Bombay High Court
Mumbai Travel Retail LimitedversusUnion Of India,Through the Secretary
- Decided
- Disposal
- DISPOSED OFF
Holding
Goods imported into India, even for warehousing or re‑export and sold in a Duty Free Shop, are not immune from the domestic regulatory regime, and the question of whether nicotine pouches are ‘drugs’ under the Act remains open for further determination.
Summary
The petitioners, operators of duty‑free shops at Mumbai International Airport, were selling nicotine‑pouch products (brand “ZYN” and “FOX”) without a Drugs and Cosmetics Act import licence or registration certificate. The Union of India and various drug‑control and customs officials issued notices and an order banning the sale, asserting that the products are “drugs” under Section 3(b) of the Drugs and Cosmetics Act, 1940. The petitioners argued that because the goods were sold within the customs frontier of the airport and intended for re‑export, domestic health regulations should not apply. The Court examined whether transactions in a DFS enjoy blanket immunity from domestic regulatory law and whether nicotine pouches fall within the definition of a drug requiring a licence. Relying on the precedent of Glamstone Cosmetics v. Union of India, the Court held that goods imported into India, even for warehousing or re‑export and sold in a DFS, are not exempt from domestic regulatory statutes, though the specific classification of nicotine pouches remains unsettled. The Court disposed of the writ petitions, allowing the petitioners to make representations to the CDSCO within four weeks and directing the authorities to consider them.
Issues considered
- Whether transactions conducted in a Duty Free Shop beyond the customs barrier are immune from the domestic regulatory regime or only from fiscal levies.
- Whether nicotine pouches constitute a ‘drug’ under Section 3(b) of the Drugs and Cosmetics Act, 1940, thereby mandating an import licence and registration certificate.
Legislation cited
- Cosmetics Rules, 2020 — s. 12
- Customs Act, 1962 — s. 11, 110, 111, 2(10), 2(11), 2(23), 2(25), 2(27), 2(28), 2(33)
- Drugs and Cosmetics Act, 1940 — s. 10, 18, 3(b)
- Drugs and Cosmetics Rules, 1945
- New Drugs and Clinical Trials Rules, 2019 — s. 2(1)(c), 23, 74, 75, 76
Subjects
- duty free shop
- nicotine pouch
- Drugs and Cosmetics Act
- customs law
- import licence
- regulatory jurisdiction
- re‑export
- public health
Judgment
WP-3079-2026+-DFS-F.doc
Shephali
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO. 3079 OF 2026
MUMBAI TRAVEL RETAIL LIMITED,
A Company existing under the Companies
Act, 2013 and having its registered office at
Adani Corporate House Shantigram, Near
Vaishno Devi Circle, S. G. Highway, Khodiyar,
Ahmedabad 382 421, Gujarat, and office in
Mumbai at Chhatrapati Shivaji Maharaj
International Airport, Mumbai 400 009
Through its Authorized Signatory
Mr Ajay Kaul …PETITIONER
~ versus ~
1. UNION OF INDIA,
Through the Secretary,
Ministry of Health and Family Welfare of
India, Nariman Bhawan, C-Wing,
New Delhi 110 001
SHEPHALI 2. THE DRUG CONTROLLER GENERAL (I),
SANJAY
MORMARE CDSCO, FDA Bhawan, Near Bal Bhavan,
Digitally signed Kotla Road, New Delhi 110 00, India
by SHEPHALI
SANJAY
MORMARE
Date: 2026.09.22
3. ASSISTANT DRUGS CONTROLLER (I),
17:59:22 +0530
Room No.10, International Air Cargo
Complex, Sahar, Andheri,
Mumbai 400 099,
4. PRINCIPAL COMMISSIONER OF
CUSTOMS,
Chharapati Shivaji Maharaj International
Airport, Mumbai 400 099. …RESPONDENTS
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WITH
WRIT PETITION (L) NO. 20740 OF 2026
FLEMINGO DUTYFREE SHOP PRIVATE
LIMITED,
A company existing under the Companies Act
2013 and having its registered office at D-72,
TTC Industrial Area, MIDC Turbhe, Navi
Mumbai 400 705, through its Authorized
Signatory Assistant Manager,
Mumbai Seaport …PETITIONER
~ versus ~
1. UNION OF INDIA,
Through the Secretary,
Ministry of Health and Family Welfare of
India, Nariman Bhawan, C-Wing,
New Delhi 110 001
2. THE DRUG CONTROLLER GENERAL (I),
CDSCO, FDA Bhawan, Near Bal Bhavan,
Kotla Road, New Delhi 110 00, India
3. ASSISTANT DRUGS CONTROLLER (I),
Office of the ADC (I), CDSCO, Central
Drugs Standard Control Organization,
M/s. JWR Logistic Pvt. Ltd. 15-45,
National Highway, 4BPanvel-JNPT
Highway, Village Padeghar, Post-Vahal,
Panvel 410206, Maharashtra.
4. COMMISSIONER OF CUSTOMS
(IMPORT II),
New Customs House, Bond Section,
New Customs House, Ballard Estate,
Mumbai 400 001. …RESPONDENTS
A PPEARANCES
For the Petitioner in Mr Janak Dwarkadas, Senior Advocate,
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WP/3079/2026 with Mr Arunabh Chowdhury, Senior
Advocate, Mr Ashish Kamat, Senior
Advocate, Mr Prakash Shah, Senior
Advocate, Simantini Mohite, Abhay
Jadeja, Dhanyashree Jadeja, Urvi
Gulechha and Ishani Saxena, i/b
Jadejas & Partners.
For Petitioner in Mr Arunabh Chowdhury, Senior
WPL/20740/2026 Advocate, with Abhay Jadeja,
Dhanyashree Jadeja, Urvi Gulechha
and Ishani Saxena, i/b Jadejas &
Partners.
For the Respondents Mr Anil Singh, Additional Solicitor
Nos. 1 to 3, UoI. General, with Rui Rodrigues, Jainendra
Sheth, Adiya Vyas and Leena Patil.
For Respondent No. 4 Mr Siddharth Chandrashekhar, with
Abhishek R Mishra.
CORAM : SUMAN SHYAM &
ADVAIT M. SETHNA, JJ.
RESERVED ON : 7th AUGUST 2026.
PRONOUNCED ON : 22nd SEPTEMBER 2026.
JUDGMENT (Per Suman Shyam, J):-
1. Rule. Rule made returnable forthwith. By consent of the
parties, both these Writ Petitions are taken up for final hearing
and disposal.
2. The Writ Petitioners are operating their respective Duty Free
Shops (DFSs) in the Departure Terminal of the Chhatrapati Shivaji
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Maharaj International Airport Terminals at Mumbai. The
Petitioners in Writ Petition No. 3079 of 2026 and Writ Petition (L)
No. 20740 of 2026 are both inter alia selling an imported product
called “Nicotine pouch” in the DFS under the brand names, “ZYN”
and “FOX”, the sale of which has been banned by the authorities,
apparently due to want of licence issued under The Drugs and
Cosmetics Act, 1940 (hereinafter referred to as “the Act of 1940”)
and the Rules framed thereunder. Aggrieved thereby, both the Writ
Petitioners have approached this Court by filing these Writ
Petitions seeking identical reliefs. Since both these Writ Petitions
raise common questions of law and are based on identical facts,
hence these are being disposed of by this common judgment and
order.
3. For the purpose of these proceedings, the facts involved in
Writ Petition No. 3079 of 2026 are being referred to hereinbelow,
for ready reference:-
4. As noted above, the Writ Petitioner is operating a Duty Free
Shop (“DFS”) viz. M/s. Mumbai Travel Retail Ltd., in the
Departure Terminal of the Chhatrapati Shivaji Maharaj
International (“CSMI”) Airport at Mumbai. The Petitioner imports
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a product under the brand names “ZYN” and “FOX” for sale in the
Duty Free Shop (DFS) at the International Departure Terminal of
the Airport. According to the Petitioner, the product in question is
“Tobacco free nicotine pouch”. These products are stored in a
Special Warehouse operated under a licence obtained from the
Jurisdictional Commissioner of Customs under section 58-A of the
Custom Act, 1962 (hereinafter referred to as the “Act of 1962”).
