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Issues: (i) whether cosmetics imported without valid CDSCO registration were liable to absolute confiscation or had to be dealt with under the re-export procedure under the Drugs and Cosmetics Rules, 1945; (ii) whether the confiscation fine and penalties imposed on the importers and other noticees were sustainable.
Issue (i): whether cosmetics imported without valid CDSCO registration were liable to absolute confiscation or had to be dealt with under the re-export procedure under the Drugs and Cosmetics Rules, 1945.
Analysis: The imported cosmetics were found to be without the required CDSCO certificate and were therefore liable to confiscation. However, Rule 131(3) of the Drugs and Cosmetics Rules, 1945 prescribes a specific procedure where imported cosmetics contravene Chapter III of the Drugs and Cosmetics Act, 1940 and the contravention cannot be remedied by the importer. In such a case, the Collector of Customs is required to communicate the report to the importer and permit the importer to send back the goods within the prescribed period or have them destroyed by the Central Government. The request for re-export was held to be a statutory right in these facts, and the Commissioner ought to have followed that procedure instead of directing absolute confiscation.
Conclusion: The absolute confiscation was unsustainable and the imported cosmetics were required to be allowed to be re-exported.
Issue (ii): whether the confiscation fine and penalties imposed on the importers and other noticees were sustainable.
Analysis: Once re-export was allowed, the basis for sustaining the confiscation fine and related penalties did not survive. The Tribunal also found that the allegations against the individual noticees and the CHA-related noticee were not made out on the facts presented, and that the penalty consequences could not be sustained in the circumstances of the case.
Conclusion: The fine and penalties were set aside.
Final Conclusion: The appeals succeeded, the confiscation order was displaced by the re-export direction, and all consequential monetary and penal liabilities were removed.
Ratio Decidendi: Where imported cosmetics are found to contravene the Drugs and Cosmetics Act, 1940 and the applicable Rules, the Customs authorities must follow the special re-export procedure prescribed under Rule 131(3) of the Drugs and Cosmetics Rules, 1945, and cannot bypass that statutory mechanism by directing absolute confiscation.
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