2023 (1) TMI 462 - AT - Customs

Tribunal rules in favor of appellant in pharmaceutical export case without NOC

M/s Medista Overseas Versus Commissioner, Central Excise & Central Goods and Service Tax, Indore (M.P.)

The Tribunal ruled in favor of the appellant in a case involving the export of pharmaceutical drugs without a No Objection Certificate (NOC) from the Drug ... Wrongful availment of benefit of Duty Drawback - export of spurious drugs - requirement for obtaining “NOC” from the Drug Controller or not - Confiscation - redemption fine - penalty - HELD THAT:- It is evident that there was no requirement of “NOC” from the Drug Controller in respect of export consignment vide Shipping Bill No. 7099329 dt. 16.04.2016 filed by the appellant for export of drugs to Liberia. Further, the evidence led satisfies that the appellant was a genuine manufacturer duly licensed to manufacture and export of drugs. Further, even from the test report of CDSCO, Mumbai, out of the three drugs, two drugs namely B-CO syrup and Sabtron have been found to be of standard quality. Thus, the whole proceedings by the Customs Authority for confiscation are vitiated. Appeal allowed. Issues:1. Export of pharmaceutical drugs without NOC from Drug Controller2. Allegation of exporting spurious drugs3. Confiscation of export consignment and imposition of penalties4. Requirement of NOC for export as per regulatory authority5. Compliance with standards for exporting pharmaceuticalsIssue 1: Export of pharmaceutical drugs without NOC from Drug ControllerThe appellant, a holder of a license to manufacture drugs, exported pharmaceuticals to Liberia without obtaining a No Objection Certificate (NOC) from the Drug Controller. The Assistant Drug Controller (ADC) observed discrepancies in the manufacturing details, leading to suspicions regarding the authenticity of the drugs. The ADC refused to issue NOC, citing the absence of the principal unit's address on the drugs, raising concerns about the legitimacy of the manufacturing process.Issue 2: Allegation of exporting spurious drugsThe ADC deemed three drugs as spurious under the Drugs and Cosmetic Act, 1940, due to discrepancies in the manufacturing information and the refusal of the supporting manufacturer to acknowledge the production of the drugs. The government analyst's report highlighted that one of the drugs was not of standard quality, further supporting the claim of exporting spurious drugs.Issue 3: Confiscation of export consignment and imposition of penaltiesThe Revenue initiated proceedings to confiscate the goods valued at Rs. 5,74,368 under Section 111 of the Customs Act, alleging the export of spurious drugs. The show cause notice proposed confiscation and penalties under Sections 113(d), 114, and 117 of the Act. The Adjudicating Authority ordered absolute confiscation of the goods and imposed substantial penalties on the appellant.Issue 4: Requirement of NOC for export as per regulatory authorityThe appellant argued that as per a Public Notice issued by the Drug Controller General, NOC was not mandatory for export consignments from 01.01.2016. The appellant provided documents demonstrating compliance with regulatory requirements and the involvement of the supporting manufacturer in the manufacturing process, emphasizing their legitimacy as a manufacturer and exporter of pharmaceuticals.Issue 5: Compliance with standards for exporting pharmaceuticalsThe appellant contended that the drugs were fit for export as they met the standards required by the importing country. Evidence was presented to show that the appellant was a recognized manufacturer, and the drugs had been manufactured for export purposes under proper licenses. The Tribunal found that the appellant was a genuine manufacturer licensed to export drugs, and two out of the three drugs were of standard quality based on the test report from CDSCO, Mumbai.In conclusion, the Tribunal set aside the impugned order, ruling in favor of the appellant and granting them consequential benefits in accordance with the law. The judgment highlighted the importance of complying with regulatory requirements for exporting pharmaceuticals and emphasized the need for transparency in the manufacturing and export processes to avoid allegations of exporting spurious drugs.