However, it is the admitted factual position that the Petitioner is
not holding any import licence or Registration Certificate issued by
the authority under the Drugs and Cosmetics Act, 1940 either for
importing or for selling the product. The Petitioner claims that
“Nicotine pouches” are imported from reputed international
suppliers and are not meant to be sold in the domestic market or
for consumption in India but are meant only for consumption by
the outbound travellers in the International Departure Terminal
and therefore, it was a case of re-export. As such, there is no
necessity for the Petitioner to obtain any licence under the Act of
1940 for dealing with such product.
5. On 3rd October 2025, a complaint was lodged by an entity
called “Mothers Against Vaping” (“MAV”), raising concerns about
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the sale of the “Nicotine Pouch” inter-alia on the ground of a
potential health hazard associated with the use of the product.
Based on such complaint, the Respondent No. 4 had issued a
Notice dated 10th October 2025 bearing No.
F.No.ARPT/WH/MISC/81/2025-DFS, calling upon the Petitioner
to furnish details concerning the legality and authorization of sale
of the Nicotine pouches. On receipt of the said notice, the
Petitioner had submitted a Reply dated 15 th October 2025,
addressed to the Respondent No. 4, thus, asserting that since the
DFS is situated within the customs frontier of the International
Airport, hence, the domestic regulatory regime would not apply to
the sale of “Nicotine pouches”. Having taken the above stand, the
Petitioner, while questioning the bonafide of the complaint made
by MAV, had also sought an opportunity of hearing before the
authorities. On 10th November 2025, the Respondent No. 4 had
called upon the Petitioner to furnish (i) the Bill of Entry under
which the product was imported/warehoused as well as the
documents connected therewith including the exemption
Notification, if any; and (ii) NOC/Exemption from the concerned
government agencies. In response to the communication dated
10th November 2025, on 13th November 2025, the Petitioner had
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forwarded the relevant Bill of Entry, while reiterating its earlier
stand that since the DFS operates beyond the customs frontier and
the product fell under the DGFT’s (Directorate General of Foreign
Trade) “free classification” policy, no NOC/Exemption was legally
required to sell the product in the DFS. The Respondent No. 4
had, however, not accepted such claims of the Petitioner and
instead, issued a communication dated 15th December 2025
alleging that in the Bill of Entry, only the brand name of the
product, viz., “ZYN” has been reflected instead of specifically
mentioning “Nicotine Pouches” and, therefore, called upon the
Petitioner to show cause as to why, such specific description was
avoided in the Bill of Entry. Since the Petitioner did not submit any
Reply to the said communication, hence, on 26 th December 2025,
the Respondent No. 4 had also issued a reminder notice. On 2 nd
January 2026, the Petitioner addressed a letter to the Respondent
No. 4 stating that the description of the product in the Bill of Entry
was based on the invoice of the supplier/ manufacturer. It was
mentioned that the product was classified under the head
‘24049100’ of the Notification dated 9 th February, 2022 issued by
the DGFT. It was further contended that since there was a specific
mention in the Bill of Entry to the effect that the same was “ For
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Duty Free Shop Sale” and the customs authorities had physically
examined the products and permitted warehousing of the same,
hence, no further action was called for in the matter. On 5 th March
2026, the Respondent No. 3 conducted an investigation at the
Petitioner's DFS pertaining to the sale of the nicotine pouches,
whereafter, investigation report dated 5th March 2026 was
prepared. Taking note of the findings of the investigation report
dated 5th March 2026, the Respondent No. 3 had issued the
impugned order dated 2nd April 2026 banning the sale of the
product (Nicotine Pouch) in the Duty Free Shops located at the
International Departure Terminal 2 of Chhatrapati Shivaji Maharaj
International Airport at Mumbai, by holding that the sale of the
product in the terminal was in contravention of the provisions of
the Drugs and Cosmetics Act, 1940 and the Rules framed
thereunder. Accordingly, a request was made by the Assistant Drug
Controller, i.e., the Respondent No 3 to the Customs Authorities to
take appropriate action in the matter. On 8 th April, 2026, the
Assistant Commissioner, DFS Bond, C.S.M.I Airport had issued a
communication to the Petitioner informing that the nicotine
pouches imported for sale in the DFS were “Drugs” as per section
3(b) of the Drugs and Cosmetics Act, 1940 and therefore, valid
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Registration Certificate and import licence were mandatory for
their import and sale in India. The Petitioner was accordingly,
advised to take up the matter with the CDSCO (Central Drug
Standard Control Organization) and obtain the necessary
documents, pending which, the sale of the product be stopped.
Aggrieved thereby, the Writ Petitioner has approached this Court
by filing the present Writ Petition with the following prayers:
“(a) that this Hon'ble Court be pleased to issue a writ of
mandamus or a writ in the nature of mandamus or any other
writ, order and direction:
(i) ordering and declaring that the Drugs and Cosmetic
Act 1940 and Drugs and Cosmetics Rules 1945 do not
apply to the Petitioner in relation to its business and
activities conducted at the Petitioner's Duty Free Shops
and/or the nicotine pouches available, displayed
and/or sold at the said Duty Free Shops and as such
the impugned Communications dated 08 April 2026
read with 02 April 2026 (at Exhibit "K" hereto) are
without jurisdiction and legal authority;
(ii) restraining, injuncting and/or prohibiting Respondents
No.1 to 4, their respective servants, officers and/or
agents from in any manner (directly and/or indirectly)
applying the Drugs and Cosmetic Act, 1940 and Drugs
and Cosmetics Rules, 1945 to the Petitioner for and in
respect of their business and activities conducted at the
Duty Free shops and/or nicotine pouches sold at the
Petitioner's Duty Free Shops; and
(ii) restraining, injuncting and/or prohibiting Respondents
No.1 to 4, their respective servants, officers and agents
from in any manner (directly and/or indirectly)
interfering with, disturbing and/or in any manner
disturbing the Petitioner's supply, display, distribution
and/or sale of the nicotine pouches at the Petitioner's
Duty Free Shops and/or acting upon on the basis of
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and/or taking any coercive measures against the
Petitioner on the basis of the impugned
Communications dated 08 April 2026 read with 02
April 2026 (at Exhibit "K" hereto) in relation to the
business and/or activities of sale conducted by the
Petitioner at its Duty Free Shops;
(b) this Hon'ble Court be pleased to issue a writ of
certiorari or writ in the nature of certiorari or any other
appropriate writ, order and direction calling for the record of
the case from Respondents No. 1 to 4 and after perusing the
legality, correctness and veracity, this Hon'ble Court be pleased
to quash and set aside the impugned Communications dated
08 April 2026 read with 02 April 2026 (at Exhibit K hereto);
(c) that pending the hearing and final disposal of the
present Petition, this Hon'ble Court be pleased to:
(i) restrain, injunct and/or prohibit Respondents No.1 to
4, their respective servants, officers and/or agents from
in any manner (directly and/or indirectly) applying the
Drugs and Cosmetic Act, 1940 and Drugs and
Cosmetics Rules, 1945 to the Petitioner in relation to
the Petitioner's business and/or activities conducted at
its Duty Free Shops and more particularly, the storage,
display and/or sale of nicotine pouches at the
Petitioner' Duty Free Shops;
(ii) stay the effect, implementation and operation of the
impugned Communications dated 08 April 2026 read
with 02 April 2026 (at Exhibit K hereto); and
(iii) restrain, injunct and/or prohibit Respondents No.1 to
4, their respective servants, officers and agents from in
any manner (directly and/or indirectly) interfering
with, disturbing and/or in any manner disturbing the
Petitioner' supply, display, distribution and/or sale of
the nicotine pouches at the Petitioner' Duty Free Shops
and/or acting upon and/or in furtherance of and/or
otherwise taking any coercive measures against the
Petitioner on the basis of the on the basis of the
impugned Communications dated 08 April 2026 read
with 02 April 2026 (at Exhibit "K" hereto).”
6. On 24st June 2026, this Court had passed an ad-interim
order restraining the Respondents from initiating any coercive
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action against the Petitioner pertaining to the existing stock of
Nicotine Pouches held in its Duty Free Shop. However, further
import of the product has remained suspended in view of the
communication dated 2nd April 2026 issued by the Respondent No.
3.
7. As noted above, the pleaded case of the Petitioner is that
since the purchase of the product is from foreign suppliers and the
product is being sold only in the Duty Free Shops at the Departure
Terminal of the International Airport and within the customs
barrier of the Airport, hence, the domestic municipal laws,
including the Rules and Regulations framed under the Drugs and
Cosmetics Act, 1940, would not have any application to such
products. Therefore, there was no requirement on the part of the
Petitioner to obtain any licence under the Drugs and Cosmetics Act
or the Rules framed thereunder.
8. The stand of the Respondents, on the other hand, has been
that, although the product is being sold in the Departure Terminal
of the International Airport, yet, the passengers take possession of
the goods immediately after the sale and are also free to consume
the same even on the Indian soil. Considering the health hazard
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associated with consumption of nicotine, the stoppage and /or
sale of the product on Indian soil would come within the domain
of the Indian regulatory agencies. It is also the case of the
Respondents that the expression “Outside customs frontier” would
be applicable to the DFS only for the customs tariff/ taxation
purposes and the same would not extend any immunity to the DFS
from the regulatory control of domestic agencies, particularly
when the matter pertains to an issue of health hazard.
9. While advancing arguments in support of the pleadings in
the Writ Petition, Mr. Janak Dwarkadas, learned Senior Counsel
has submitted that in view of the decision of the Supreme Court
rendered in the case of M/s. Hotel Ashoka (Indian Tour Dev. Cor.
Ltd) Vs. Assistant Commissioner of Commercial Taxes & Anr. 1 as
well as Garden Silk Mills Limited & Anr. v. Union of India & Ors., 2
the law is well settled that goods stored in the customs
warehouses are later on, sold in the Duty Free Shops, would not
attract customs tariff and/or indirect tax since the transaction
takes place within the customs barrier. According to Mr.
Dwarkadas, since the Nicotine Pouches sold in the DFS, are not
1 (2012) 3 SCC 204.
2 (1999) 8 SCC 744.
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sold to the domestic consumers, the same do not merge with the
“mass of goods” in India. As such, the product would neither
attract customs duty and/or tax on sale nor can the same be
subjected to the domestic regulatory regime. Mr. Dwarkadas has
further argued that unless the product transcends the customs
barrier, none of the Regulatory Authorities, including the
Respondent No. 3, would have any authority or jurisdiction under
the law to either seize the product or to insist on any licence for
trading of the same.
10. In his attempt to distinguish the recent decision of a
coordinate Bench of this Court in the case of Glamstone Cosmetics
Pvt. Ltd. Vs. Union of India & Ors. ,3 Mr. Dwarkadas has further
argued that it was a case where the Court had found that there
was a fraudulent declaration of the cosmetics imported by the DFS
and, accordingly, the Court had upheld the seizure of such goods.
However, submits Mr. Dwarkadas, in the present case, the product
having been imported under a valid Bill of Entry and stored in the
customs warehouse with the full knowledge and understanding of
the customs authorities that the product was imported for the
3 2026 SCC OnLine Bom 1861.
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purpose of re-export, the provisions of the Act of 1940 and the
Rules framed thereunder, would have no application in case of
such product. In support of his above arguments, Mr. Dwarkadas
has relied upon and referred to the following decisions: -
1. Garden Silk Mills Limited & Anr. v. Union of India &
Ors. — (1999) 8 SCC 744.
2. Flemingo Dutyfree Shop Private Limited v. The State
of Karnataka — ILR 2009 KAR 3462.
3. DFS India Private Limited v. Commissioner of Custom
— Special Leave Petition (C) No. 2436 of 2010.
4. DFS India Private Limited & Anr. v. The Commissioner
of Customs—Writ Petition No. 2578 of 2009.
5. Indian Tourist Development Corporation Limited v.
Assistant Commissioner of Commercial Taxes & Anr.
—(2012) 3 SCC 204.
6. DFS India Private Limited & Anr. v. Union of India &
Ors.—rit Petition (L) No. 975 of 2014.
7. DFS India Private Limited & Anr. v. Union of India &
Ors.—Writ Petition (L) No. 2136 of 2014
(renumbered as Writ Petition No. 2680 of 2014).
8. DFS India Private Limited & Anr. v. Union of India &
Ors.—Writ Petition No. 2680 of 2014.
9. DFS India Private Limited & Anr. v. Union of India &
Ors.—Writ Petition (L) No. 3003 of 2017
(renumbered as Writ Petition No. 215 of 2018).
10. Commissioner, Service Tax-VII v. Flemingo Dutyfree
Shop Private Limited—2017 SCC OnLine CESTAT
10531.
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11. Aarish Altaf Tinwala—Order No. 634/2018-CUS
(WZ)/ASRA/MUMBAI dated 31.08.2018.
12. A-1 Cuisines Private Limited v. Union of India—2018
SCC OnLine Bom 21238.
13. A-1 Cuisines Private Limited v. Union of India and
Anr.—Special Leave Petition (C) No. 33011 of 2018.
14. Sandeep Patil v. Union of India & Anr.—Cri. Public
Interest Litigation (St.) No. 3 of 2019.
15. Atin Krishna v. Union of India—2019 SCC OnLine All
7064
16. Sandeep Patil v. Union of India & Anr. along with
another connected matters—2019 SCC OnLine Bom
2483.
11. Mr. Arunabh Chowdhury, learned Senior Counsel, appearing
for the Petitioner in Writ Petition (L) No. 20740 of 2026, while
adopting the submissions made by Mr. Dwarkadas, has further
argued that the impugned communication dated 2 nd April 2026 is
wholly arbitrary and without jurisdiction since there is nothing on
record to show that the product (Nicotine Pouch) would come
within the definition of “drug” within the meaning of Section 3(b)
of Drugs and Cosmetics Act, 1940 requiring an import licence.
According to Mr. Chowdhury, the product is not a prohibited item,
rather, it enjoys “free import” status as per the Notification No.
54/2015-2020 dated 9th February 2022 issued by the DGFT.
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Therefore, submits Mr. Chowdhury, there is no justifiable ground
for the Respondent No. 3 to either insist on an import licence or a
Registration Certificate for selling the product in the DFS of the
International Airport as there was no requirement under law to
hold such a licence.
12. Resisting the above arguments, Mr. Anil Singh, learned
Additional Solicitor General of India, appearing for the
Respondents, has submitted that any transaction involving the
product taking place on the Indian soil and within the territorial
waters of India would be subject to the regulatory regime of the
country. Therefore, a product which requires licence outside the
customs frontier would also require a licence, even if transacted
within the DFS. According to Mr. Singh, selling the product in the
DFS would be deemed to have been done within India.
13. Mr. Singh has further argued that since ‘Nicotine’ is
considered as an API (Active Pharmaceutical Ingredient) Agent
and/or a pharmaceutical ingredient within the meaning of Section
3(b) of the Act of 1940, hence, its import, sale or stocking in
India, without a valid licence, would be prohibited under Section
11 of the Act of 1962 as well. On such count, Mr. Singh has,
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therefore, submitted that the Respondent No. 3 was not only
justified in insisting on a licence but the Customs Authorities were
also well within their authority and jurisdiction to ban the sale of
the product unless the DFS complies with the regulatory regime. It
is also the contention of Mr. Singh that the present case will be
squarely covered by the judgment of this Court in the case of
Glamstone Cosmetics Pvt. Ltd. Vs. Union of India & Ors. (Supra)
and, therefore, the Writ Petition(s) is/ are liable to be dismissed.
14. We have considered the submissions made at the Bar and
have also gone through the material available on record.
15. After a careful analysis of the projections made by the
contesting parties, we are of the view that, two important
questions, having a substantial bearing in the outcome of the
proceeding(s), would arise for consideration by this Court, are as
follows:-
I. Whether all transactions conducted within a DFS,
beyond the customs barrier, would enjoy absolute
immunity from the domestic regulatory regime or
whether such immunity/exemption would be
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restricted solely to fiscal levies such as customs duty,
indirect tax, etc.?
II. Whether “Nicotine Pouch” falls within the definition of
“drug” under section 3(b) of the Drugs and Cosmetics
Act, 1940, making import licence and/or registration
mandatory even for dealing with the product within
the customs barrier of the International Departure
Terminal of the Airport?
16. In order to answer the aforementioned questions, it would
be necessary for us to refer to and rely upon certain provisions of
the Act of 1962 as well as the Act of 1940 and the Rules framed
thereunder.
17. The following provisions of the Customs Act, 1962 would be
relevant for the purpose of this case and therefore are being
quoted herein below for ready reference:-
“2. Definitions.—In this Act, unless the context otherwise
requires,—
(10) “customs airport” means any airport appointed
under clause (a) of section 7 to be a customs airport 6 [and
includes a place appointed under clause (aa) of that section to
be an air freight station;
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(11) “customs area” means the area of a customs
station 7 [or a warehouse] and includes any area in which
imported goods or exported goods are ordinarily kept before
clearance by Customs Authorities;
(23) “import”, with its grammatical variations and
cognate expressions, means bringing into India from a place
outside India;
(25) “imported goods” means any goods brought into
India from a place outside India but does not include goods
which have been cleared for home consumption;
(27)“India” includes the territorial waters of India;
(28) “Indian Customs Waters” means the waters
extending into the sea up to the limit of 4 Exclusive Economic
zone under section 7 of the Territorial Waters, Continental
Shelf, Exclusive Economic Zone and other Maritime Zones Act,
1976 (80 of 1976),] and includes any bay, gulf, harbour, creek
or tidal river;
(33) “prohibited goods” means any goods the import
or export of which is subject to any prohibition under this Act
or any other law for the time being in force but does not
include any such goods in respect of which the conditions
subject to which the goods are permitted to be imported or
exported have been complied with;
xxxxxxxxxxxxxxxxxx
Section 11:
11. Power to prohibit importation or exportation of goods.
(1) If the Central Government is satisfied that it is
necessary so to do for any of the purposes specified in sub-
section (2), it may, by notification in the Official Gazette,
prohibit either absolutely or subject to such conditions (to be
fulfilled before or after clearance) as may be specified in the
notification, the import or export of goods of any specified
description.
(2) The purposes referred to in sub-section (1) are the
following:—
(a) the maintenance of the security of India;
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(b) the maintenance of public order and standards of
decency or morality;
(c) the prevention of smuggling;
(d) the prevention of shortage of goods of any
description;
(e) the conservation of foreign exchange and the
safeguarding of balance of payments;
(f) the prevention of injury to the economy of the
country by the uncontrolled import or export of
gold or silver;
(g) the prevention of surplus of any agricultural
product or the product of fisheries;
(h) the maintenance of standards for the
classification, grading or marketing of goods in
international trade;
(i) the establishment of any industry;
(j) the prevention of serious injury to domestic
production of goods of any description;
(k) the protection of human, animal or plant life or
health;
(l) the protection of national treasures of artistic,
historic or archaeological value;
(m) the conservation of exhaustible natural resources;
(n) the protection of patents, trademarks, copyrights,
designs and geographical indications];
(o) the prevention of deceptive practices;
(p) the carrying on of foreign trade in any goods by
the State, or by a Corporation owned or controlled
by the State to the exclusion, complete or partial,
of citizens of India;
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(q) the fulfilment of obligations under the Charter of
the United Nations for the maintenance of
international peace and security;
(r) the implementation of any treaty, agreement or
convention with any country;
(s) the compliance of imported goods with any laws
which are applicable to similar goods produced or
manufactured in India;
(t) the prevention of dissemination of documents
containing any matter which is likely to
prejudicially affect friendly relations with any
foreign State or is derogatory to national prestige;
(u) the prevention of the contravention of any law for
the time being in force; and
(v) any other purpose conducive to the interests of the
general public.
(3) Any prohibition or restriction or obligation relating to
import or export of any goods or class of goods or clearance
thereof provided in any other law for the time being in force,
or any rule or regulation made or any order or notification
issued thereunder, shall be executed under the provisions of
that Act only if such prohibition or restriction or obligation is
notified under the provisions of this Act, subject to such
exceptions, modifications or adaptations as the Central
Government deems fit.
xxxxxxxxxxxxx
18. The following provisions of the Drugs and Cosmetics Act,
1940 and the Rules framed thereunder would be relevant for the
purpose of this case and therefore are being reproduced
hereinbelow for ready reference:-
“3. Definitions.—In this Act, unless there is anything
repugnant in the subject or context,
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(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 prevention of any
disease or disorder in human beings or animals, including
preparations applied on human body for the purpose of
repelling insects like mosquitoes;
(ii) such substances (other than food) intended to
affect the structure or any function of the human body or
intended to be used for the destruction of [vermin] or insects
which cause disease in human beings or animals, as may be
specified from time to time by the Central Government by
notification in the Official Gazette;
(iii) all substances intended for use as components of a
drug including empty gelatin capsules; and
(iv) such devices* intended for internal or external use
in the diagnosis, treatment, mitigation or prevention of disease
or disorder in human beings or animals, as may be specified
from time to time by the Central Government by notification in
the Official Gazette, after consultation with the Board;
Section 10:
10. Prohibition of import of certain drugs or cosmetics.—
From such date as may be fixed by the Central Government by
notification in the Official Gazette in this behalf, no person
shall import—
(a) any drug or cosmetic which is not of
standard quality;
(b) any misbranded drug or misbranded or
spurious cosmetic;
(bb) any adulterated or spurious drug;
(c) any drug or cosmetic for the import of which
a licence is prescribed, otherwise than under, and in
accordance with, such licence;
(d) any patent or proprietary medicine, unless
there is displayed in the prescribed manner on the label
or container thereof the true formula or list of active
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ingredients contained in it, together with the quantities
thereof;
(e) any drug which by means of any statement,
design or device accompanying it or by any other
means, purports or claims to cure or mitigate any such
disease or ailment, or to have any such other effect, as
may be prescribed;
(ee) any cosmetic containing any ingredient
which may render it unsafe or harmful for use under
the directions indicated or recommended;
(f) any drug or cosmetic the import of which is
prohibited by rule made under this Chapter:
Provided that nothing in this section shall apply
to the import, subject to prescribed conditions, of small
quantities of any drug for the purpose of examination,
test or analysis or for personal use:
Provided further that the Central Government
may, after consultation with the Board, by notification
in the Official Gazette, permit, subject to any
conditions specified in the notification, the import of
any drug or class of drugs not being of standard quality.
Section 18:
18. Prohibition of manufacture and sale of certain drugs and
cosmetics.—From such date as may be fixed by the State
Government by notification in the Official Gazette in this
behalf, no person shall himself or by any other person on his
behalf—
(a) manufacture for sale or for distribution, or sell, or
stock or exhibit or offer for sale] or distribute—
(i) any drug which is not of a standard quality,
or is misbranded, adulterated or spurious;
(ii) any cosmetic which is not of a standard
quality or is misbranded or spurious;
(iii) any patent or proprietary medicine, unless
there is displayed in the prescribed manner on the label
or container thereof the true formula or list of active
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ingredients contained in it together with the quantities
thereof;
(iv) any drug which by means of any statement,
design or device accompanying it or by any other
means, purports or claims [to prevent, cure or
mitigate] any such disease or ailment, or to have any
such other effect as may be prescribed;
(v) any cosmetic containing any ingredient
which may render it unsafe or harmful for use under
the directions indicated or recommended;
(vi) any drug or cosmetic in contravention of
any of the provisions of this Chapter or any rule made
thereunder;
(b) sell, or stock or exhibit or offer for sale, or
distribute any drug or cosmetic which has been
imported or manufactured in contravention of any of
the provisions of this Act or any rule made thereunder;
(c) manufacture for sale or for distribution, or
sell, or stock or exhibit or offer for sale, or distribute
any drug or cosmetic, except under, and in accordance
with the conditions of, a licence issued for such
purpose under this Chapter:
PROVIDED that nothing in this section shall
apply to the manufacture, subject to prescribed
conditions, of small quantities of any drug for the
purpose of examination, test or analysis:
PROVIDED FURTHER that the Central
Government may, after consultation with the Board, by
notification in the Official Gazette, permit, subject to
any conditions specified in the notification, the
manufacture for sale, or for distribution, sale, stocking
or exhibiting or offering for sale or distribution of any
drug or class of drugs not being of standard quality.
xxxxxxxxx
Rule 123
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123. The drugs specified in Schedule K shall be
exempted from the provisions of Chapter IV of the Act
and the Rules made thereunder to the extent and
subject to the conditions specified in that Schedule.
SCHEDULE K
Extent and Conditions of
Class of Drugs
Exemption
33. Nicotine gum The provisions of Chapter IV
and Lozenges of the Act and the Rules made
containing upto 2 thereunder which require
mg of nicotine them to be covered by a sale
licence subject to the
condition that such a product
has been manufactured under
a valid drug manufacturing
licence.”
19. At the very outset, we propose to deal with the argument
advanced on behalf of the Petitioner(s) to the effect that the
product, “Nicotine Pouches” being sold to the customers in the
departure terminal of an International Airport, which is beyond
the customs frontier, no import licence or Registration Certificate
would be necessary for importing the product nor would the
domestic regulatory agencies have any jurisdiction to interfere in
the matter. Such a contention has been raised primarily by relying
upon the decisions of the Hon’ble Supreme Court in the case of
Garden Silk Mills Limited & Anr. v. Union of India & Ors. (Supra)
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as well as M/s. Hotel Ashoka (Indian Tour Dev. Cor. Ltd) Vs.
Assistant Commissioner of Commercial Taxes & Anr. (Supra).
20. In Garden Silk Mills Limited & Anr. v. Union of India & Ors.
(Supra), the core issue was pertaining to the question as to
whether, while assessing customs duty payable in respect of
imported goods, the customs authorities could add/include
landing charges in arriving at the value of those goods. That was a
case where the Appellants had imported polyester yarn from
abroad and the sale transaction involving a domestic purchaser
and the foreign supplier was in the nature of CIF contract, i.e.,
price-included cost, insurance and freight charges contract. Under
the contract, the price paid by the purchaser included not only the
cost of the goods but also the insurance and the freight charges.
Notwithstanding the same, the customs authorities, while
determining the value of the goods for the purpose of ascertaining
the amount of duty payable, had added to the CIF price, the
landing charges which were paid to the Port Trust Authorities. In
that case, the Apex Court had considered the concept of import in
the context of the assessment and payment of import duty under
the Customs Act, particularly when goods are cleared for home
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consumption under Sections 47 and held that import is completed
when the goods become part of the goods within the country.
Therefore, the taxable event is reached when the goods cross the
customs barriers and the Bill of Entry for home consumption is
filed. It is in such factual backdrop, the Supreme Court had made
the following observations in paragraph 18 which are reproduced
hereinbelow for ready reference: -
“18. It would appear to us that the import of goods
into India would commence when the same cross
into the territorial waters but continues and is
completed when the goods become part of the mass
of goods within the country; the taxable event being
reached at the time when the goods reach the
customs barriers and the bill of entry for home
consumption is filed”.
21. In M/s. Hotel Ashoka (Indian Tour Dev. Cor. Ltd) Vs.
Assistant Commissioner of Commercial Taxes & Anr. (Supra), the
Appellant-Corporation, which was having its Duty Free Shops
(“DFS”) at all the major International Airports, which were selling
several articles including liquor, cigarettes, perfumes and food
articles to foreigners and also to Indians travelling abroad or
coming to India by air. The controversy in that case pertained to
the transactions that took place in the Duty Free Shops (“DFS”)
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situated at the International Airport at Bangalore. The Appellant-
Corporation, which was a registered dealer under the Karnataka
Value Added Tax Act, 2003 as well as the Central Sales Tax Act,
1956, had taken the plea that no tax was payable by the Appellant
since the goods which have been sold at the Duty Free Shops were
sold directly to the passengers and even the delivery of goods at
the Duty Free Shops was made before importing the goods or
before the goods had passed the customs frontier of India. As
such, it was the case of the Appellant that the Assessment Order
issued by the Assistant Commissioner of Commercial Tax
(Transition-12), Bangalore, directing the Appellant to pay a sum of
Rs. 4,20,70,900/- by way of Sales Tax was illegal. The core
question arising in that case was as to whether, the State would
have the authority under Article 286 of the Constitution to levy
sales tax / VAT on transactions taking place in the DFS at the
International airport terminal before such goods had crossed the
customs frontier. By referring to Section 5(2) of the Central Sales
Tax Act, 1956, the Hon’ble Supreme Court has held that no tax on
sale or purchase of goods can be imposed by any State when the
transaction takes place in the course of import of goods or export
of goods outside the territory of India. In other words, the decision
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in M/s. Hotel Ashoka (Indian Tour Dev. Cor. Ltd) Vs. Assistant
Commissioner of Commercial Taxes & Anr. (Supra) deals with the
power of a State to impose duty on such goods in course of export
or import.
22. From a careful reading of the judgments rendered in the
case of Garden Silk Mills Limited & Anr. v. Union of India & Ors.
(Supra) as well as in M/s. Hotel Ashoka (Indian Tour Dev. Cor.
Ltd) Vs. Assistant Commissioner of Commercial Taxes & Anr.
(Supra), it is thus apparent that those precedents exclusively deal
with the taxable events for assessing customs duty and sales
tax/VAT. The decisions do not extend any blanket immunity to the
DFS operators from the domestic regulatory or public health laws
of the country. The aforesaid decisions relied upon by the learned
Senior Counsel for the Petitioner(s) are also not the authorities for
the proposition that all transactions taking place in the DFS,
beyond the Customs frontier, would enjoy blanket
exemption/immunity from the domestic regulatory regime. On the
contrary, the issue appears to be squarely covered by the decision
of a co-ordinate Bench of this Court in Glamstone Cosmetics Pvt.
Ltd. Vs. Union of India & Ors. (Supra).
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23. In Glamstone Cosmetics Pvt. Ltd. Vs. Union of India & Ors.
(Supra), the Petitioner (therein) was engaged in the import and
trading of cosmetics. Accordingly, consignments of cosmetics and
FMCG (Fast Moving Consumer Goods) were imported to India for
re-export. The Petitioner had filed warehousing Bills of Entry
pertaining to those consignments. However, the product, despite
being ‘cosmetics’ coming within the ambit of the Act of 1940, did
not have any licence from the Central Drugs Standard Control
Organization (“CDSCO”). Although the Petitioner had applied for
the licence, no such licence was granted by the CDSCO qua the
products. Notwithstanding the same, the goods were imported to
India. According to the Petitioner, the warehousing Bills of Entry
were filed only to hold the goods in the bond, pending regulatory
clearance. Since the goods were not meant to be sold in India,
hence, those could not have been seized by the authorities due to
want of licence. The plea of the authority, on the other hand, was
to the effect that the goods were being imported based on mis-
declaration of value and other particulars in order to circumvent
the restrictions imposed on the goods under the import policy
since a licence from CDSCO was mandatory under the Act of 1940
and the Rules framed thereunder before which the goods could be
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imported in India. Hence, import of these goods to India was in
violation of the relevant Act, Rules and the Foreign Trade Policy.
24. After taking note of the contentions of both the sides and on
an assessment of the relevant provisions of the Act of 1962 as well
as the Act of 1940, the co-ordinate Bench has observed in
Glamstone Cosmetics Pvt. Ltd. (Supra) as follows:-
“32. However, something which is at the very threshold
needs to be discussed, namely, when the goods are sought to
be imported into India from a place outside India, necessarily
the provision of Section 2(23) defining 'import' which mean
"bringing into India from a place outside India", would become
applicable. Such goods would be imported goods within the
meaning of Section 2(25) being any goods brought into India
from a place outside India, prior to their clearance for home
consumption. Thus, in the context of bringing of the goods
into India as ordained by Section 2(23) and Section 2(25)
(supra), Section 2(27) and Section 2(28) become relevant
which means “the territorial waters of India” and the “Indian
customs water” to inter alia mean waters extending into the
sea, up to the limit of ‘exclusive economic zone...’. Further
Section 2(33) when speaks about ‘prohibited goods’ it means
any goods, the import or export of which is “subject to any
prohibition” under the Act “or any other law for the time being
in force”. Also Section 11 A(a) defines “illegal import” to mean
the import of any goods in contravention of the provisions of
the Act or “any other law for the time being in force”. It is in
the context of the said provisions, Chapter VII of the Customs
Act which inter alia provide for clearance of imported goods
are required to be considered in Section 46 provides for ‘Entry
of goods on importation.’
