by the competent drug authority, constituted a breach warranting confiscation and penalty; (iii) whether the goods imported by a 100% export oriented unit under the into-bond warehousing mechanism could be subjected to confiscation proceedings on the alleged prohibition.

Issue (i): Whether customs authorities could invoke section 111(d) of the Customs Act, 1962 by applying the Drugs and Cosmetics Act, 1940 and the Drugs and Cosmetics Rules, 1945 on the basis of tariff classification and place-of-clearance restrictions.

Analysis: The governing question was whether the regulatory framework under the drugs law could be enforced by customs on the strength of tariff classification under the customs law. The relevant regulatory statute contains its own definition of drugs and entrusts control over imported drugs to the competent authority under that enactment. The customs authorities cannot substitute their own understanding of the drugs law for that of the specialised authority, and classification for customs assessment cannot determine applicability of the drugs regulatory regime.

Conclusion: Customs authorities could not lawfully invoke section 111(d) merely by relying on customs classification to decide breach of the drugs law.

Issue (ii): Whether import of the goods through Nhava Sheva, followed by transhipment to the designated place on the basis of a no objection certificate issued by the competent drug authority, constituted a breach warranting confiscation and penalty.

Analysis: The goods entered through a permitted location and were moved further only after approval by the Assistant Drugs Controller. The regulatory scheme and the circulars recognised supervision by the competent drugs authority, including flexibility in movement where authorised. Once the competent authority permitted transhipment and utilisation at the place of delivery, customs could not treat the movement as an unauthorised import breach for purposes of confiscation.

Conclusion: The permitted entry and authorised transhipment did not justify confiscation or penalty.

Issue (iii): Whether the goods imported by a 100% export oriented unit under the into-bond warehousing mechanism could be subjected to confiscation proceedings on the alleged prohibition.

Analysis: The imports were for a bonded export-oriented unit and were governed by the warehousing and manufacturing regime under the Customs Act, 1962. In that setting, the ordinary home-consumption assessment logic was not determinative, and proceedings based on alleged prohibition under the drugs law, without a breach reported by the competent drugs authority, were outside the intended scope of customs enforcement.

Conclusion: Confiscation proceedings against the warehoused imports of the export-oriented unit were not sustainable.

Final Conclusion: The appeal failed because the competent drugs authority had approved the movement of the goods, and customs could not independently impose confiscation and penalty by substituting its own view on compliance with the drugs regulatory regime.

Ratio Decidendi: Where a specialised regulatory statute entrusts import control to its designated authority and authorises movement of goods with that authority's approval, customs cannot invoke confiscation provisions under the Customs Act, 1962 to enforce an alleged breach independently of that statute.

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