2026-VIL-1132-BOM-CU
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CUSTOMS High Court Cases

Customs - Applicability of domestic regulatory regime to goods sold in Duty Free Shop - Petitioners operated Duty Free Shops in the Departure Terminal of an International Airport and sold imported nicotine pouches stored in a special warehouse under Section 58-A of the Customs Act, 1962, without any import licence or Registration Certificate under the Drugs and Cosmetics Act, 1940, contending that the product was meant only for outbound travellers and was a case of re-export - Authorities banned the sale on the ground that the product was a drug requiring licence - Whether all transactions conducted within a Duty Free Shop, beyond the customs barrier, enjoy absolute immunity from the domestic regulatory regime or whether such immunity is restricted solely to fiscal levies such as customs duty and indirect tax - HELD - The decisions relied upon by the Petitioners exclusively deal with the taxable events for assessing customs duty and sales tax/VAT and do not extend any blanket immunity to Duty Free Shop operators from the domestic regulatory or public health laws. Under Section 2(23), 2(25) and 2(27) of the Customs Act, goods are imported once they enter the territorial waters of India, even if not cleared for home consumption. By reason of the words "any other law for the time being in force" in Section 2(33), goods restricted or prohibited under any other law become prohibited goods, and the prohibition under Section 10 of the Drugs and Cosmetics Act applies to them - The coordinate Bench decision in Glamstone Cosmetics holding that import for the limited purpose of warehousing or re-export enjoys no immunity is a binding precedent. Import of goods into India, even for the limited purpose of warehousing or re-export, does not enjoy any immunity from domestic laws, and the exemption, if any, is limited to fiscal measures such as customs duty, tax and VAT - The first question is answered against the Petitioners and in favour of the Respondents - Drugs and Cosmetics Act, 1940 - Whether nicotine pouch is a "drug" under Section 3(b) - Ban on sale of nicotine pouches in Duty Free Shops by the Assistant Drug Controller on the ground that the product is a drug requiring import licence and Registration Certificate - Petitioners had not furnished product specification and the impugned communication did not indicate under which clause of Section 3(b) the product fell - Whether nicotine pouch falls within the definition of "drug" under Section 3(b), making import licence and registration mandatory even for dealing within the customs barrier of the International Departure Terminal - HELD - Section 3(b) contemplates four categories. Under clause (i) the substance must have intended use in diagnosis, treatment, mitigation or prevention of disease or disorder, and under clauses (ii) and (iv) the substance or device must be specified in a Central Government Notification, which is admittedly not available for nicotine pouch. Clause (iii) requires intended use as a component of a drug. A nicotine pouch marketed purely as a recreational product without therapeutic or cessation claims may not automatically be a drug merely because nicotine has physiological effects - The Drug Controller has jurisdiction to ban sale without licence only if the product is a drug, and the jurisdictional facts must be clearly established before invoking powers under the Act, which were completely missing in the impugned communication. Whether the product is a drug, or is covered by Schedule D or Schedule K exemptions, requires factual inquiry into composition and intended use, which cannot be adjudicated in a writ petition under Article 226, and the question is kept open. Since the Petitioners had not provided product specification, the impugned communication cannot be faulted for want of reasons - The Petitioners are at liberty to file representations with supporting material, to be disposed of by a reasoned order after personal hearing
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