Back
1989 Supreme(SC) 517
SUPREME COURT OF INDIA
M.M.Dutt : S.R.Pandian
Roche Products Limited
Versus
Collector Of Customs
Case No. : 4407 of 1989
Date of Decision : 10/19/89
Advocates Appeared: Bakshi M.P. : Divan Anil B. : Ganesh S. : Mahajan V.C. : Mishra D.N. : Mitra Amrita : Narain Ravindra : Ram P.K. : Rana A.J. : Rao P.P. : Sharma Hemant
A.J.RANA, Amrita Mitra, Anil B.Divan, D.N.Mishra, HEMANT SHARMA, M.P.BAKSHI, P.K.RAM KUMAR, P.P.Rao, Ravindra Narayan, S.GANESH RAO, V.C.MAHAJAN
Headnote:
Customs Act, 1962 – section 130(2),112(1),111(d) and 122 - Imports and Exports (Control) Act, 1947 – Section 3 - Goods imported - Penalty - Appellant, Roche Products Limited, a public limited company has, by this appeal, challenged propriety of decision - In the writ petition, appellant challenged order of Collector of Customs passed in exercise of his revisional jurisdiction under S. 130(2 of the Customs Act, 1962, directing confiscation of goods imported by appellant, but giving to appellant an option to pay in lieu of such confiscation a fine and further imposing on the appellant a penalty - Appellant is engaged in business of manufacture of various pharmaceutical products including sulphamethoxazole which is also known as SMX - One of the important ingredients or raw materials for the manufacture of SMX is a chemical known as isoxamine, which is also known as 3-amino-5-methyl-isoxazole - Ministry of Industrial Development of government of India issued to the appellant an industrial licence enabling it to manufacture 18 tonnes of SMX per year - Whether the particular goods have been imported under a valid licence or not – held, before court part with this appeal, court may dispose of two other minor contentions of the appellant - Counsel for appellant submits that as appellant has been found not entitled to use imported material in production of SMX - It is curious that by the impugned order appellant has been given an option to pay in lieu of the confiscation of imported materials a fine and clear the goods into the town - Counsel submits that this Shows that appellant is entitled to use imported material for the production of SMX -This contention is devoid of merit and is fit to be rejected on the face of it - Appellant may have been allowed to clear the goods on payment of a fine in lieu of confiscation, but that does not mean that appellant would be entitled to use the goods for the manufacture of SMX in violation of the industrial licence - Appellant may sell the goods to some other person but, surely, it cannot use it in its factory for the manufacture of SMX - Other contention of the appellant is that as capacity of the appellant to manufacture SMX has been raised from 18 tonnes to 45 tonnes per annum, there is no sense in confiscating imported goods - This contention is equally devoid of merit - It may be that the manufacturing capacity of appellant has been increased, but there is nothing to show that central government has permitted appellant to manufacture SMX with imported isoxamine - Appellant may go on manufacturing SMX from indigenous materials and manufacturing capacity of appellant may have been increased from 18 tonnes to 45 tonnes for the manufacture of SMX from indigenous materials, but these facts are quite irrelevant and have no bearing on the question with which court are concerned - Appeal is dismissed.
JUDGMENT
M.M.DUTT, J.
(1) THIS special leave petition has been heard at length and both parties have made elaborate submissions on the merits of their respective cases and, accordingly, we proceed to dispose of the special leave petition after granting leave.
(2) THE appellant, Roche Products Limited, a public limited company has, by this appeal, challenged the propriety of the decision of the Division bench of the Bombay High court dismissing the appeal preferred by the appellant against the judgment of a learned Single Judge dismissing the writ petition of the appellant. In the writ petition, the appellant challenged the order of the Collector of Customs passed in exercise of his revisional jurisdiction under S. 130(2 of the Customs Act, 1962, hereinafter referred to as the Act, directing confiscation of the goods imported by the appellant, but giving to the appellant an option to pay in lieu of such confiscation a fine of Rs. 19,00,000.00 and further imposing on the appellant a penalty of Rs. 5,00,000.00.
(3) THE appellant is engaged in the business of manufacture of various pharmaceutical products including sulphamethoxazole which is also known as SMX. One of the important ingredients or raw materials for the manufacture of SMX is a chemical known as isoxamine, which is also known as 3-amino-5-methyl-isoxazole.
(4) ON 23/04/1974, the Ministry of Industrial Development of the government of India issued to the appellant an industrial licence enabling it to manufacture 18 tonnes of SMX per year. Clause 4 of the industrial licence enjoins that the manufacture of "new articles" shall be completed and commercial production established within a period of two years from the date of issue of the industrial licence. The industrial licence also contains some additional conditions of which the condition contained in clause 5(iv) is relevant for our purpose. Clause 5(iv) provides as follows: "5. The industrial licence will also be subject to the conditions stipulated in Annx. I. It will be further subject to the following additional conditions: (iv) The undertaking should base the manufacture of sulphamethoxazole on MAI (5-methyl-3-amino in sale [sic]). From the third year onwards, the manufacture of drugs will be based on T. Butyl alcohol hydroxylamine acid T. Butyl alcohol hydroxylamine said sulphates and methyl formulate. The manufacture of formulations should be based on their own production of sulphamethoxazole and import of Tricathopria will be considered only for one year. Thereafter, it should be based on locally produced materials."
(5) CLAUSE 10 provides that the industrial licence will be valid only for a period of two years within which commercial production is to be established.
(6) IT is apparent from the conditions of the industrial licence that the appellant was permitted to import the material, isoxamine, for a period of two years only from the date of the licence, that is to say, up to 23/04/1976 and that, thereafter, the product SMX was to be manufactured from indigenous materials.
(7) ON 13/10/1976, the Import Control Authority issued to the appellant an import licence for the import of various raw materials up to an aggregate value of Rs. 53,31,000.00 including isoxamine. The licence was valid for a period of 24 months from the date of issue of the same. It, however, contained a condition that all the goods that would be imported under it should only be used in the factory of the appellant.
(8) BY its letter dated 20/09/1978, addressed to the Under secretary, government of India, Ministry of Petroleum, Chemicals and Fertilisers, the appellant stated their difficulties in manufacturing SMX from indigenous materials and made a request that it might be allowed to import isoxamine until the middle of 1979. The appellant also wrote another letter dated 29/09/1978 to the said Under secretary, again pointing out to him, inter alia, the difficulties whic
