w w w . L a w y e r S e r v i c e s . i n



The Drugs Controller General (India) Directorate General of Health Services & Another v/s M/s S. Kesarimal, A partnership firm rep. By its partner K. Prakash Chand & Others

    W.A.NO.1559 OF 2010

    Decided On, 23 February 2012

    At, High Court of Judicature at Madras

    By, THE HONOURABLE MR. JUSTICE P. JYOTHIMANI & THE HONOURABLE MR. JUSTICE M. DURAISWAMY

    For the Appellants : K. Mohanamurali, Advocate. For the Respondents: R1, Satish Parasaran, R2, P. Mahendran, Advocates, R3, No appearance.



Judgment Text

(Prayer : Writ appeal filed against the order dated 22.04.2010 made in W.P.NO.4841 of 2010.)

P. JYOTHIMANI, J.

This writ appeal arises from the order of the learned Single Judge passed in W.P.No.4841 of 2010 filed by the first respondent in the appeal. The first respondent in the appeal who is the importer and supply of drugs to the manufacturers of chemicals; drugs, pharmaceutical and food industries, holds a licence under the Drugs and Cosmetics Act, 1940. According to him, he has been regularly importing a particular drug viz., 'Benfotiamine' which is according to the first respondent, a synthetic supplement finished product. Since as per the first respondent, the said substance is supplied by the petitioner to various companies engaged in manufacturing dietary supplements and not for manufacturing medicine, as per Rule 43 of the Drugs and Cosmetics Rules, 1945, the exemption granted in respect of the implementation of Chapter III of the Drugs and Cosmetics Act, enables him to continue to import without getting approval in Form 10 or Form 10A. However, the appellant in the impugned communication dated 22.02.2010, has informed the first respondent that since the Assistant Drug Controller, Custom House has opined that the subject consignment 'Benfotiamine' cannot be released without importer's licence in Form- 10, a direction was issued to the first respondent to produce the licence in Form 10 for the purpose of clearance of the consignment. It was against the said communication of the Assistant Drugs Controller, the first respondent has filed the above said W.P.No.4841 of 2010 on the ground that inasmuch as the consignment sought to be released by way of import was not intended to use for medicinal use, there is no question of obtaining any licence, since as per Rule 43 of the Drugs and Cosmetics Rules, the first respondent is exempted from being an importer from the provisions of Chapter III of the Drugs and Cosmetics Act. The said contention found favoured with the learned Single Judge, and, in the impugned judgment has allowed the writ petition and held that by virtue of Rule 43 read with Rule 123 of Schedule D of Drugs and Cosmetics Rules, 1945, the question of obtaining licence either in Form 10 or Form 10-A does not arise. The learned Judge has also held that if the first respondent in the guise of getting exemption under Rule 43 of the Rules, but attempted to use the imported drugs for medicinal use, it is always open to the authorities to take appropriate action under the Act, it was with that observation, the writ petition came to be allowed and the impugned letter of the drugs authorities came to be set aside. It is as against the said order of the learned Judge, the appellant department has filed the present appeal.

2. The main ground on which the appeal has been filed is that by allowing the importer to use the provision of Rule 43 of the Rules, there is a possibility of spurious drugs being circulated to the human use which will be neither allowable nor permissible , that mere fact that the consignment label carries stamping given by the importer, it is not for medicinal use itself is not sufficient and it is therefore to have a check over the attempt and in the public interest, it was felt that licence in Form 10 or Form 10A should have been obtained or in the form of no objection certificate from the authority competent, that as per the communication of the Directorate General of Health Services, Drugs Controller General (I) dated 12.12.2005, it was opined that mere exemption granted under Section 43 of the Rules, cannot be allowed to be the ruse for traders in allowing for sub-stranded and spurious drugs and therefore, inasmuch as the said communication was arrived at based on the discussion from various ministries, it is for the purpose of such check and balance, the said impugned letter was passed by the appellant department.

3. Mr.Mohana Murali, learned counsel for the appellant department and Mr.P.Mahadevan, SCGSC vehemently contended that such a drive has been only taken in public interest, since unscrupulous traders may attempt to supply the spurious drugs for medicinal use, which is not permissible and therefore the public interest has to be taken note of. Merely because Rule 43 of the Rules contemplates exemption, it does not mean that the authorities have lost their right of control in respect of distribution of spurious drugs.

4. On the other hand, Mr.Satish Parasaran, learned counsel for the first respondent/original writ petitioner has submitted that inasmuch as by virtue of Rule 43 of the Rules, the application of Chapter III itself has been exempted, there is no question of issuance of licence either in Form 10 or Form 10A of the Act. It is his submission that when once the importer follows the condition contemplated under Rule 43 of Schedule D of the Act, necessarily he has got a statutory right of exemption of application of Chapter III. According to him, it is not as if the department is left in lurch. In the event of failure in person acting as per Rule 43 read with Schedule D, of the Act, certainly he loses his right of exemption from the provisions of Chapter III, it is always open to the authority to take appropriate action for any violation and simply because, the department is unable to take action in respect of the unscrupulous traders, which does not mean that the rule has to be given a go bye. It is his submission that inasmuch the said rule is a statutory rule by virtue of the power of the Government under Rule 123 of the Act, the statutory rule always prevail and it cannot be sought to be explained by executive instruction as relied on by the learned counsel for the first respondent.

5. We have heard the learned counsel for the appellant and respondents and we have gone through the Judgment of the learned Judge.

6. On the face of it, it is no body's case that that the said 'Benfotiamine'is not a drug, The question is as to whether the drug is to be used for medicinal use or not. In this regard, it is relevant to refer to the word 'drug' which is defined as follows:

2(b) "drug" includes-

(i) all medicines for internal or external use of human beings or animals and all substances intended to be used for or in the diagnosis, treatment, mitigation or preventive of any disease or disorder in human beings or animals, including preparations applied on human body for the purpose of repelling insects like mosquitos."

The definition makes it clear that the term 'drug' included drug usable not only for human beings, but also to animals. Chapter III of the Drugs and Cosmetics Act deals with the import of drugs and cosmetics. In effect that this Chapter which stipulates the standard of quality of drugs apart from steps to be taken against the misbranded drugs, adulterated drugs, spurious drugs, misbranded cosmetics and spurious cosmetics. Section 10 of the Act also contemplates certain prohibition in respect of certain type of drugs and cosmetics. As per Section 10-A of the Act, the Central Government has power to prohibit the import of certain type of drugs and cosmetics in public interest and Section 12 enables the Central Government to make the rules. In fact, Section 12(2)(o) enables the Government in granting exemption of application of any of the chapter of the Act or imposing any condition in respect of the application of any of the portion of the Act. The said provision is as follows:

"12(2)(o) provide for the exemption conditionally or otherwise, from all or any of the provisions of this Chapter or the rules made thereunder of any specified drugs or class of drugs"

7. Section 13 of the Act enables the authorities to take appropriate criminal action in cases of offences committed regarding the distribution of spurious drugs and adulterated drugs etc., as contemplated under Section 9-A, 9-B or 9-D of the Act and Section 14 also enables the authority, apart from taking criminal action to confiscate the goods. Therefore, the said Chapter, which speaks about the maintenance of quality of drugs, gives ample power upon the authorities not only to supervise that the drugs are properly distributed for the specific purpose, but also enables the authority to take appropriate action in the public interest. It is by virtue of the powers conferred under Section 12 of the Act, the Central Government has framed the Drugs and Cosmetic Rules 1945, as enabled by the Government under Section 12(2)(o) of the Act, extracted above. In the said Drugs and Cosmetics Rules, 1945, the Central Government has granted exemption in respect of some of the drugs under Rule 43 of the Rules which is as follows:

"Rule 43 The drugs specified in Schedule D shall be exempt from the provisions of Chapter III of the Act and of the rules made thereunder to the extent, and subject to the conditions specified in that Schedule."

8. As per the said rule, the drugs which are substances under schedule D are exempted from the provisions of Chapter III of the Act. A reference to schedule D shows that the product in issue comes under Item No.1 "substances not intended for medical use" under the caption "Class of drugs"'. The said schedule D also contains the conditions based on which exemption is granted. The conditions are extracted below:

"All provisions of Chapter III of the Act and rules thereunder subject to the condition that if the substance is imported in bulk, the importer shall certify that the substance is imported for non-medical uses, and if imported otherwise than in bulk, each container shall bear a label indicating that the substance is not intended for medicinal use or is intended for some purposes other than medicinal use or is of commercial quality"

9. Therefore the condition in respect of drugs which are not intended for medical use is that if the substance is imported in bulk and it should be certified that it is imported for non-medical use and each of the container shall bear a label indicating that the substance is not intended for medicinal use and therefore if the said conditions are complied with, Chapter III of the Act does not apply. Consequently, the question of obtaining Form 10 or Form 10A in the form of licence in respect of those drugs, does not arise.

