Ajanta Pharma Gets Relief in Erectile Dysfunction Drug Export Case, Penalty Set Aside
Mumbai: In relief to Ajanta Pharma Ltd, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Mumbai has set aside a Rs 2 lakh penalty imposed on the company in connection with the alleged misdeclaration of exported erectile dysfunction drugs including Kamagra Oral Jelly, Super Kamagra Tablets, and Kamagra Gold Tablets.
The matter relates to 43 consignments exported between September 11, 2018, and March 10, 2021, which included Kamagra Oral Jelly, Super Kamagra Tablets, and Kamagra Gold Tablets. Although the shipping bills, invoices, and packing lists carried correct descriptions of the goods, the corresponding airway bills were marked as “medical apparatus.” The customs department treated this as misdeclaration under Para 2.06(a) of Chapter 2 of the Foreign Trade Policy 2015-20 and DGFT notification dated 12.03.2015, imposing a penalty under Section 117 of the Customs Act.
Ajanta Pharma challenged this decision before the Tribunal. During the hearing, Dr Suvendu Kumar Pati, Member (Judicial), observed:
“Section 117 is restricted to imposition of penalties for contravention of provisions of Customs Act only or for its abetment... No such violation is noticeable here.”
The Tribunal noted that the Customs authorities themselves admitted that the shipping documents bore accurate product descriptions, and only the airway bills – a document handled by freight forwarding agents – carried the alternate terminology. The show cause notice and the Order-in-Original were based on provisions from the Foreign Trade Policy, but no direct violation of the Customs Act was alleged or proven.
The CESTAT also referred to the Supreme Court's ruling in M/s. Amrit Foods Vs. Commissioner of Central Excise (2005 (190) ELT 433 SC), which underscores that penalty cannot be sustained without the assessee being informed of the exact nature of the contravention.
Based on these findings, the Tribunal ruled;
“I am of the considered view that no provision of the Customs Act has been violated nor even alleged to have been violated by the Appellant-Exporter, for which it can be made liable to penalty under Section 117 of the Customs Act, 1962.”
Subsequently, the appeal was allowed, and the penalty order issued by the Commissioner of Customs (Appeals), Mumbai-III vide Order-in-Appeal No. MUM-CUSTM-AXP-APP-886/2022-23 dated 24.08.2022 was set aside, granting consequential relief to Ajanta Pharma.
To view the original judgment, click on the link below:
