Canalised drug classification prevails despite sub-standard quality; import under OGL barred and redemption fine reduced.

Piperazine was treated as a canalised drug under Appendix 9 of the Import Policy AM 1982-83, and its sub-standard or non-pharmacopoeial quality did not alter its character as a drug. The import was therefore not permissible under OGL, and confiscation under section 111(d) was upheld. On penalty consequences, the absence of a section 112 penalty, the industrial use of the importer, and the surrounding circumstances justified moderation of the redemption fine, which was reduced from Rs. 27,000 to Rs. 15,000.

---

---

Issues: (i) whether the imported piperazine was a canalised drug falling within Appendix 9 of the Import Policy AM 1982-83 and therefore not importable under OGL; (ii) whether the redemption fine imposed on confiscation was excessive and required reduction.

Issue (i): Whether the imported piperazine was a canalised drug falling within Appendix 9 of the Import Policy AM 1982-83 and therefore not importable under OGL.

Analysis: The import was of piperazine, which the policy treated as a drug in Appendix 9. The fact that the sample did not conform to pharmaceutical grade specifications did not take it outside the category of drug, because sub-standard quality does not destroy the basic character of the substance as a drug. The policy did not confine canalisation only to standardised or pharmacopoeial grade material, and the item continued to be a basic drug notwithstanding its intended use as a drug intermediate.

Conclusion: The import was canalised and was not permissible under OGL; the confiscation under section 111(d) was upheld.

Issue (ii): Whether the redemption fine imposed on confiscation was excessive and required reduction.

Analysis: The goods were liable to confiscation, but the absence of any penalty under section 112, the industrial use of the importer, and the circumstances of import showed that the appellants were not acting with grave mala fides. The redemption fine at about 50% of the value was considered unduly high in the circumstances.

Conclusion: The redemption fine was reduced from Rs. 27,000 to Rs. 15,000.

Final Conclusion: The appeal failed on the challenge to confiscation, but partial relief was granted by reducing the redemption fine.

Ratio Decidendi: A substance does not cease to be a drug merely because it is not of pharmaceutical grade, if the policy treats the basic substance as a canalised drug; however, the quantum of redemption fine may be moderated on the facts of the case.

---