Customs classification of antibiotic injections held illegal where added ingredients served only as stabilisers, not therapeutic agents.

Hostacycline injections were held to fall under the customs tariff entry for antibiotics, because ascorbic acid and similar accompanying ingredients functioned only as buffering or stabilising agents and had no therapeutic value; classification under the broader patent or proprietary medicines entry was therefore illegal. The refund suit was also held not to be premature, as failure to pursue a further statutory remedy did not bar the civil court where that step would serve no useful purpose. The civil court was said to have jurisdiction to review a manifestly erroneous or perverse customs classification and grant relief, so the duty levy could not stand and refund with costs followed.

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Issues: (i) Whether Hostacycline injections were correctly classified under item 28A of the Indian Customs Tariff or were assessable under item 28(27); (ii) whether the suit for refund was premature for non-exhaustion of remedies under the Sea Customs Act; (iii) whether the civil court had jurisdiction to examine the customs classification and grant relief.

Issue (i): Whether Hostacycline injections were correctly classified under item 28A of the Indian Customs Tariff or were assessable under item 28(27).

Analysis: Item 28A applied to patent or proprietary medicines not otherwise specified, whereas item 28(27) covered antibiotics and preparations containing only one antibiotic and free from other therapeutic ingredients. On the evidence, the added ascorbic acid and the other accompanying ingredients functioned as buffering or stabilising agents and did not have therapeutic value for the purposes of classification. The finding that the goods contained other therapeutic ingredients was held to be unsupported and perverse, and the product remained an antibiotic preparation within item 28(27).

Conclusion: The classification under item 28A was illegal and the consignments were properly classifiable under item 28(27), in favour of the assessee.

Issue (ii): Whether the suit for refund was premature for non-exhaustion of remedies under the Sea Customs Act.

Analysis: The requirement to pursue statutory remedies is not an absolute bar to the court's jurisdiction. The prior rejection by the customs authorities and the nature of the dispute showed that further revision would serve no useful purpose. The suit was therefore not rendered incompetent merely because a further remedy under the customs statute was not pursued.

Conclusion: The suit was maintainable and not premature, in favour of the assessee.

Issue (iii): Whether the civil court had jurisdiction to examine the customs classification and grant relief.

Analysis: Finality attached to customs orders does not exclude judicial review where the order is manifestly erroneous, perverse, or based on an illegal basis. Quasi-judicial customs determinations remain amenable to correction where the authority acts outside the proper legal limits or classifies goods on an obviously unsustainable basis. The court therefore had jurisdiction to scrutinise the classification and the levy founded on it.

Conclusion: The civil court had jurisdiction to review the customs authorities' classification and to grant relief, in favour of the assessee.

Final Conclusion: The levy of duty on the suit consignments under item 28A could not stand, and the plaintiff was entitled to refund and costs.

Ratio Decidendi: A customs classification based on the mistaken attribution of therapeutic value to ingredients used only as buffering or stabilising agents is illegal, and customs orders so made remain amenable to judicial review where the finding is perverse or manifestly erroneous.

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