33. On a cumulative application of the provisions of the
Customs Act (supra) read with the provisions of the Drugs and
Cosmetics Act, 1940 and the Cosmetics Rule 2020, qua the
goods in question, the following appears to be the apparent
requirement of law:
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(i) The import of the goods in question which are
Cosmetics certainly falls within the expression of
import as defined under Section 2(23) i.e., bringing
into India from a place outside India and the term
India as defined under Section 2(27) includes the
territorial waters of India and not the port of arrival or
the goods being warehoused, the warehouse being on
Indian territory, meaning thereby that the goods are
imported goods once they enter the territorial waters
of India.
(ii) Such goods would be imported goods within the
meaning of Section 2(25) being brought into India
from a place outside India, not cleared for home
consumption.
(iii) The goods are prohibited goods within the meaning of
Section 2(33), the import of which is subject to any
prohibition under the Customs Act or “any other law
for the time being in force”;
iv) Also an ‘illegal import’ within the meaning of Section
11A(a) means the import of any goods in
contravention of the provision of the Customs Act “or
any other law for the time being in force”.
34. Thus, necessarily by incorporation of the words “any
other law” in the provisions of Section 2(33) of the Customs
Act, read with the Drugs and Cosmetics Act 1940 and the
Rules framed thereunder become ipso facto applicable to any
imports apart from the applicability of the provisions of the
Customs Act. In such context, Section 10 of the Drugs and
Cosmetics Act (supra) is a provision which prescribes
prohibition on import of certain drugs or cosmetics, when such
provision ordains that no person shall import any Drug or
Cosmetic for the import of which a licence is prescribed, and
otherwise than under such licence thereby making a prior
licence mandatory for the imports.
35. Further, Section 10 of the Drugs and Cosmetics Act,
1940 is required to be read with the Cosmetics Rules 2020,
and more particularly, Rule 12 providing for import of
Cosmetics which clearly provide that no cosmetic shall be inter
alia imported into India, unless the product has been
registered in accordance with these rules by the the Central
Licensing Authority and making further provisions for
application for registration of a Cosmetic product intended to
be imported into India.
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36. It is, thus as clear as the daylight, that as per the
provisions of Section 10 of the Cosmetics Act, no import of
Cosmetics could have been undertaken by the petitioner
without a licence, as rightly contended on behalf of the
Respondent. Admittedly the goods in question were imported
into India without a licence. This was not permissible,
considering the conjoint effect of the aforesaid provisions.
Thus, the provisions of Section 2(33) which define prohibited
goods to inter alia mean any goods the import of which is
subject to the prohibition either under the Customs Act or “any
other law for the time being in force”, stand breached and/or
not complied thereby rendering the goods, in question
“prohibited goods”.
37. Thus, the goods in question as imported by the
petitioner being prohibited goods, the provisions of Section
110 of the Customs Act providing for seizure and the provision
of Section 111 providing for confiscation of improperly
imported goods, would stand attracted and applicable. This
more particularly, clause (d) of Section 111 which provides
that the goods would be liable for confiscation when goods
which are imported or attempted to be imported or are
brought within the Indian Customs Waters for the purpose of
being imported, contrary to any prohibition imposed by or
under the Customs Act or any other law for the time being in
force. In such circumstances, applying the statutory provisions
as discussed hereinabove, to the goods in question, which
were imported by the petitioner without a licence, the legal
character of the goods certainly is of these goods being
"prohibited goods" as defined under Section 2(33) of the
Customs Act.
38. On the aforesaid complexion, the contentions as urged
on behalf of the petitioner are now required to be considered.
The case of the petitioner is that the petitioner had imported
the goods only for the purpose of warehousing, as seen from
Bills of Entry for warehousing, presented by the petitioner for
the goods to be kept in the warehouse and thereafter to be re-
exported being its contention. The petitioner has also
contended that for such reason there was no requirement of a
licence to be obtained before the said import. We do not agree
on such case of the petitioner. Moreover, such contention of
the petitioner militates against the clear provisions of Section
10 of the Drugs and Cosmetics Act read with the Cosmetics
Rules 2020 which stand clearly attracted nay incorporated in
the provisions of the Customs Act, as noted by us hereinabove.
Thus, merely for the purpose of warehousing, such goods
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could be imported, i.e., brought into the Indian territorial
waters, is an untenable contention, which has no legs to stand,
considering the effect of the aforesaid provisions of the
Customs Act read with the Drugs and Cosmetics Act, 1940
read with the Cosmetics Rules, 2020.
39. We are hence in agreement with Mr. Mishra, learned
counsel for the Revenue drawing the Court's attention to the
reply affidavit, to contend that there was never an intention of
the petitioner that the goods be imported only for the purpose
of warehousing and/or re-export. Such case of the petitioner
appears to be a complete afterthought being presented before
the Customs Authorities as also before this Court, that the
goods be permitted to be re-exported as they were not meant
to be cleared for home consumption. We do not find any
material whatsoever to the effect that there was any prior
intention before the imports were undertaken, that the goods
were meant to be only stored i.e., being imported only for
warehousing in India and thereafter to be re-exported. This is
not recognized in law. If this was to be the sole intention, the
petitioner could not have applied for a CDSCO licence in May,
2025. The clear provisions of the Drugs and Cosmetics Act and
the Cosmetics Rules 2020 as applicable to the imports of
Cosmetics do not conceive a situation, that such goods can be
brought into territorial waters merely for the purpose of
warehousing and/or on that basis, that after the arrival of the
goods, a licence can be applied. This is totally unacceptable
and in fact illegal. The provisions of law as discussed
hereinabove do not permit that these goods can be brought
into the Country only for the purpose of warehousing and that
too contravening and/or circumventing the provisions of law.
The consequence of such contentions as urged on behalf of the
petitioner, would be to the effect that Indian territory permits
prohibited goods to be brought into India, merely for the
purpose of warehousing, on a specious consideration that
warehousing is cheaper in India than in other countries, and
therefore such unlicenced imports be permitted, for the goods
to be ultimately re- exported. This would be too far fetched.
We do not gather any such intention under any provisions of
law as urged before us. The imports in question being per se
illegal cannot be labelled to be legitimate or legal, merely
because the petitioner intends to re-export the goods and for
which no duty according to the petitioner is attracted.”
25. The decision in Glamstone Cosmetics Pvt. Ltd. (supra), has
established that goods brought into India from outside the country
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would mean and include goods brought within the “territorial
waters of India”. The term ‘India’, as defined under Section 2(27)
of the Act of 1962, would include territorial waters and not merely
the port of arrival or the warehousing of the goods. “Import”
under Section 2(23) takes place once the goods enter the
“territorial waters of India”. Upon entering the territorial waters in
India, the goods would be deemed to be imported goods within
the meaning of Section 2(25) even if the same are not cleared for
home consumption. Consequently, the prohibition under Section
2(33) would also be applicable to such imported goods if the same
is otherwise prohibited under the Customs Act or any other law
for the time being in force. Therefore, the prohibition under
Section 10 of the Act of 1940 would also apply to such goods.
26. It is not in dispute that the decision in Glamstone Cosmetics
Pvt. Ltd.(supra), which has duly considered Garden Silk Mills
Limited & Anr.(supra), has attained finality in the eyes of the law.
We do not find any justifiable ground to take a different view in
the matter, in the facts and circumstances of the case. We are,
therefore, of the opinion that the ratio laid down in the said
decision would constitute a binding precedent for this Court to
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follow. In view thereof, the first question framed by this Court is
answered against the Petitioner(s) and in favour of the
Respondents.
27. We, accordingly, hold that import of goods into India, even
if it is for the limited purpose of warehousing or re-export, would
not enjoy any immunity from the application of the domestic laws.
Such goods would be subject to the law of the land and would be
governed by the regulatory regime in force even if the transaction
takes place in the DFS, beyond the customs barrier. The
exemption, if any, would be limited to the fiscal measures such as
levy of customs duty/tax/MVAT etc. As such, if an item is
restricted or prohibited under “any other law for the time being in
force” it would constitute “prohibited goods” under Section 2(33)
of the Act of 1962 and hence, the domestic regulatory regime will
apply in full force to such goods brought into the DFS within the
Indian territorial jurisdiction.
28. Coming to the next question, as framed above, it is to be
noted herein that Section 3(b)(i) of the Act of 1940, covers all
medicines for internal or external use and all the substances
intended to be used for or in the diagnosis, treatment, mitigation
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or prevention of disease or disorder. Under Section 3(b)(i) of the
Act of 1940, a substance will qualify as a drug if its intended use is
in diagnosis, treatment, mitigation or for prevention of any disease
/ disorder (e.g. Nicotine Replacement Therapy).
29. Section 3(b)(ii) covers substances, other than food,
intended to affect the structure or function of the human body “as
may be specified from time to time by the Central Government by
notification in the Official Gazette.” Therefore, substances which
come within the definition of ‘drug’ under Section 3(b)(ii) must be
included in a Central Government Notification published in the
Official Gazette.
30. An import licence is required for importing all drugs into
India but the requirement is subject to the exemptions prescribed
under the Act of 1940 and the Drugs and Cosmetics Rules, 1945.
Section 10(c) of the Drugs and Cosmetics Act, 1940, prohibits the
import of “any drug or cosmetic for the import of which a licence
is prescribed, otherwise than under, and in accordance with, such
licence.”
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31. Section 11 of the Act of 1962 confers power on the Central
Government to prohibit importation or exportation of goods by
issuing notification in the Official Gazette.
32. The Supreme Court in Chimanlal Jagjivandas Sheth v. State
of Maharashtra4 gave the expression “drug” a comprehensive
meaning and held that the word “substances” can include things
other than conventional medicines, provided those are used for
treatment. This was further explained in State of Andhra Pradesh
v. Linde India Ltd.5 wherein the Supreme Court has held that a
substance other than a conventional medicine can fall within
Section 3(b)(i), but there must be the requisite connection with
diagnosis, treatment, mitigation or prevention of disease/disorder.
33. In the above context, it would be worth noting herein that
the available literature on the subject goes to indicate that purified
or chemical nicotine is a regulated product which requires a
licence from the CDSCO. Although, import of nicotine in its
chemical compound cannot be said to be completely banned in
India and its legal entry into the country would depend largely on
4 AIR 1963 SC 665
5 (2020) 16 SCC 335
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the product form and its intended use which would determine the
necessity of its statutory licensing. “Nicotine” in its pure/chemical
form is used as an active substance in pharmaceutical
formulations such as nicotine replacement products for smoking
cessation. Therefore, “Nicotine” when used in such form, would
come within the definition of ‘Active Pharmaceutical Ingredient’
(“API”). As per Rule 2(1)(c) of the New Drugs and Clinical Trials
Rules, 2019 an “Active Pharmaceutical Ingredient” (“API”) is
defined as follows:
“active pharmaceutical ingredient" means any substance
which can be used in a pharmaceutical formulation with the
intention to provide pharmacological activity; or to
otherwise have direct effect in the diagnosis, cure,
mitigation, treatment or prevention of disease; or to have
direct effect in restoring, correcting or modifying
physiological functions in human beings or animals.”
34. From the above discussion, it is evident that in order to
qualify as an API, the use of the substance must be in
pharmaceutical formulation with the intention to provide
pharmacological activity, having a bearing in diagnosis, cure,
mitigation, treatment, etc.
35. An import license may be required for importing “Nicotine”
if the same falls within the definition of “Drug” under Section
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3(b). However, what is to be noted herein is that Rule 43 read
with Schedule-D of the Act of 1940 exempts substances that are
not intended for medical use, from the application of Chapter III
(Import of Drugs and Cosmetics). In those cases, requirements of
registration and import licence may not apply, subject to the
fulfillment of the prescribed conditions.
36. Under the DGFT Notification dated 9th February 2022,
specified finished Tobacco products including those containing
nicotine have been declared as falling under the “prohibited”
category. However, the product description does not include
products licensed under the Act of 1940. We also find that
“Nicotine” under ITC (HS) 24049100 “for oral application” is
“free” under the DGFT framework. Therefore, by necessary
implication, it is apparent that all forms of Nicotine may not
necessarily be “restricted” or “prohibited” and hence may not
come within the ambit of definition of “drug” under Section 3(b)
of the Act of 1940. A licence would be required only in case of a
“drug” under Section 3(b) of the Act of 1940. It is only in such
cases that import of the product without a valid import licence
would be prohibited under Section 10 of the Act of 1940.
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37. Likewise, manufacture and sale of such a product would
also be prohibited under Section 18 of the Act of 1940, unless
specifically exempted under Rule 123, in which event, such drugs
shall stand exempted from applicability of the provisions of
Chapter IV of the Act and Rules made thereunder to the extent
and subject to the conditions specified in the schedule.
38. Rule 123 does not offer a blanket exemption from import
licensing under Chapter III. The object of Rule 123 appears to
exempt certain specified drugs in Schedule K from specified
provisions of Chapter IV, subject to the fulfillment of the conditions
contained in Schedule K. The nicotine-specific Entry 33 in
Schedule-K pertains to nicotine gum (e.g. Nicotex) and lozenges,
containing up to 2 mg nicotine. It does not expressly include
nicotine pouches. Therefore, although statutory exemptions exist
for certain variety of nicotine based product, yet, they operate
only in specific instances.
39. The requirement of CDSCO licence, however, may not be an
absolute requirement, applicable to every “drug” and in every
circumstance. Rule 43 provides that the drugs specified in
Schedule D are exempted from the provisions of Chapter III
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(Import of Drugs and Cosmetics) of the Act and the Rules, to the
extent and subject to the conditions specified in Schedule D.
Schedule D deals with substances not intended for medicinal use
thus, excluding those intended to be used as drugs after
purification for rendering them sterile. As such, where a particular
product falls within prescribed Schedule D exemption, the
ordinary import licensing requirements may not apply.
40. CDSCO approval/licensing is required where the product
falls within the definition of “drug” under Section 3(b) of the
Drugs and Cosmetics Act, 1940. For ordinary import of a drug,
Rule 23 of the Drugs Rules, 1945 requires an import licence in
Form 10 or Form 10-A, subject to the exemptions under the Rules.
When the product is a “new drug”, an additional regulatory
requirement arises under the New Drugs and Clinical Trials Rules,
2019. Rule 74 of the Rules of 2019 prohibits import or
manufacture for sale or distribution of a new drug except in
accordance with the provisions of the Act and those Rules. Rule 75
lays down the procedure for obtaining the permission to import a
new drug and Rule 76 provides for grant of permission by the
Central Licensing Authority. The NDCT Rules also, inter alia, treat
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a drug proposed to be marketed in a new dosage form or through
a new route and certain novel drug-delivery systems, as a “new
drug” under Rule 2(w).
41. Tobacco-free nicotine, which is specifically intended and
marketed as a smoking cessation/NRT (Nicotine Replacement
Therapy) has a substantially wider basis for classification under
Section 3(b)(i) of the Act of 1940, because its intended use can
also be connected with treatment. However, a nicotine pouch
marketed purely as a recreational nicotine product, without any
therapeutic or cessation claims, may not automatically come
under the purview of Section 3(b)(i) merely because nicotine has
physiological effects. Therefore, a tobacco-free nicotine pouch may
not necessarily be a “drug” within the meaning of Section 3(b)
merely because it contains pharmacologically active nicotine/
tobacco-free nicotine. Unless it is found that the product is used in
the diagnosis, treatment, mitigation or prevention of any disease
or disorder, it may not qualify as a “drug”. Whether or not a
particular composition/ formulation in the form of “Nicotine
Pouch” would satisfy the requirement of any of the clauses of
Section 3(b) of the Act of 1940, so as to be treated as a “drug”
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would depend on the composition of the product and its intended
use.
42. The legal position, that can, therefore, be culled out from
the above analysis is that any product which is a “drug” under
Section 3(b) of the Act of 1940 is ordinarily subject to the import-
licensing regime. This requirement is, however, subject to specific
exemptions, if any, provided under the Act and Rules.
43. In the case at hand, the question as to whether an import
licence is required for import and sale of “Nicotine Pouch” would
essentially depend upon whether the particular product falls
within the definition of “drug” under any of the clauses of Section
3(b) and if so, whether any specific exemption is applicable to the
product.
44. We have noted the stand of the Respondents that “Nicotine
pouches”, which are sold by the Petitioner in its DFS under the
brand names “ZYN” and “FOX”, contain a specified amount of
Nicotine, i.e. 3 mg to 6 mg per pouch and, therefore, those
products would fall under the definition of “drug” under Section
3(b)(i) of the Act of 1940. At the same time, it is also the case of
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the Respondents that save and except mentioning the brand
names, the Petitioner(s) has not furnished any other particulars
pertaining to the product in question. A perusal of the Bill of Entry
of warehouse also goes to show that only the brand name “ZYN” is
mentioned against the relevant Customs Tariff Heading (CTH). If
that be so, it is not understood as to on what basis the Respondent
No. 3 has reached the conclusion that the product “Nicotine
Pouch” is a “Drug” with the meaning of Section 3(b) of the Act of
1940.
45. We have also noted that, in the impugned order dated 2 nd
April 2026, although it has been mentioned that “Nicotine
pouches” would fall under the definition of “drug” as per Section
3(b) of the Act of 1940, yet, no cogent reason has been furnished
in support of the conclusion. There is also no indication in the
communication dated 2nd April 2026, as to under which of the four
categories envisaged by clauses (i) to (iv) of Section 3(b) of the
Act of 1940 would “Nicotine Pouch” fall so as to qualify as “drug”.
The contents of the order dated 2nd April 2026, issued by the
Assistant Drug Controller (I), CDSCO, Air Cargo Complex,
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Mumbai, would be relevant and, therefore, is reproduced herein
below for ready reference:-
“Sir,
With reference to the subject cited above, it is to inform that
the Drugs Inspector from this office inspected the duty-free
shops at Terminal 2 (Arrival & Departure) on 05-03-2026. The
inspection report, along with supporting documents, has been
submitted (copy enclosed).
As per the findings of the inspection, nicotine pouches (3 mg
and 6 mg) marketed under the trademark "FOX" are being
imported by M/s Mumbai Travel Retail Private Limited vide
Bill of Entry No. 5386403 dated 29-10-2025. These products
are supplied by M/s Swedish Smokeless Solutions AB, Sweden,
and are currently being sold at the duty-free shop located at
Terminal 2 Departure, Mumbai International Airport.
It is pertinent to note that certain nicotine-containing
formulations are approved for sale in India, such as Nicotine
transdermal patches (36 mg, 78 mg, 114 mg), Nicotine
lozenges (2 mg, 4 mg), and Nicotine gums. These formulations
fall under the definition of "Drug" and are regulated under the
Drugs and Cosmetics Act, 1940.
In this context, the said Nicotine pouches also fall within the
definition of "Drug" as per Section 3(b) of the Drugs and
Cosmetics Act, 1940. Accordingly, a valid Registration
Certificate and Import Licence are mandatory for their import
and sale in India, under provisions of Drugs & Cosmetics Act
1940 and Rules thereunder.
Therefore, the import and sale of these nicotine pouches at the
duty-free shops located at Terminal 2 Departure, Mumbai
International Airport are in contravention to the provisions of
the Drugs and Cosmetics Act, 1940 and the rules thereunder.
In view of the above, it is requested to take deemed fit action
including directing to stop the sale and distribution of the said
drug products at Mumbai International Airport.
The action taken in this regard may kindly be intimated to this
office at the earliest.”
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46. As has been noted above, Section 3(b) of the Act of 1940
contemplates four different categories of substances. In order to
fall in the category of “drug” under Section 3(b)(i), the substance
must have intended use in diagnosis, treatment, mitigation or
prevention of any disease or disorder. In order to qualify as “drug”
under Section 3(b)(ii) or (iv), the substances/devices must be
specified in a Central Government Notification published in the
Official Gazette. No such Central Government Notification is
admittedly available covering the product “Nicotine Pouch”. In so
far as Section 3(b)(iii) is concerned, here also, the intended use of
the substance must be as a component of a drug. There is,
however, no reflection in the impugned order/communication
dated 2nd April 2026 that “Nicotine Pouch” contains and/or is a
substance which is used as a component of a drug. Before
concluding that “Nicotine Pouch” is a “drug” under the Act of
1940, it was incumbent upon the authority to clearly indicate as to
under which of the four categories/clauses of Section 3(b) of the
Act of 1940 the product would fall. No such indication is available
in the impugned communication dated 2nd April 2026.
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47. It would be significant to note herein that the Respondent
No. 3 would have jurisdiction to impose and/or insist on a ban on
the sale of the product without a valid licence only if it is a “drug”
within the meaning of Section 3(b) of the Act of 1940 and not
otherwise. Therefore, the requisite jurisdictional facts would have
to be clearly established by the Drug Controller before invoking its
powers under the Act of 1940 and the Rules framed thereunder. In
the present case, we find that such particulars are completely
missing.
48. Whether import licence and/or Registration Certificate
would be required or not will depend on whether the composition
of the product legally constitutes a “drug” under Section 3(b).
Such determination would require detailed factual verification of
the product specification. However, it is an admitted fact that the
Petitioner has not furnished the product specification to the
Respondents. It is also not clear from the material on record, as to
what is the exact nature of composition of the product, insofar as
its Nicotine content is concerned. Therefore, it is not possible for
this Court to record a finding on the above issue.
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49. Whether a specific composition is a “drug” under Section
3(b) having a therapeutic use or if it qualifies under Schedule-D/
Schedule K exemptions would require factual inquiry. This Court
does not have the expertise either to embark on such a factual
inquiry or to express any opinion in the matter. Therefore, these
are not matters that can be determined or adjudicated in a Writ
Petition in exercise of jurisdiction under Article 226 of the
Constitution.
50. For the aforestated reasons, this Court is not in a position to
answer the second question, i.e., “Whether Nicotine Pouch falls
within the definition of “drug” under section 3(b) of the Drugs
and Cosmetics Act, 1940, making import licence and/or
registration mandatory even for dealing with the product within
the customs barrier of the International Departure Terminal of the
Airport?” The said question is, therefore, kept open to be
answered/decided in an appropriate proceeding.
51. Since the Petitioner(s) has not provided the product
specification to the Respondents, hence, the impugned
communication cannot be faulted for not furnishing proper
reasons, meriting interference by this Court. However, that alone
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may not be a valid ground for the authority not to suitably review
and/or revoke the communication dated 2 nd April 2026, if full and
better particulars, regarding the product, are placed before them.
52. For the reasons stated hereinabove, we are of the view that,
notwithstanding the determination made here-in-above, ends of
justice would be met, if these Writ Petitions are disposed of with
the following:-
ORDER
(a) The Petitioner(s) would be at liberty to make
representation(s) before the appropriate authority
including the CDSCO, with supporting material, to
show that the product in question is either not a
“drug” within the meaning of Section 3(b) or is
covered under Schedule “D” and/or Schedule “K”
exemptions of the Act of 1940 and the Rules framed
thereunder and, therefore, can be imported and
transacted in India in the DFS without a valid import
licence and/or Registration Certificate.
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(b) If any such representation is filed within a period of 4
(four) weeks from the date of uploading this
Judgment, the same shall be considered on its own
merit and disposed of by a reasoned order, in the light
of the observations made hereinabove, if necessary,
by giving a personal hearing to the representative(s)
of the Petitioner(s).
(c) The aforesaid exercise be carried out and completed
within a period of 30 (thirty) days’ from the date of
receipt of the representation(s), if any, to be
submitted by the Petitioner(s).
(d) In the facts and circumstances of the case, there
would be no order as to costs.
(e) The Writ Petitions are disposed of accordingly.
(ADVAIT M. SETHNA, J.) (SUMAN SHYAM, J.)
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