10. It is not in dispute that in respect of the first respondent -importer, he has imported the above said drug ''Benfotiamine' and the condition contemplated under schedule D has been complied with. If that is so, the contention of the learned counsel for the appellant that the authority must be given effective power to supervise and the parties must be directed to approach the authority for 'No Objection Certificate 'has no meaning. The contention of the learned counsel for the appellant, placing reliance on the circular issued by the Directorate General of Health Services dated 13.12.2005 cannot supersede the statutory rules framed by the Government, as per the powers conferred in the Drugs and Cosmetics Act, 1945. The said circular which is heavily relied on by the learned counsel for the appellant reads as follows:

CIRCULAR

Sub: Import of drugs having dual use and drugs which are used as a raw material for the manufacture of other drugs by the actual users only- regarding

Representations have been received from various quarters including manufacturers of food items, Cosmetics, Textile industries, chemical industries etc., regarding import of certain drugs, which are also used for purposes other than medicinal use. Representations have also been received from various actual users of such bulk drugs that are used as an intermediate for the manufacture of other drugs.

These issues were examined in consultation with the Ministry of Health & Family Welfare and DGFT, Ministry of Commerce and Industry. A view has been taken that a blanket exemption from registration and from provisions contained in Chapter III of the Drugs & Cosmetics Act as given in Schedule D to the Drugs & Cosmetics Rules, cannot be given for import of such categories of drugs, which are not intended for medicinal use or drugs which may themselves be used as drugs but are used for manufacture of other drugs.

To waive registration and import licence in Form 10 for import of drugs not intended for medicinal purpose, the importer will have to make an application to CDSCO, HQ where case to case examination will be done and after due scrutiny, permission to import dual purpose drugs, for non medicinal use, without registration and import licence maybe granted.

The Zonal/Sub Zonal Officers of CDSCO with the help of State Drug Control will ensure random post import checks to ensure that such products are not diverted by importers for medicinal use. However, the containers of such substances should carry the label "Not for Medicinal Use."

Sd/-

Drugs Controller General(I)

11. A reference to the said circular shows that the department has taken a view that giving blanket exemption from the applicability of Chapter III of the Drugs and Cosmetics Act, would cause harm to the public interest and therefore to have a supervision over the use of the said drugs, the importer must be directed to obtain licence in Form 10. The said circular even though is stated to have been issued by taking note of the public interest, after consulting the various Ministries, in our considered view, cannot attempt to take away and supersede the statutory provisions contained in Rule 43 of Rules as extracted above. As correctly found by the learned Judge, the department is not left in lurch, in the event of any of the unscrupulous importer attempted to use or sell the above said drugs for medicinal purpose. A joint reading of the above said provision extracted would categorically show that the exemption granted to the importer from the applicability of Chapter III is available, only when the conditions contemplated under Rule 43 read with schedule D of the Rules is fulfilled scrupulously. If only the department comes to a conclusion on evidence and proof that there is breach of such condition of Rule 43 of Schedule D, the moment it is proved, the importer loses his right of exemption under Chapter III of the Act. Certainly, the authority in such circumstances would have a right to interfere for insisting necessary licence or make necessary search and enforce the provision under Section 13 of the Act for any violation. When such powers are available to the authorities, it is not known as to how the appellant is repeatedly referring to the word 'public interest'. Simply because the authorities who are expected to enforce the law are unable to enforce effectively, it does not mean that the statutory provision must be given a go bye and such a construction would be antitheses to the concept of rule of law. The learned Judge in a categoric manner has given liberty to take appropriate action in cases where the authorities come across any material that are imported on the declared purpose is attempted to be used for different purpose. The operative portion of the order of the learned Judge is extracted below:

"22. It is hereby made clea

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r that if the authorities come across any material that the imported substance cleared as an exempted item is not used for the declared purpose, it is always open to the respondents to proceed against the petitioner in accordance with law". The said direction has given abundant powers to the authorities which are already available under the Act. 12. The law is well settled that the statutory rule cannot override by the executive fiat as it was held in K.Kuppusamy and another Vs. Sftate of T.N. and others reported in (1998) 8 SCC 469. 13. When once the right has been conferred under statutory rule, the same cannot be taken away by any executive fiat, as it was held by the Supreme Court in Priya Blue Industries Limited Vs. Commissioner of Customs (Preventive) reported in 2004 (172) E.L.T 145 . The relevant portion is extracted as follows: "6. We are unable to accept this submission. Just such a contention has been negatived by this Court in Flock (India)'s case (supra). Once an order of Assessment is passed the duty would be payable as per that order. Unless that order of assessment has been reviewed under Section 28 and/or modified in an appeal that order stands. So long as the order of Assessment stands the duty would be payable as per that order of Assessment. A refund claim is not an appeal proceeding. The officer considering a refund claim cannot sit in appeal over an assessment made by a competent officer. The officer considering the refund claim cannot also review an assessment order."14. While so, we do not agree with the contention of the learned counsel for the appellant and accordingly the appeal fails and the same is dismissed. No costs.
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