Re-imported expired medicines: importer liability, duty recovery and confiscation upheld, with simultaneous penalty under Section 114A set aside.

Re-import of expired medicines at a non-notified port was treated as customs import where the surrounding facts, correspondence and conduct showed the appellant's knowledge of the movement of the same goods earlier exported. On that basis, the appellant was held liable as importer to file the bill of entry, and the duty equivalent to the export incentive foregone, together with DEPB recovery, was upheld. The goods were also held liable to confiscation. On penalties, the simultaneous levy under Section 114A of the Customs Act was not sustained once penalty under Section 112(a) was imposed on the same facts, and the penalty under Section 112(a) was retained with reduction in quantum.

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Issues: (i) Whether the appellant could be treated as the importer of the re-imported expired medicines and whether duty, DEPB recovery and confiscation were sustainable; (ii) whether the penalties under Section 112(a) and Section 114A of the Customs Act, 1962 were sustainable and to what extent.

Issue (i): Whether the appellant could be treated as the importer of the re-imported expired medicines and whether duty, DEPB recovery and confiscation were sustainable.

Analysis: The goods re-entered India as the same goods earlier exported by the appellant, and the record showed continuing business dealings with the overseas entities involved in the movement of the cargo. The appellant's own statements and correspondence were relied on to infer knowledge of the re-import, while the attempt to deny awareness was not accepted on the facts. The import of expired medicines at Pipavav Port, which was not a notified port for such goods, attracted the Customs Act as well as the Drugs and Cosmetics Rules. The claim to relinquish title was rejected in the facts of the case, and the appellant was treated as the importer liable to file a bill of entry and bear the duty consequences. The duty equivalent to the excise foregone at export and the DEPB benefit were therefore upheld as recoverable and appropriable.

Conclusion: The appellant was treated as the importer, and the duty and DEPB recovery were upheld.

Issue (ii): Whether the penalties under Section 112(a) and Section 114A of the Customs Act, 1962 were sustainable and to what extent.

Analysis: The import of expired medicines at an unauthorized port rendered the goods liable to confiscation and exposed the appellant to penal consequences. At the same time, the penalty structure required rationalization, and the simultaneous penalty under Section 114A was not sustained once penalty under Section 112(a) was imposed. The quantum of penalty on the company and its directors was reduced in view of the overall circumstances, while maintaining liability for penal action.

Conclusion: Penalty under Section 112(a) was sustained with reduction in quantum, and the penalty under Section 114A was not sustained.

Final Conclusion: The appeal succeeded only to the limited extent of reduction and restructuring of penalties, while the core findings on importer status, duty liability and confiscability were maintained.

Ratio Decidendi: A person shown by the surrounding facts, correspondence and conduct to have knowledge of the re-import of the very goods earlier exported, and who seeks to retain the export benefits, may be treated as the importer for customs purposes even where the goods are expired and land at a non-notified port; however, simultaneous penalty under Section 114A cannot be sustained where penalty under Section 112(a) is imposed on the same facts.

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